Ask The Hub
Ask The Hub The article blames immigration and minimum wage hikes. Are these the only possible explanations for youth unemployment, or are there other factors to consider? How might the widening gap between youth and adult unemployment rates impact Canada's future economic growth and social stability? What policy changes, beyond adjusting immigration levels and minimum wages, could the Canadian government implement to address the youth unemployment crisis?
In 2025, 437,000 young Canadians were looking for work and couldn’t find it, a 57 percent increase in joblessness for the demographic of 15 to 24 years old over just three years. The average young person spent an average of about 16 weeks searching for a new job in 2025, up nearly a month and a half from 2022. Canada’s youth unemployment rate hit 19.5 percent for 15- to 19-year-olds, a level that has historically only appeared during severe recessions—yet the broader economy was not in recession, but growing at an anemic 1.7 percent of real GDP. Those are the central findings of a new Fraser Institute report that describes the surge in youth joblessness since 2022 as unprecedented in Canada’s modern labour market history. The report, authored by Philip Cross, former chief economic analyst at Statistics Canada, outlines that the unemployment rate for Canadians aged 15 to 24 climbed from a record low of 10 percent in 2022 to 13.8 percent in 2025, a pace of increase that exceeded the early years of every recession since the 1980s. The gap between youth unemployment and adult unemployment (5.7 percent) reached 8.1 percentage points, approaching an all-time high outside of severe downturns. Meanwhile, with American youth unemployment held near a historic low of 10 percent, Canada’s rate diverged to its widest gap with the U.S. on record outside of the late-1990s tech boom and the pandemic. This is a divergence that, Cross argued, rules out global trends as explanations and points instead to Canadian policy choices. Immigration and minimum wages, two culprits Cross argues that two interlocking policy failures explain the current crisis. First, a dramatic expansion of immigration, particularly non-permanent residents and foreign students, flooded entry-level labour markets. Permanent immigration targets rose 89 percent in a decade, while non-permanent residents reached four times the level of permanent immigration. The youth population grew 14.3 percent between 2021 and 2025, primarily driven by immigration. The second cause Cross found was aggressive minimum wage increases across all provinces, with the average rising 124.5 percent between 2005 and 2024. This locked in high labour costs precisely when an influx of new workers should have caused wages to adjust downward. Kari Norman, senior economist at Desjardins, explained to The Hub that upon the pandemic ending, Canadian businesses had an extremely high demand for workers. “The government responded by bringing in more international students with work permits and temporary foreign workers. However, as economic activity normalized, the result was rising unemployment, particularly for youth who typically have the lowest seniority and least experience.” The supply-demand mismatch hit these least-experienced Canadian workers hardest. Retail trade and accommodation and food services, accounting for 70 percent of youth jobs, saw youth employment fall 4.6 percent despite those industries hiring 7.4 percent more adults in that same timeframe. Economists agree on immigration as key driver Pierre Fortin, economist and professor at Université du Québec à Montréal (UQAM), has independently reached similar conclusions. He found that the number of recently arrived immigrant adults in Quebec’s labour force nearly quadrupled between 2016 and 2025, from roughly 135,000 to approximately 500,000. This created an excessive rise in unemployment, hitting both young people and newcomers caught in a congested entry-level market. “The key point is that you do not observe the same large increase in 15–24 unemployment in the U.S. or among the 25-plus Canadian labour force, so that leaves the migratory explosion as the only distinguishing candidate for an explanation,” Fortin told The Hub. Norman noted that teens are bearing the brunt of the crisis this year, with their unemployment rate hitting 20.2 percent in the first quarter of 2026. “The [valuable] skills they get from these early career experiences are quite different from those they learn in school.” A shrinking entry-level jobs market The current picture doesn’t look all that promising for a recovery in jobs for Canadian youth. According to Statistics Canada, job vacancies stood at approximately 495,000 in the fourth quarter of 2025, down sharply from a peak of nearly 986,000 in mid-2022. Vacancies requiring only a high school diploma fell the most steeply, accounting for nearly half the total decline—precisely the jobs young Canadians and new immigrants compete for. By October of last year, there were 3.3 unemployed Canadians for every job opening. Parisa Mahboubi, associate director of research at the C.D. Howe Institute, agrees that weak labour demand is the dominant force. “Entry-level job growth has not kept pace with the number of young people looking for work, and as hiring softens, employers become more selective, typically favouring more experienced workers.” She told The Hub that Canadians should not expect a full recovery any time soon. “Job search durations have lengthened, making the transition from school to work more difficult. Even if cyclical, these delays can have lasting effects on early-career outcomes.” A mixed policy signal The Carney government’s approach to the Temporary Foreign Worker Program (TFWP) has sent contradictory signals. Work permit issuances fell roughly 50 percent in the first half of 2025, and Prime Minister Mark Carney called for a “focused approach” targeting specific sectors. Yet as of April of this year, the government simultaneously expanded the program for rural employers, raising the cap on low-wage positions from 10 percent to 15 percent of a workplace’s workforce through March 2027. Mahboubi believes that reducing immigration levels should open up spaces in the entry-level labour markets for Canadian youth, but warns that it addresses only part of a complex issue, including waiting to hire due to the economic slowdown, AI disruption, and trade uncertainty. For Cross, the lesson from the data is mostly structural. Federal and provincial policies that expanded labour supply while ballooning minimum wages prevented market adjustment, ultimately failing many Canadian youth unemployed today.