Where are the Jobs?

Canada is seeing the highest unemployment rates in over two decades and it's impacting young people the most

May 14, 2025

This episode of the Missing Middle podcast focuses on the alarming state of the job market for young people in Canada.

Mike and Sabrina explore the data behind these statistics, the social implications of high youth unemployment, and potential policy solutions to address the crisis.

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Below is an AI-generated transcript of the Missing Middle podcast, which has been lightly edited.

Sabrina Maddeaux: So, Mike, I came across a new report from Indeed Canada, and they're saying that outside of the COVID-19 years, this is the worst job market for new grads and people in their 20s in over two decades. And here in Ontario, it seems to be even worse. The unemployment rate just climbed up to 7%, which is up from 5 to 6% just last year.

And again, that's the highest it's been since 2014 if you don't count the pandemic years. And for young people ages 15 - 24, it's even worse. Unemployment is at 13 -14% across Canada.

As a youngish person, I am seeing friends and peers stuck in this brutal job market. They're applying to dozens of jobs or hundreds of jobs and getting ghosted, or not hearing back. The jobs are disappearing or sitting on job boards for months. And now it turns out there's real data backing up this trend I've been hearing about socially for months now.

So I wanna ask you why exactly are young people getting hit so hard right now?

Mike Moffatt: Yeah, and it's not just anecdotes. You know, the data backs this up, that this is a particularly brutal job market.

There's a few things going on. Canada's economy never really fully recovered from the pandemic. We had many lost years of investments companies didn't grow and so on. Couple that with, you know, what's going on in the United States and just the kind of slowdown in the global economy. And we see that particularly with trade-exposed sectors. So things like manufacturing, that there isn't, you know, a lot going on there.

You know, some of the housing market that we're seeing, we know that investors are leaving the condo market. So you're seeing, you know, not a lot of condo construction happen, not a lot of pre-construction sales. One of the big condo developers just laid off about a quarter of their marketing and sales staff last week.

Sabrina Maddeaux: Wow.

Mike Moffatt: Yeah, it's a bad, bad market right now.

And then obviously, you know, we've grown our population of new grads through international student programs and so on. So the supply of young workers is massive right now, but the demand is not there.

Overall, it's not a great job market across the board, but it's particularly bad for those 15 to 24-year-olds, and I would say even 24 to 29-year-olds. They're not doing well right now. There's a lot of people looking for work, not so many jobs.

Sabrina Maddeaux: Yeah, I wanna dig in a bit more to how we get this data, because like I said, I've been hearing about this from peers for a long time. I saw on social media, on Reddit boards, people really frustrated with the job market before the numbers seem to actually start making headlines.

So when economists like yourself look at the state of the job market, what data are they actually looking at? Because even now, I don't think the numbers we hear in the news are necessarily telling the full story and the pain we're seeing out there. The unemployment rate, for example, doesn't count people who've given up looking for work, like some of those may be choosing to head to grad school.

And so again, it just feels to me like the job market is actually a lot worse than the official unemployment rate would suggest.

Mike Moffatt: Yeah, absolutely.

I think there can often be confusion here about what these numbers are actually measuring. And it's not that the numbers are necessarily wrong or somebody's putting the thumb on the scale, but they can be misinterpreted.

So when we talk about the unemployment rate, that is the percentage of people who are unemployed over the size of the labour force. But to be considered unemployed, you have to actively be looking for work, not a full-time student and so on. So that doesn't capture everybody. And again, it's not supposed to capture everybody. You can have groups, like we call them discouraged workers that they've given up looking for work. They're not technically considered unemployed in the data, right? They're not included there.

So because of that, economists like to use a number of different metrics. One of the other ones we use is called the employment rate. And it's just what percentage of the population of a given cohort has a job. That could be a full-time, part-time, gig job, what have you. Those numbers are particularly bad right now. And that's in part because of discouraged workers, but also because of people who have gone back to school, are a full-time students and so on.

There's other data. One that's particularly popular in the United States is called NEET, N-E-E-T, which is Not in Employment, Education, or Training. So basically it's the percentage of people who don't have a job, who aren't in school, or some kind of trades training, that kind of thing.

Our data in Canada isn't as good for that. We don't use that as much here. But overall I think we shouldn't just be using a single metric, like the unemployment rate, because it can mislead you - and again, it's not because government's hiding something or something like that. It's just, you know, these things measure what they measure.

But overall, whether we're looking at the unemployment rate, the employment rate, looking at things like wage growth, it shows that the economy is very weak, particularly for that 15 to 29-year-old cohort.

It's not so bad for guys my age, but for younger people in Canada, they really are struggling.

Sabrina Maddeaux: It looks like Ontario is getting hit particularly hard. There, the unemployment rate for 20 to 24-year-olds is over 13%, and for 25 to 29-year-olds, it's at 10%, which is nearly the highest in Canada. Why is it so bad in Ontario right now?

Mike Moffatt: Yeah, it really is bad in Ontario. And I think we're the kind of epicenter of a few different trends going on.

So the biggest one, or one of the biggest ones, is that the international student boom was centred right here in Ontario. Our population of 15 to 29-year-olds is growing faster here than pretty much anywhere else outside of maybe Lower Mainland BC. So that's part of the issue. There are just so many people looking for jobs.

The condo market, particularly in the GTA, has evaporated, so that's not helping. And Southern Ontario in particular, is more heavily reliant on trade, things like manufacturing, shipping, warehousing, and so on. And those are getting particularly hurt because of Canada-US relations. Also, reliance on tourism. Think like Niagara Falls and areas like that, that never really fully recovered after the pandemic. And the Canada-US situation isn't helping. So that's one of the reasons why you can have different unemployment rates in different regions.

So if the oil sector is doing well, then the job market in Alberta tends to be doing well. If oil's doing poorly, then just the opposite.

Now that's the economics of it. I'd love to zoom out to the social impacts because here at The Missing Middle, we're all about the middle class and young people's future. And when unemployment is hitting 14% nationally and for youth and even higher in pockets like the GTA, and we know it's even higher for groups like racialized individuals, immigrant youth, persons with disabilities, and so on, I wonder what is that doing to our social fabric?

So as somebody who comments on these issues, I think you're a little bit better positioned than I am to understand what's going on. So what do you see happening to Canada's social fabric in this period of high unemployment?

Sabrina Maddeaux: Yeah, the bottom line there is nothing good.

We've talked so much on this podcast, and I've covered it in many, many columns about how the housing crisis and the disappearing middle class have started to tear apart Canada's social fabric. And it's particularly led to a lot of resentment among younger Canadians who feel that that social contract of: you get a good education or you get a good job or you work hard and you do all the right things and you play by the rules, no one thinks there's always gonna be equal outcomes, but the opportunity isn't even there. So you already have that festering resentment and anger from the housing crisis and other cost-of-living issues. And then you add a terrible job market on top of that, where now we're not just talking about wage stagnation or feeling stuck in a job, but you can't even get a job. You can't even get on that ladder, which for years, you were just pretty much able to get a job in your 20s of some kind. Maybe it's not your dream job, but you could at least get in the door and work your way up. And now that entry level job, even if it's a crappy job, isn't there. You have hundreds of people applying for those. So I think that this is leading to a situation where there's going to be more fractures, more anger, more division.

I think that when young people are suffering, it often takes much too long for politicians to catch up to that reality, as they did with the housing crisis.

And this is something that's only going to compound that.

Even when you go into the slightly older demographic and you start to look at people in their early 30s, the job market's not great for them either. They're trying to start families or save for homes, and you're gonna see those frustrations rise as well. So it's something that we can't ignore.

I do wanna tie this and broaden it out to the economy a bit more broadly because high youth unemployment isn't just a personal struggle. It's a drag on Canada's growth overall. And with 51% of young people already living paycheck to paycheck, and so many people delaying having kids or buying a home or moving out of their parents' basements, how does this ripple through our economy? I've seen figures saying that high youth unemployment levels are costing Canada billions in GDP.

Mike Moffatt: Yeah, that's absolutely right. And it does affect an individual and an economy-wide spectrum.

So you look at the individual level, there's really good research to show that when you graduate from university or college, what job market you're graduating into affects your earnings across your life.

Alex Usher, a friend of the podcast, has a number of great blog posts about this. And it really matters. So it's not just that, ‘Oh, okay, it might affect you for a year or two, and then the economy improves.’ But if you graduate in a weak job market, that means fewer years of experience you're getting.

You're not climbing the ladder as quickly. And then what that means is that you're not progressing in your career, you're not making as much money, you're not buying your first home as quickly and buying all the furniture.

Sabrina Maddeaux: Yeah, investing for retirement down the road. There are all these compounding effects.

Mike Moffatt: Investing for retirement. You're not saving as much, you're not investing for retirement. And the knockdown effects could be that you're delaying having kids. So you may end up having fewer children than you otherwise would. So it really does have societal impacts. If people are graduating into a weak job market, struggling for a few years, that does unfortunately scar that cohort for the rest of their lives.

Now you can, it's not, I don't wanna overstate the impact. They're not doomed, but it does mean that the lifetime earnings of that group might be five to 10% less than people who had graduated, say two or three years earlier or two to three years later. So it really does make a difference.

And I would imagine it also affects their voting patterns, depending on what kind of job market they're entering in and what the economy looks like in their 20s.

So, Sabrina, as a political columnist and millennial, you've got your finger on the pulse of the youth vote. So with the federal election just behind us, unemployment spiking,the employment rate down, just not a great job market for youth. How do you see this job crisis shaping the outlook of young Canadians' political priorities?

Sabrina Maddeaux: It's something politicians can't afford to ignore for sure. We saw what happened when certain political parties ignored the housing crisis and actually presented a huge opportunity for the federal conservatives to capture the votes of younger Canadians who historically hadn't voted conservative at all. So I think young Canadians are still feeling quite politically homeless right now because they've been crying out for help for so long on so many cost of living issues. And the situation seems to be just getting worse and worse.

I don't think voting patterns are stuck in place for this generation yet. I think whatever leader or party actually starts to make meaningful changes on these issues has a generational opportunity to capture loyalty for years and decades to come. So my advice to any politician would be, don't sleep on this.

Particularly for parties who may have lost party status or are struggling right now. I look at the federal NDP, but also the Liberals and NDP in Ontario who both want to make a big showing against Doug Ford's conservatives next time around. It would do a lot of good for them to treat this issue seriously and speak to it because there's a lot of opportunity there, and younger Canadians are just begging for someone to listen to them and actually talk about this issue.

Now, I came across, I think it was last week, a fascinating piece in The Atlantic by Derek Thompson that might shed some light on what we're seeing. So in the US, unemployment for recent grads is worse relative to the overall economy than at any point in the last 40 years. And the interesting thing, though, is that law school applications are surging like they did during the Great Recession, which is actually when I graduated. So we don't have exact data for Canada, but do you think we'll see a similar trend here, where young Canadians retreat to grad school because they can't find jobs? And if they are doing that, what does that say about the state of our entry-level job market?

Mike Moffatt: We do see this. I've spent most of my adult life associated with Western University and specifically Ivy Business School, and I believe the largest MBA class we had was just right after the dot-com crash. We had a lot of young folks, some of [whom] were recent grads, some of [whom] had worked in the dot-com space, find themselves in a really bad job market and said, ‘You know what? I'm going to improve my credentials. I'm going to sit out of the job market for two years and develop some skills.’ That's back when the program was a two-year program. So we see that, and that's not uncommon.

It's this weird thing that we have in academia, particularly professional programs, where we tend to be counter-cyclical. The worse the economy is, the more applications we get. And from an individual point of view, it actually makes a lot of sense that if the job market is weak, you're having trouble getting a job anyway. You're not forgoing as much by getting that extra credential. And then, hopefully, two years down the road, you are graduating into a much better job market. So I suspect we are going to see it here.

I think that would be a sign. Like if we see, going into September, all of a sudden we've got more people going to law school, doing their MBA, doing these kinds of professional master's degrees, or in some cases, going to do a PhD and entering kind of traditional academia - I think that is a sign that things aren't going well for people in their twenties. Good economy, they don't apply, bad economy, they do.

Sabrina Maddeaux: You know, I'm actually curious about your thoughts on this because like you said, this has been a historical trend where more people apply to grad school or law school during tougher times, but also in the last few years, we've really seen outcomes diverge from level of education where getting that extra degree or going to university at all doesn't necessarily result in better employment outcomes or a higher salary. So now I'm wondering about that bargain for young people, that if they're choosing to go to school and get that extra degree for two years, does it result in better economic outcomes, or are they just going to end up leaving with more debt and then we're seeing the cycle continue? What do you think about that?

Mike Moffatt: Yeah, I mean, that can happen. And I think, as somebody who has a PhD that probably did not pay for itself - I spent a lot of time in grad school, you know, lost years worth of income, so probably not economically ahead. That does happen.

I think partly you have to think about why you're doing it in the first place. I started out as a philosophy major, right? I started out as a guy, like, ‘I just want to be in school to learn things.’ If that's your goal, that's fine, right?

Recognize, ‘Okay, I'm paying because I want to learn about French literature or what have you’, that's okay. If, on the other hand, your goal is to make more money, if that's your kind of primary focus, then I do think you have to do a lot of research, do the math and go, ‘Okay, what is the outcomes for people who take this degree, take this diploma? How much of their earnings go up historically?’ Do those kinds of calculations. And then I think there are a limited number of pathways available.

So, business school probably pays for itself. Law school probably pays for itself. A master's degree in economics probably pays for itself, but a PhD probably doesn't, just because it takes a really long time and it's painful.

So I think if that's your motivation, if it's purely a dollar and cents thing, then I think you really have to do your research because I think for a lot of people they'll spend two, three, four, however many years in grad school and find that at the end, their salary hasn't jumped up enough to make it worth it.

So, Sabrina, you've talked about how housing costs are crushing young people's hope. Now, if that wasn't enough to worry about, now they've got to worry about unemployment spiking and a bad job market. So it's a double whammy. They're getting hit on both sides. So, for younger millennials and Gen Z, what is the impact of joblessness and unaffordable housing on their ability to build a future here in Canada?

Sabrina Maddeaux: Yeah, it doesn't give them much hope. We're already seeing so much brain drain to other places and outside of Ontario, whether that's within Canada or whether people are still looking at moving to the US or other locations or people just getting very frustrated with living here because it delays everything.

If you can't get a job, if you can't get a good wage and it just has all these compounding effects over time. And I think a really important thing to highlight here is we're not talking about people spending eight weeks on a job search or even two months or three months. We're talking about young people who are job searching for six months, a year, or even more, and just like running into brick walls.

I've also seen data on rising long-term joblessness and that same Indeed report I mentioned earlier says in March, 2025, 3.5% of adults ages 25 to 54 wanted a job, but hadn't worked in over six months, which is pretty staggering because it's up from 2.9% just a year earlier. Now, this was the highest year recorded during this time of year - again, outside of the pandemic, since 2014, and it's weaker than the trend of the overall unemployment rate.

So to me, that's a major red flag that we're seeing young people lose up to half a year, years of experience, wages and that's going to have long-term impacts down the line, socially, economically, financially, and should be an even bigger red flag for public officials to look at.

We've talked a lot about what's wrong right now, and I know things probably feel pretty bleak out there for some of our listeners. So, let's wrap up with a bit of a more positive look forward. If you could wave a magic wand and implement one policy to tackle this youth unemployment crisis, what would you do?

Mike Moffatt: Yeah, so I'm going to cheat a little bit. It's a big kind of overarching policy, but I think we really need to have regulatory reform that allows us to build things again.

Obviously that affects the housing crisis, but that's all the policies that prevent us from building green energy. Policies that prevent us from building wind turbines on Lake Ontario and things like that. Like, we've spent the last 40 to 50 years having governments basically going farther and farther and farther, finding more ways to say “no” to something. Or not even “no,” just giving a non-answer. I think we've gone too far. I know I sound a little bit like Ezra Klein from Abundance here, but I think he's got the right idea.

We have to be able to have a policy that allows us to build things again. You know, I don't think we're going to be able to wave a magic wand. I think what we shouldn't be doing is looking for make-work type projects just to keep young people busy. I think we have to take this moment that we have with the Canada-US relationship, use this as an impetus to rebuild our economy, to rebuild our regulatory structures, to figure out how we can get stuff built again in a way that protects the environment, protects worker safety and so on.

I think now is the moment for that kind of regulatory reform. Allow companies to expand, and let's build some infrastructure. That's going to create a lot of good jobs in the short run, but also help grow the economy over time.

Sabrina Maddeaux: Yeah, I agree with you. There's no magic wand, so to speak, on an issue like this. It's definitely systemic, and we have to increase our capacity to build. I think that increasing competition, support for young people who may want to start businesses and entrepreneurs who are out of the job market. We could really have some interesting incentives there, incentives for employers to hire young Canadians again. You know, we've subsidized salaries for temporary foreign workers, but we won't do it for young Canadians. So that's a gap for me.

And I think looking at how our immigration policy tries to fix so-called labour shortages, but often ends up causing more issues. And we've certainly seen that impact on younger workers. So there's work to do there as well.

But thank you, everyone. We're out of time. Thank you so much for watching and listening and to our producer, Meredith Martin.

Mike Moffatt: If you have any thoughts or questions about applying to grad school, please send us an email to [email protected]

Sabrina Maddeaux: And we'll see everyone next time.