Why Job Seekers Are Locked Out of the Economy

Unemployment is low. Hiring isn’t happening. Inside Canada’s “low-hire, low-fire” job market.

Sabrina Maddeaux, Mike Moffatt, and Meredith Martin

Feb 18, 2026

The unemployment rate says everything is fine. Job seekers know it isn’t.

In this episode of Classonomics, we unpack one of the biggest economic contradictions in Canada right now. How can unemployment sit at 6.5% while people are sending out hundreds of resumes and hearing nothing back?

While layoffs remain relatively contained, hiring has slowed sharply. Fewer companies are posting jobs, fewer unemployed workers are finding work each month, and more people are collecting employment insurance than this time last year. There are now roughly three unemployed workers for every available position. This has created what we describe as a low-hire, low-fire economy. It may look stable on the surface, but for anyone trying to break in or move up, it feels frozen.

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

Sabrina Maddeaux: Hi, and welcome to the Missing Middle. I’m Sabrina Maddeaux.

Mike Moffatt: And I’m Mike Moffatt.

Sabrina Maddeaux: Today on Classonomics, we examine a paradox. The unemployment rate suggests the economy is just fine, yet it’s also unusually difficult to find a job.

Mike Moffatt: If you know a young worker struggling to find a job and think their frustration is justified, please share this episode and leave a comment. We’d love to hear from you.

So, Sabrina, one thing I hear a lot from young people is that they simply don’t believe the economic data coming from the federal government. Here’s one example: Since last fall, Canada has added almost 200,000 new jobs, according to the labour force survey, and the unemployment rate is under 7%. Now, those aren’t outstanding numbers, but they’re not bad either. But if you talk to younger people who are either looking for jobs or have found one after a lengthy search, they tell you that those numbers don’t reflect their experience. Do you get that sense as well?

Sabrina Maddeaux: Absolutely, the numbers don’t reflect the experience of young people or those in their early to mid 30s. It’s a really crappy job market right now. We’re seeing some layoffs, but layoffs are less of an issue as much as it is if you’re unemployed or looking for a job; there are simply no jobs to be had. People are sending in hundreds of applications, getting zero replies, and getting ghosted by employers if they are in the interview process.

Even old-school networking isn’t working. There’s just so much uncertainty that no one has jobs to offer. On this podcast, when we’ve talked in the group chat, we all know people who have been out of work a very long time, whether that’s months or, in some cases, well over a year. And that’s not for lack of skill or good resumes or trying, it’s just the state of things at the moment.

Mike Moffatt: I think that’s absolutely correct.

I think part of the problem is that we could over-focus on certain indicators at the expense of others. So while the media and, frankly, think tanks like ours often focus on the unemployment rate or the total number of jobs - sometimes we talk about wages - there are a lot of other labour market indicators that we could be looking at.

So things like: the number of people who are being fired or voluntarily quitting their jobs, the number of people who get hired each month, and the number of people who simply give up looking for work because they’re not having any luck. These are called “discouraged workers” in the data, and they’re not counted in the unemployment rate. One of the conditions of being considered unemployed is that you need to be actively looking for work.

We could also look at job vacancies and the number of companies that report that they can’t find workers, or the number of workers collecting employment insurance. So there’s this whole raft of labour force economic data that we tend not to look at. We just look at a couple top line figures, and that can occasionally be misleading.

Sabrina Maddeaux: So what do all these other numbers tell us?

Mike Moffatt: Well, if someone had a few hours, they could dive into the StatCan data themselves, but fortunately, that’s not necessary. There are a lot of credible groups that do that work for us. The Bank of Canada is one. TD had a really interesting report last month. We’ll link to those in the comment section. But here’s the general lay of the land.

The unemployment rate right now is under 7%. The latest data is 6.5% to be exact, which is basically where it is in normal economic times. So it’s not really high. It’s not really low either, but it suggests an economy and a labour market that’s fine. Now we have something else called the labour force participation rate that measures the proportion of people who either have a job or are actively looking for one. That number, right now, has been relatively flat, but it’s in the low end of the normal range. And this is indicative of a labour market, or economy, where you have a large number of people who are neither working nor looking for work, which suggests you have a lot of people who have basically given up - they’ve dropped out of the labour force entirely. Maybe they’ve gone back to school, or they’re simply staying at home. “I can’t get a job with the credentials I have now, so I’m either going to do something about it, or I’m going to give up.”

The next thing we can look at is how many jobs are vacant. So these are positions where companies say we’ve got this open position, but currently nobody’s filling it. Back in 2022, this ratio was 1 to 1 in the sense of the number of vacant jobs versus the number of people looking for work. And that’s a sign of a tight labour market. That’s the sign that unemployed people have a lot of power to pick and choose from the jobs they want. Nowadays, there are 3 unemployed workers for every position. And that’s an indication that things are tough out there.

And then finally, we can look at the employment insurance data - how many people are collecting E.I., and that’s up 16% relative to this time last year.

It’s important to do a year-to-year comparison because there’s a lot of seasonality in the data. But overall, that also suggests the economy is getting worse, that the labour market is struggling. When you have 16% more people collecting E.I. than we did this time last year.

Sabrina Maddeaux: And also, not everyone qualifies for E.I., so it’s clear that the employers have the upper hand. But when it comes to hiring, are they actually hiring?

Mike Moffatt: Well, there are a few ways that we can look at this. One is the job vacancy rate, which is the percentage of positions at companies that are unfilled. Right now we’re at about 2.6%, which is well below the historical average, well below the 2020 peak. And it suggests that overall, there are not that many open positions. We heard that there were a lot of unemployed people.

So it creates a condition where companies can be a little bit picky. They’re like, if we don’t have the perfect candidate today, we’ll wait a month because we don’t have to worry about that star candidate getting away. There will be other candidates to take their place.

Sabrina Maddeaux: And that doesn’t surprise me at all, given the global economic uncertainty we’re seeing right now. Driven obviously by trade tensions and geopolitical shifts, the business environment just seems very uncertain, bordering on frightened. So they’re happy to sit still. And they are reluctant to make any long-term investments, which include new full-time employees.

Mike Moffatt: I think that’s absolutely the case. And I think one of the things causing the disconnect is that outside of a few industries, like automotive, like timber and so on, we’re not seeing these mass layoffs, but companies don’t know what the conditions are going to be a year or two years from now. So they’re saying, let’s not make any big bets.

Let’s ride this out. Let’s get past the summer or see how Canada US trade negotiations go. Let’s see what happens in the midterm elections in 2026 and then start making decisions. So you’re absolutely right that that level of uncertainty is causing companies to pull back and say, we’re not going to make any long-term bets. We’re just going to ride this out and see where we are a year or two from now.

Sabrina Maddeaux: I guess the problem is there’s an assumption baked in there that this uncertainty will be something that passes, rather than being in a new era of uncertainty, which complicates that.

Let’s go back to the point around AI for a minute. And the number of unemployed people in general. That number goes up when people leave their jobs, either because they get fired or they quit without having a new job in place. But it also goes down when people get jobs. So what’s the current situation look like, both in terms of hiring and firing?

Mike Moffatt: That dynamic is a really key point. That we have to think of the labour market as being a series of inflows and outflows. And I think that series of inflows and outflows explains why the experience of job seekers doesn’t match that top-line data when it comes to unemployment. So one piece of data we can look at is called the job separation rate. That is the proportion of workers who are leaving their jobs for whatever reason. It’s actually relatively low by historical standards, which means outside of a few industries, we don’t have a massive amount of firings, but we also don’t have people just voluntarily leaving their jobs. Which makes sense for the uncertainty that we talked about earlier. It doesn’t just affect companies; it affects workers who say, I’ve got a comfortable job here, the job market doesn’t look that great. I’m just going to stay where I’m at.

So overall, that job separation rate is lower than the historical average. So we’re not seeing as much inflow to the job market. However, what’s also lower is the proportion of unemployed people who get a job each month. That TD report I referenced earlier showed something called the job finding rate.

And it’s basically you look at the number of unemployed people at the beginning of the month - how many of them have a job at the end of the month? Right now, that’s 20%. And that’s actually quite low by historical standards. So it means if you’re looking for a job, you’re looking longer than usual. It’s taking you five months on average instead of maybe 3 to 4.

So what this has created is what I call a low-hire, low-fire equilibrium. And on the one hand, that’s not necessarily a bad thing, as things sound quite stable. You don’t have all of this churn. They’re not willing to make these big changes, so you have this level of stability.

But on the other hand, this equilibrium is disastrous for people looking for jobs because of that low-hire rate. So if you are somebody actively looking for a job, you’re probably going to have a tough time these days.

Sabrina Maddeaux: So this obviously lends credibility to the young people who feel the economy is a lot of bad vibes right now. This type of low-hire, low fire environment means that if you’re one of the unlucky ones who gets laid off, it’s going to be extra difficult to find work, let alone if you’ve just graduated, are entering the labour market, or are looking to move on from that entry level position, it’s going to be much harder to find a role - or that next role.

So once again, this is mostly young people getting screwed by yet another economic crisis. There seems to be a new one every year at this point. Young people are stuck in place. Wage growth is slowed for them, job satisfaction is down, and, understandably, their confidence is low.

At the same time, the housing market is also frozen, and fewer people are moving homes. And historically, we’ve seen this stagnation lead to lower productivity, less innovation, more inequality and less social mobility. How do we get out of this environment?

Mike Moffatt: That’s a really great question. And I agree with the entire premise of that. That young people are getting stuck, whether it be on the job market, the housing market, and what have you.

When it comes to the job market, there’s always going to be a temptation in policy circles to be hyper-targeted with your policy. Say, it’s young people who are facing the brunt of this, so let’s design some employment programs for young people. That could be things like summer job programs and so on. And there’s absolutely room for that, don’t get me wrong, but this equilibrium that we find ourselves in is a symptom of a larger economic malaise. And we’re only going to get out of this equilibrium through broad economic reform. So we have to treat the root causes of a slow economy, not just the symptoms.

So, at the risk of sounding too much like Ezra Klein and the abundance folks, the obvious place to start would be getting out of our own way when it comes to building things in this country. That’s not just housing, but things like clean energy projects and so on. We have to realize that a complex web of rules is slowing down the economy, and they’re also preventing us from making the kinds of investments we need in housing or energy.

And interestingly enough, a lot of these rules are put in place to have beneficial social outcomes, like better environmental outcomes, but if you make it difficult to build clean energy, or you make it difficult to build homes near where people work, you’re actually going to have worse environmental outcomes.

So we’re in a scenario where we’re harming the economy, but we’re also harming social cohesion. We’re harming the environment. I think the first thing that we can do is get out of our own way and say, How can we build things in this country which directly create construction jobs, but also indirectly make a better society because you allow people to live closer to where they work? You have lower rents. Put more money in people’s pockets, and they’re able to spend that at restaurants or movie theatres or what have you. And the economy improves as a whole.

But I’d love to get your take.

Sabrina Maddeaux: A big thing is we need to promote more competition in this country, and we need to promote and incentivize businesses to invest in innovation in the future and long-term investments. And that includes young people and hiring new employees. At the same time, I think that we can do a lot more to help people who want to become entrepreneurs, start a business or freelance. We can cut red tape. We can make our tax structure easier to understand and certainly more friendly and less burdensome as well for young entrepreneurs.

And ultimately, we need to understand that this isn’t an issue of young people trying harder, submitting more resumes or going back and taking another university course. This is a systemic problem that we need to address with policy, and it impacts everyone.

If you have a generation of young people locked out of a job, locked out of good jobs, not just a summer job, either, but well-paying jobs that put them on the track for a career, that impacts them and, by extension, the economy and society for an entire lifetime.

We also need to continue to keep an eye on how immigration numbers have specifically impacted young people’s employment prospects. We hear a lot about buy-Canadian, but I’d like to see more about hire-Canadian as well and help the young people already here.

Mike Moffatt: And I think that entrepreneurship is a really important one. And it goes to the housing theory of everything. One of the reasons why young people aren’t engaging in entrepreneurship as much is that they don’t have the money to. You can’t found a startup in your garage if you don’t have a garage.

And I founded a company with a couple of friends back in 2005, which still exists. It’s still creating jobs in London, Ontario. And we were able to do that because we weren’t paying our entire salary in mortgage and rent. We had something left over at the end of the month. We could create the seed capital to create those businesses.

So absolutely, I think entrepreneurship is important. And because it’s us and our podcast, it goes back to the housing theory of everything. And if we could solve housing, we could solve a lot of these other issues as well.

Sabrina Maddeaux: It all ties back. Thank you, everyone, so much for watching and listening. And to our amazing producer, Meredith Martin and our editor, Sean Foreman.

Mike Moffatt: And if you have any thoughts or questions about obscure labour force statistics, please send us an email to Missing Middle podcasts at gmail.com.

Sabrina Maddeaux: We’ll see you next time.