If employers can’t find workers, wages are supposed to rise. That’s how a market economy works. So why do governments keep stepping in to make labour cheaper instead?
As youth unemployment reaches levels not seen in decades, this episode examines how the Temporary Foreign Worker Program may be reshaping Canada’s labour market, and why the people paying the biggest price could be young Canadians looking for their first job.
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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.
Cara Stern: In a free market, when demand goes up, prices rise. And when supply goes up relative to demand, prices drop. The same applies to the labour market. During times of high unemployment, employers have the power to dictate wages and working conditions. But when unemployment is low, it’s harder to find workers, so wages should go up. Canada, though, has completely messed with that, ensuring that it’s never really an employee’s market in this country.
Mike, what was your first job?
Mike Moffatt: Like any good Gen Xer, I started working at an absurdly young age. In my case, it was the age of eight, and I delivered newspapers. I did that all through elementary school, high school, and even through a couple of years of university. But my first actual paycheck job was going door-to-door for Greenpeace, trying to sign up people for donations. I really didn’t enjoy that job. What sticks out to me about that time was how hard it was to find that job. Back in the early to mid-1990s, the youth unemployment rate was in the 15% to 20% range. Folks my age were just taking whatever we could get.
Cara Stern: Today’s youth unemployment rate is bad, but it’s actually not as bad as you had it. You Gen Xers win again, though by “win” I mean lose. Given all the other challenges young people are facing these days, the 13.4% unemployment rate feels like a kick in the gut.
For some context, the regular unemployment rate is 6.6%, so the youth rate is more than double what it is for the rest of the labour force. When you think about it, it’s no surprise that the youth unemployment rate is higher than the general population, but double is actually much higher than the historical average.
Mike Moffatt: It really is. As much as there were those issues in the early to mid-1990s, governments did something about it. Back then, they stepped in and created programs to help with youth unemployment, some of which still exist today.
Cara Stern: Even though you may have had an even worse job market than today’s Gen Z, at least you didn’t have to compete so heavily with a huge number of people who have been hired through the Temporary Foreign Worker Program.
We’ve covered the Temporary Foreign Worker Program a lot on this podcast, but one thing we haven’t talked about is how the stream of low-wage labour impacts the job prospects for young people in Canada.
Mike Moffatt: It’s not just the Temporary Foreign Worker Program. Students are facing, and have faced over the last few years, way more competition for those jobs, mainly because the student population has exploded, especially with so many international students. The youth population grew by over 14% between 2021 and 2025. That’s a combination of temporary foreign workers, international students, and a little bit of immigration as well. There’s been a massive supply of young workers competing for a fairly limited number of jobs.
Cara Stern: Right before I started university, international students could only work on campus. But then that changed so that they could work anywhere for a maximum of—well, it’s up to 24 hours per week now, as well as an unlimited amount between semesters.
This is the kind of thing I’m talking about when I say governments are messing with supply and demand in the labour force. More young people are looking for work, which means more supply of workers in the labour market for lower-skilled jobs. That means a higher unemployment rate for youth.
Mike Moffatt: It really does. Again, there are so many young workers competing for a limited number of jobs. If we focus just on the temporary foreign worker issue for a moment, the TFW program has been around a while—it’s older than I am, having been around since 1973.
It was designed to keep the economy moving and help out wherever there were temporary labour shortages. The idea was simple: if employers couldn’t find workers locally, they could bring in foreign nationals on a very temporary basis to fill those gaps in specific industries where it was hard to find people.
Nowadays, it’s not just one bucket of very specialized labour. You’ve got a high-wage stream and a low-wage stream. You have the primary agriculture stream, which goes back to the ‘70s, and you have this fourth stream which is specifically dedicated to supporting permanent residency. The program started out in a limited sense but has really ballooned over the last 50 plus years.
Cara Stern: What we want to talk about today is that low-wage stream. That’s the stream that seems to be having a significant impact on the youth unemployment rate.
Mike Moffatt: And it wasn’t always like that. When the program started in the early ‘70s, it was very limited to a certain set of occupations: very high-skilled roles, some academics, and specific agricultural roles like picking tobacco.
But that changed in the early 2000s when the low-wage stream was created. Suddenly, employers could bring in people for pretty much any job, especially jobs that only needed a high school diploma or a bit of on-the-job training. These were the jobs that traditionally students worked. Students weren’t just competing for tobacco-picking jobs in Tillsonburg anymore; now they’re competing for fast-food jobs and positions all over the economy. As long as the Temporary Foreign Worker Program has existed, there have always been concerns around what it means for young workers, but now even more so because that competition is so much more fierce.
Cara Stern: We’ve seen a big backlash to immigration over the last few years—so much so that Canada has reduced the number of people it lets in on the permanent residency side of things.
The Temporary Foreign Worker Program has had some changes, too. Basically, most sectors have a 10% cap on low-wage TFWs. But in 2022, thanks to a lot of lobbying from places like Tim Hortons, that cap jumped, and businesses could have almost a third of their employees through the program. It didn’t drop back down to 10% until September 2024, when public opinion shifted drastically.
Because of that backlash and the spiking youth unemployment, they changed the rules again this past April. Now, employers have to advertise a job for eight weeks before they can even apply to get a temporary foreign worker, although some designated sectors, such as healthcare, food manufacturing, and accommodation, are eligible for a higher cap than that.
Mike Moffatt: We see it in some of those industries like the accommodation industry, the hospitality sector, hotels, motels, and so on. Think of jobs like the front-desk clerk, housekeeping staff, janitors, and accommodation service managers—jobs where you can go above that 10% cap. A lot of those jobs were traditionally filled by students or by younger workers.
Even with these reductions, the fact that these exemptions exist to allow for higher levels of temporary foreign workers to be hired tends to disproportionately push out, or at least cause increased competition with young workers.
Cara Stern: What got us talking about this most recently was an article being passed around in our group chat with the headline, Tourist Towns Desperate for Workers in Alberta. It basically said that Alberta’s tourism industry is facing a severe labour shortage, with mountain towns like Banff and Canmore being particularly affected.
Employers highlighted two primary barriers: a critical housing shortage that makes it unaffordable for staff to live in the region, and tighter federal regulations on the TFW program, which have slowed their ability to fill vacant roles with international staff.
Mike Moffatt: When you guys were passing this around the group chat, it drove me absolutely up the wall. I found it incredibly maddening because, first of all, the article presents no actual evidence that there’s an unusually high number of job vacancies relative to previous years. That might be true, or it might not—we don’t know, we’re never told.
But suppose it is true. Let’s say everything they’re saying is factually accurate and could be backed up by data. Employers could just raise their wages and attract more people to work there. If they can’t find enough people to work at a certain price, raise the price. Yes, that would have knockdown effects; if you raise the price of labour, you may have to charge more for rooms or meals. But it also means that young workers would make more money, and it would create incentives for companies to innovate and invest in technology so they’re less labour-intensive.
We talk a lot in this country about our productivity issues, but every time a company is forced to be a little bit productive because they can’t find enough workers, the government comes in and says, “No, no, no, don’t invest in technology. We’ll just make it easier for you to hire a bunch more low-wage workers.” It drives me absolutely up the wall.
Cara Stern: I find this part of the program very offensive to workers. I’ve heard employers say they can’t find workers, that young people just don’t want these jobs. But there is a price where people would want those jobs. If an employer is not getting the number of people they need, if they just raise wages, they will find someone. There is a number where people will do these jobs. What I want people to get from this is that if you hear them talking about labour shortages, what that really means is an employee’s market, and that should be the time when wages go up.
I also think it’s interesting that you get this constant push from employers saying they need more workers, then the government expands the program, then you get spiking youth unemployment, then there’s a backlash and they implement new restrictions, and then employers say they can’t find people. It’s a cycle that keeps going on and on.
Mike Moffatt: It does. I think it’s symptomatic of a larger problem in Canada that goes way beyond the TFW program. In any other sector in the economy, prices are allowed to adjust. If the demand for gasoline goes up because we all want to take a bunch of road trips, we don’t suddenly have gas shortages everywhere; we let the price adjust upward. In economist-speak, we get the quantity supplied and the quantity demanded to stay in balance, and when you get to a gas station, there’s actual gas available to buy.
But for some reason in Canada, we don’t treat labour the same way, at least not in the same professions. When the demand for workers goes up, we don’t have firms competing with each other for workers and putting upward pressure on wages. Instead, we declare there to be a shortage and have governments put policies in place to eliminate that competition.
It’s like saying, “Well, there’s a shortage of 50-cent cups of coffee in my neighbourhood.” Okay, that’s true, but if I’m willing to pay three bucks, I could find a half-dozen coffee shops to sell to me. It’s not a real shortage; we have to be able to allow prices to adjust.
Ultimately, what Canada does is insulate businesses from capitalism, which undermines a lot of its benefits. But us non-business owners have to deal with the downsides. It’s a very unequal system.
Cara Stern: I totally get why employers are stressed about seasonal workers because that’s a hard business to be in when you need people for such short periods of time. You’re asking them to move or to give up part of their life to work for a short period, and it’s tough to deal with those seasonal swings. But that’s just the nature of tourism. Historically, places like the Jasper Park Lodge and the Banff Springs Hotel solved this by building staff housing right into their business models.
Mike Moffatt: Absolutely. Any good Gen Xer knows this from the 1987 classic movie with Patrick Swayze and Jennifer Grey, Dirty Dancing. If you haven’t seen it, make time for it—make a weekend of it. Watch Ferris Bueller’s Day Off and some other great ‘80s movies, but make sure you watch Dirty Dancing.
Cara Stern: For decades, resorts relied on students looking for spring and summer work, and that’s what we saw in the movies. Since these hotels were built by the railways, they would sometimes pay a student’s train ticket to get there, which was a strategic move. By covering that, they made sure that if you were tempted to quit, you maybe wouldn’t because it would cost you to get home, versus if you made it through to the end of your contract, it wouldn’t.
In fact, according to our producer’s mom, Sally Martin, who worked at Jasper Park Lodge as a chambermaid in the '50s, the hotel actually preferred employees traveling from the Maritimes because it was a far journey, so it would cost them more to get home. There was a better chance they would actually stay.
Mike Moffatt: Big shout-out to Meredith’s mom here.
To be clear, when Cara mentioned those two historic hotels, they weren’t the employers who were complaining about the articles, so we’re not throwing shade at those two fine institutions. Rather, we’re trying to establish the idea that resort towns across Canada have always experienced swings in the demand for labour because that’s how the business model works, and they found ways to adjust without the government stepping in to create temporary foreign worker programs.
One of the main ways these hotels were able to do that was to hire students who happen to have a four-month break in the summer when these places need more staff. They could entice them by saying, “Hey, come out to Banff or Jasper, and we will give you free or subsidized housing, and we’ll pay for your travel to get there and back home.”
What’s happened is that the Temporary Foreign Worker Program has blunted the need to build more housing, either permanent or seasonal. If companies faced labour shortages due to a lack of housing and didn’t have the TFW program, they could work with pro-housing groups to get reforms in place to actually get more homes built. Instead, they’re given this cheat code: bring in a bunch of temporary foreign workers, and you don’t have to worry about housing or innovating. You get a get-out-of-jail-free card.
Cara Stern: The thing I don’t understand is that those temporary foreign workers have to live somewhere, too. You say it blunted the need for housing, but how does that work?
Mike Moffatt: You find that people are less likely to complain about their housing conditions if complaining gets them deported. It’s an issue with how the Temporary Foreign Worker Program is run. Everybody needs housing, but things change a little bit depending on who’s getting hired and what ability they have to enforce their labour rights. Unfortunately, we know that temporary foreign workers have a much harder time getting their rights enforced than other workers.
Cara Stern: That makes them ideal workers for a lot of bad employers.
I will say, though, many companies do still hire locally, and they attract people from across the country by offering highly subsidized housing and food. I have a brother-in-law right now who’s in the Columbia Icefields, and while they didn’t pay for his ticket to get there, he does get a bonus for finishing the contract, cheap housing, and food covered. It’s a really good experience. If I were in university, I would absolutely take one of these jobs because it’s such a unique thing to do—something you wouldn’t do at any other point in your life. It fits so neatly into the school year when you get that four months off. It’s hard to find a regular job in a city for four months because people typically want someone long-term. They do still exist, they are still out there, and I highly recommend people look into it.
Mike Moffatt: Absolutely. I’m sure it beats going door-to-door soliciting donations.
Cara Stern: It probably does, and you don’t get to be that person everyone hates when they open the door and want to get out of the conversation. I would hate to do that job because people are just dreading it when they open the door and see you, right?
Mike Moffatt: I’d just be like, “Cara, you care about the environment, right? Of course you’re going to write me a cheque.”
Cara Stern: This brings me to another article that caught our attention: the Tim Hortons announcement that they plan to hire 10,000 local workers while scaling back their use of the Temporary Foreign Worker Program. They said something like lobbying for expanded access is no longer necessary given the high youth unemployment rate. Man, did they get roasted online for this.
Mike Moffatt: “Now, of all times, we don’t need as many workers.” I’m sure that had to do with it and not the other conditions going on in our economy and not the fact that they are seeing sales decline and their brand value absolutely evaporate. “No, no, no, it’s the economic conditions—that’s what’s changed here.”
Cara Stern: Or the threat of Dunkin’ Donuts coming to Canada, helping them realize they need to change the narrative on their hiring practices because they’ve kind of become the poster child for the Temporary Foreign Worker Program. I think they thought people would see this and think it’s great, but I saw mostly people saying, “Oh, so you could have been doing this all along. This was a choice you made.”
They could have hired locally because, while they say it’s no longer necessary, the rate of youth unemployment has been high for years. It’s not that much higher now than it was when they were lobbying to get 30% of their businesses filled with temporary foreign workers. I don’t believe their argument, and I don’t think most people do. It’s nice that they’re doing it now, and I’m glad finally this is happening, but it doesn’t really buy them the goodwill they thought it might.
Mike Moffatt: It’s like saying, “We no longer kick puppies.” Great, but I’m not going to give you credit for that. It feels like this backfired a little bit, and they may have been better off to downplay this and just make those changes instead of trying to position themselves as being corporately responsible. It created a backlash where people are just like, “Come on, guys, you’re not good corporate citizens, and don’t try to pretend otherwise.”
Cara Stern: To sum up, Canada’s youth are facing a significantly higher unemployment rate this summer that is more than double that of the regular workforce, and that’s historically much worse than normal. It isn’t as bad as the 1990s, but it’s close.
Canadian youth are facing a high level of competition through the low-wage stream of the Temporary Foreign Worker Program and the increase in international students who are competing for jobs that used to go to Canadian-born students. We seem to get into this cycle where every time employers have a somewhat difficult time finding workers, instead of doing the thing that capitalism is supposed to do—raise wages—they simply lobby the government to get access to more temporary foreign workers. Then there’s an eventual spike in youth unemployment, a backlash, a tightening of the temporary foreign worker rules, and we start all over again.
Mike, how do we get out of this doom loop?
Mike Moffatt: We have to scale back the Temporary Foreign Worker Program and put it back into its intended use. That’s not to eliminate it entirely; there are reasons why you might need a temporary foreign worker. Let’s say you are refurbishing a nuclear power plant and there’s an expert in Germany who can help because they have skills and experiences you can’t find here—absolutely, that’s the type of thing this should be used for. But the idea that we can’t find somebody to be an assistant manager of a Dairy Queen or pour coffee just doesn’t make any sense. We really need to eliminate this for lower-skilled jobs.
If we find that there are chronic labour issues there, you could settle that through permanent residency. If they’re good enough to work here year after year, they’re good enough to live here, raise a family, and contribute to Canada’s economy on both the supply and demand sides, rather than this endless cycle. It really comes down to that. Don’t be afraid to let the economy adjust, and if certain business models don’t work anymore, they should be allowed to die. It shouldn’t be the role of government to prop up companies with unworkable business models that rely on massive amounts of exploitable temporary foreign workers.
Make the TFW program highly focused on high-skilled jobs that you truly can’t fill in Canada and let capitalism do its job. Stop propping up unprofitable companies with bad business models.
Cara Stern: Something you said there is really important. It’s not that there’s something inherently wrong with people coming here and working low-wage jobs; it’s the fact that they’re temporary and don’t have the same rights as other workers. As someone who cares a lot about workers’ rights, I think you need some sort of path for people to come here and stay, because it’s so easy to take advantage of someone who has to leave the country if they complain.
It’s not a progressive thing to support this program, even though I understand there are a lot of progressives who support immigration for all different kinds of reasons. This is about working conditions, and that’s something people need to realize. It’s so important that they have the same rights as everyone else in Canada rather than having this second class of citizens.
Thank you so much for watching and listening. Our producer is Meredith Martin, and our editor is Sean Foreman.
Mike Moffatt: And if you have any thoughts or questions about why Tim Hortons shouldn’t get a participation trophy for hiring locally, please send us an email to [email protected].
Cara Stern: And we’ll see you next time.
Additional Reading/Listening that Helped Inform the Episode:
Tourist towns ‘desperate’ for workers in Alberta
Tim Hortons says it will hire locals, scale back temporary foreign workers
The Extraordinary Increase of Youth Unemployment in Canada
Temporary ForeignWorkers in Canada:Are They Really Filling Labour Shortages?
StatsCan: Drayton Valley statistical area sees lowest unemployment in Alberta at 4.9 per cent
Canada’s Temporary Foreign Worker Programs
Businesses face new limits on temporary foreign worker program
3 problems with the temporary foreign worker program and 3 possible fixes, according to experts
Brought to you by the Missing Middle Initiative
Hey, Mike, you might want to consider talking to a professional economist about this stuff. There are no "fixed" amount of jobs in the economy. When people show up they add to both supply and demand. The best academic evidence shows a very limited relationship between immigration and unemployment. Read some meta-analyses.
Did you know employers can and do hire administrative assistants through the Temporary Foreign Worker Program? Of all the misuses, this one drives me up the wall the most. The program's senior management is highly attuned to what the minister and prime minister want, which is to make life easier and cheaper for businesses, and so ridiculous things like letting in foreign workers to take jobs as admin assistants, bookkeepers, secretaries, and the like persist. The program should only exist for truly high-skilled roles and agricultural jobs which Canadians are unlikely to fill.