Young Workers Left Behind: The Hidden Cost of Government Layoffs

The ripple effects of shrinking the federal public service could mean huge blindspots in future policy making.

Mike Moffatt

Sabrina Maddeaux

, and

Meredith Martin

Jul 23, 2025

In this episode of The Missing Middle, Sabrina Maddeaux and Mike Moffatt break down the massive wave of federal public service job cuts and how they’re slamming young Canadians the hardest.

From thousands of lost student and contract jobs to long-term impacts on housing, wages, and health, they reveal how a shrinking government workforce could shut an entire generation out of shaping Canada’s future. They also delve into what this means for unions, the economy, and why genuine public service reform must include the voices of young people.

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

Sabrina Maddeaux: Today, we're diving into a tough one, the federal government's recent job cuts and how they're hitting young Canadians the hardest. According to a recent report in The Globe and Mail, the public service lost nearly 10,000 jobs between 2024 and 2025, with almost 80% of those cuts affecting workers in their 20s, who are mostly temporary contract and student positions.

Mike, let's start with the big picture here. What exactly is driving these cuts? And why are younger workers, especially those in their 20s, bearing the brunt?

Mike Moffatt: Yeah, absolutely. We're seeing the federal government wanting to scale back on the size of the public service. It grew quite a bit in the Trudeau years and particularly during the pandemic. And I think there's an acknowledgement across the board that it's grown too large and that we do need to right-size the public service.

And full disclosure, I am married to a public servant. So, just keep that in mind as I'm talking here.

Now, we've got to understand that the public service often hires a lot of folks on, like, six-month contracts, little temporary contracts, that thing. Partly because there are a lot of temporary roles that the public service needs to fill. But also it's a way to try people out, right? They can come in, they can work for six months if it's a good fit, then they go on to more of a permanent job.

The discussion in the media will often make it sound like these are actual cuts, like people are losing their jobs. What is happening is that a lot of those temporary contracts and so on are not getting renewed, or governments are hiring fewer of them.

Plus, you always have attrition at the top. The public service has a lot of people in their 60s. They retire, they're not getting replaced. So I liken it more to what's going on with international students. We can link to that episode in the show notes. It's not that we're kicking international students out of the country to lower the numbers. It's just that some are graduating and going home after graduation. And we're limiting the intake.

But absolutely, this is not a great thing if you are a person in your 20s who wants to work for the public service. They're just hiring fewer people than they did before. And this is not the first time this has happened. In the 1990s, starting about 95 to say 2000 or so, the federal public service didn't hire that many people after the big Paul Martin, Chrétien budget cuts of the mid-1990s. And there's this weird cohort effect. I can see it as somebody who briefly worked in the public service.

I graduated from university in 99. For us, it was hard to get a job in the public service. So if you go to the federal public service, there are not that many people in it who were born between 1970 and 1977, because they were unlucky enough to graduate at a time when the public service wasn't hiring that many people. So we're likely to see that again. We're likely to see this effect, that if you were born between, say, 2000 and 2005, you're probably less likely to work for the public service than if you were born in, say, 1995. And that's going to be a problem for young people.

And I know you've advocated a lot for younger voices in politics. And a lot of the discussions that we have, and I know you've had with others, are more on the elected side, right? So you're talking about younger candidates, younger cabinet appointees, etc. This is going to affect the other side of government, the unelected side of government.

So I would love to get your take on the state of younger workers in the public service and how that's going to impact the political influence of younger Canadians.

Sabrina Maddeaux: Yeah, when we talk about the political influence of younger Canadians, a lot of the attention goes to the elected positions, which is natural, because they're the ones in the spotlight a lot of the time.

And that's a massive issue, too. We don't have enough younger MPs or cabinet ministers who can advocate on issues like housing affordability, and you know what it's like to be a renter, that older generations really haven't seen any evidence that they're really grasping that issue with the urgency that it requires.

But the other side of that is this more behind-the-scenes, public service sector, right? And to shut an entire generation out of that is harmful as well, because this is the federal government, it's an institution that's supposed to be developing policy for young Canadians who are bearing the brunt of issues like unemployment, housing, and immigration. Understanding their challenges, representing their interests.

The public service is essentially going to be systemically excluding younger voices and perspectives. That's bad. That's going to affect the policy that's made, that's going to affect what moves forward. And the thing is, because it's behind the scenes, it probably won't get as much attention. So this is a problem.

And I think that while the public service absolutely needs cuts, and there is waste to shed, there needs to be some thought put into how we do this without just excluding people in their 20s or their early 30s or the next generation coming up, because you're going to end up with these huge knowledge and perspective and lived experience gaps that will have outcomes in the real world.

But I want to go back to the 90s for a second. So when I brought up this topic in our group chat, and you mentioned it a bit here already, you said that back then, the federal government was making these big cutbacks, and they went years without new hires. There was a big age gap in the public service as a result. Can you share a little bit more about what you witnessed back then and what you think its impacts were?

Mike Moffatt: Yeah, absolutely. And keep in mind that I was only in the public service for one year in 2017, so I came as an outsider. But one of the things I always found a little bit funny is I was often either the youngest person in the room by 10 years or the oldest person in the room by 10 years. I had turned 40 in 2017. And it does make a difference because your cohort is going to have different lived experiences. They're going to be at different parts of their life.

So, for instance, I would have been one of the few people there in all these meetings who had a child in grade three. So that makes a difference. If none of your colleagues have kids in elementary school, it's going to change the amount of time you think about elementary school. Now, in the federal public service, it doesn't matter as much because we're not in charge of the schools. But those cohort things matter.

The perspective of Gen Xers like me are going to be very different than Boomers, that are going to be very different than Millennials. And you can imagine a public service, let's say, that didn't have a lot of Millennials is probably not going to think a lot about housing, right?

Now, luckily, the federal public service does have a lot of Millennials. And I can tell you somebody who still works closely with people in the federal public service, the fact that there are a lot of Millennials around, I actually think, does positively impact the way that the federal government thinks about housing. If you are a minister or a deputy minister and a large cohort of the people around you are struggling to find a home and talking about it in meetings or at the coffee shop or whatever, that's going to influence your priorities.

And I think the second potential area is that as the cohort of people older than me retires, it creates a talent vacuum, right? Because most deputy ministers are going to be between the ages of 55 and 65. Once all those folks from the early 70s reach that age, …there's not that cohort of talent to choose from to become ministers or deputy ministers. You're either choosing less talented people or you're saying, ‘you know what, this person's a little young, she's a millennial, but she's really good. So let's put her in charge of this department.’ I think it creates both challenges and opportunities when you do have this missing cohort of individuals.

Sabrina Maddeaux: Now, I'm curious if we see the same phenomenon play out in the private sector?

Mike Moffatt: Yeah, we absolutely do. And we see it on a very macro level. And there's a substantial body of evidence on this, including one really well-known paper that uses Canadian data. That paper's from 2006, and it's called The Short and Long-Term Career Effects of Graduating in a Recession. It looks at college and university grads from the 1980s and 1990s, and it compares labour market outcomes for people who graduated during a recession and those who did not.

If we look at the 80s and 90s, it was a period of big economic cycles, right, where there was an early 80s recession, then things were great. We had a massive economic boom in the late 80s. Things went to crap in the early 90s, recovered again near the end of the decade. So we have these big economic swings. So you can compare, let's say, a person who graduated in 1987 to a person who graduated in 1992 - examine those entire cohorts and say, ‘okay, is there a difference in their labour market outcomes?’ And it turns out there is.

So what the paper found was that graduating in a recession, and this is an exact quote, “Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9% of earnings in the initial stage, eventually recede, but slowly, halving within five years, but not disappearing until 10 years after graduation.”

So basically, if you graduate in a bad labour market, the next 10 years on average are not going to be great for you relative to somebody who might have graduated two or three years earlier or two or three years later, and ended up in a better labour market. So this absolutely has longer-term impacts that if you are graduating in a terrible job market, that's not just going to affect you right away, but that's going to affect you for a decade or more afterwards.

Sabrina Maddeaux: Now, I imagine this has to have broader economic impacts. We know that high youth unemployment is already costing Canada billions in GDP. And we also know that the federal public service isn't going to be hiring as many young people. And those who are on temporary contracts aren't likely to get rehired. So what are the additional ripple effects this is likely to have?

Mike Moffatt: Yeah, so it's obviously not going to be great for consumer spending. And because my consumer spending is someone else's job, there's a multiplier effect.

So if you have a lot fewer young public servants wandering around the streets of downtown Ottawa, that's not going to be great for all the lunch places and the pubs and the movie theatres and you name it, but also not great for the apartment market, not great for the condo market and so on. So absolutely, it has a multiplier effect.

Now, I haven't seen anyone attempt to estimate this, but I know we have some academic economists who watch and listen to the podcast. So if you have, please send it to us. We'd love to see it. But what we can look at is some of the research that examines the overall economic impact, beyond jobs.

So the U.S. National Bureau of Economic Research - one of the big generators of economic research in the U.S. - has a great piece summarizing the research in this area called the Life Cycle Impacts of Graduating in a Recession. And once again, we'll post in the show notes. There was a paragraph in particular that caught my eye, and I'll just summarize so we can avoid the economic jargon. But what it basically says is that entering the labour market in a recession leads to losses in earnings, wages and employment that persist for about 10 years. (So just like the previous report.)

But it also says that recent analysis suggests that an unlucky start could also have longer-term consequences. A few studies indicated that some impacts on earnings and health can persist until age 40. And the economic conditions in youth and early adulthood may even affect mortality and middle age.

So, in other words, this isn't just about the salary that somebody earns in their mid to late 20s. This research is showing that there are broader implications, including potential impacts on health and lifespan. Which makes sense - if you have a very stressful 20s, if you're not making as much money, things are more difficult for you. That has to impact your health.

A lot of economic research is figuring out things that we already intuitively know. And this is one of those things that if things are bad for people in their 20s, you know, either on an individual level or an entire cohort level, that's going to affect their health and well-being. And that's going to persist for some time.

Sabrina Maddeaux: Yeah, that makes sense to me. It reminds me of reports that came out that said shift work has long-term impacts on health. Or if you're working night shifts specifically, like that's as bad as smoking on your long-term health impacts.

And I think about younger workers and if they're working overnight, you know, maybe delivering food or as an Uber driver, or they're working all sorts of contracts and side hustles. It'd be interesting to see the long-term impacts of that on health when you don't have your standard routine and maybe you're working nights as well. Like you said, that can add up over time.

Mike Moffatt: Yeah, absolutely. And I know there's research out there about the effect of shift work on health. And so I think it's important to quantify these things. You know, I've always joked that I always wanted to start something called the Journal of the Blindingly Obvious, where we just study things that we all know are true, but we just try and quantify them, right?

It's like, you know, touching a hot stove is painful…

Sabrina Maddeaux: But just how painful?

Mike Moffatt: Just how painful! It's important to quantify those effects. And it does…matter for public policy because we want to make sure that we are focusing every dollar we can, having the biggest outcome. So these effects do matter.

But yeah, I do get a bit of a laugh when I read this research, and as a lay person, you're going, like, ‘Well, okay, of course, I do really need to study that?’

Now, I actually wanna raise another potential unintended consequence of all this. And young people are struggling, and older workers can be seen as hoarding jobs. This was a big thing when I was growing up as a Gen Xer; we kept hearing like, ‘Oh, we're never gonna be able to get jobs because Boomers took them all.’ And that wasn't true, but at the same time, we did have some difficulties, those of us who graduated in the early 90s. So, I know that viewpoint's out there - it's persisted for a while.

And even though the story of the Carny cutbacks and the shrinking of the public service really isn't a unionization story, it's more of an attrition story, if I go on Reddit - which I know is a dangerous thing to do, but I do it anyway - I see young folks on there blaming the last-in first-out nature of the unionized workforces as why they can't get into the public service, or why their six month contract isn't leading to something more permanent.

So, as a Millennial who's tuned into what younger Canadians are feeling, how do you think this wave of job losses in both the public and private sectors might change the way that Gen Z and Millennials view our labour market institutions like unions?

Sabrina Maddeaux: It will have an impact.

And I think there's already been an impact over the last, I'd say, 15 years now, because I graduated during the Great Recession. So, I was one of those young people who went into a really rough job market, and there were similar feelings that, you know, older workers weren't choosing to retire or they'd stay on and consult. And so there was a feeling that, yeah, older generations were hoarding some of the jobs. And then this led to a lot of people in my age group, including myself, being freelancers for a long time, working contract jobs and having a really tough time getting those full-time jobs that had a bit more security with benefits and especially in unionized environments.

My background is obviously media journalism, where a lot of those newsrooms are unionized. And I've been a part of some of those unions throughout my career, and I've freelanced for places that have unions. And it's been difficult because of last-in, first-out. You are the first to go when there are layoffs. And that's frustrating, especially when you look at sometimes, you know, older workers who have been there a long time, whose skills don't always keep up with the times. And those are the jobs that are protected, and they're likely also making significantly more than you.

I actually wrote about this in a column for the National Post a couple of years ago, and maybe we can link to it in the show notes, that it's something unions have to think about if they want to continue to have the level of support amongst the Canadian public that they've enjoyed over the last little while. Because if younger Canadians and workers feel that unions aren't protecting their interests and are actually, in some cases, working against them, that's going to affect public support, which will then affect political support. And when you have things like strike negotiations, that's going to be problematic for them.

And I think young people instinctively like the idea of organized labour in unions for the most part, but the reality is we're getting screwed over by a lot of them. And there are also a lot of things like even if you're contributing as a freelancer or on a contract, unions sometimes have stipulations that you can only do a certain amount of work or a certain number of hours, or you can't do this and you can't do that. So you're running into so many walls already on the employment market and just trying to get a foothold for future economic opportunity. And then you have unions a lot of the time saying, ‘well, you can't do this and you can't do that. And sorry, you can't make this type of money. And sorry, you're the first one to lose your job.’ So it is a big problem, and it's something that needs to be addressed. And if it's not, I think that, yeah, support will continue to plummet. And yeah, there will be consequences for unions as a result.

Now, I want to ask you this as a wrap-up. If you were advising the Carney government on how to actually achieve meaningful public service reform, not just easy cuts like we've been talking about, what would you tell them? How would you balance fiscal responsibility, which we absolutely do need, but without sacrificing an entire generation of public servants?

Mike Moffatt: Yeah, it is a tough, tough challenge to be sure. And I do think that the focus should be on right-sizing the government and making sure that every dollar is spent as effectively as possible. But I don't think these things have to be at odds with each other.

I certainly think we can look at things like voluntary buyouts, early retirements, things like that, which can accomplish a couple of things at once. First, it can reduce the size of the public service, but also still allow us to get some fresh, young blood in there, some new ideas and so on.

I know that if the government tried this, the headline in the newspapers would be, 20,000 public servants get golden parachutes or what have you. But I think in the long run, it can end up saving money because you're hiring younger workers and allowing for a broader cohort of people.

Sabrina Maddeaux: So you don't have a lot of people who are all sharing the same birth year. It strikes me the same way I was talking about unions, that if you have young people shut out of unions, they're not going to support unions. If you have young people shut out of the public service, that's going to probably lead to less support for the public service and more resentment towards it in the long run. So it's a larger issue that does need to be solved.

But that's our time for today. So thank you, everyone, so much for watching and listening and to our producer, Meredith Martin.

Mike Moffatt: And if you have any thoughts or questions about being a public servant born in the 1970s, please send us an email to [email protected]

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