Right Talent, Wrong Time: Canadian Youth in the Workforce
In December 2025, the Canadian economy added just over 8,000 jobs. After a year marked by rising unemployment and economic uncertainty, economists diagnosed the labour market as choppy but recovering, and the figure suggested a modest turn.
The composition of those gains, however, told a more troubling story. Workers 55 and older claimed roughly 33,000 new positions, while young people between fifteen and twenty-four lost 27,000. Youth unemployment sat at 13.3 per cent, more than double the national average, and the recovery suddenly felt less like an expansion than a migration; opportunity was shifting towards those who already had it, and receding from those arriving at the door.
To any young person today, these facts come as no surprise. Job listings draw hundreds of applicants within hours; networking has become an expectation. By conventional measures, today’s graduates are more credentialed than ever, but entry-level work has thinned. Competition crowds even the most modest of postings, and while Gen Z is educated, fluent in the language of resumes and LinkedIn, we remain employable in theory, not practice.
National youth unemployment reached 14.7 per cent in September, and averaged as high as 17.9 per cent through the summer of 2025.
According to Desjardins’ economists, teen unemployment should have ran more than a full percentage point lower than it did, but the shock had concentrated almost entirely on the youngest workers. Meanwhile, for those twenty-five and older, unemployment has tracked better than models would predict, painting an unfortunate irony for those just starting out. What this suggests is that the problem was more than just a weak cycle, but a structural reallocation of unemployment in Canada’s labour market. Over the past half-century, each downswing in youth employment has correlated directly with an economic recession. What makes the current moment strange, consequently, is that rates have risen steadily for three consecutive years, despite the absence of a technical recession since 2020.
That’s to say that the 2025 job market faced a unique set of circumstances, much to the chagrin of young Canadians.
Why the Door Is Jammed
The reasons, however, are multifaceted. On the supply side, the youth labour pool expanded faster than the market could absorb, and in the post-pandemic rebound, relaxed work restrictions for non-permanent residents drove a sharp rise in labour force participation amongst those aged twenty to twenty-four. Many entered retail, hospitality, and food services, all sectors that faced acute shortages at the time. But as consumer demand softened and hiring pulled back amidst trade uncertainty, the inflow of workers began to outpace the creation of vacancies. Entry-level labour accumulated faster than it could be placed, and the job-finding rate for new entrants weakened accordingly.
On the demand side, firms grew increasingly reluctant to let experienced workers go (e.g., labour hoarding), and rather than laying off seasoned employees during periods of slow growth, employers cut back on recruitment instead. The effect was a rising hiring threshold. Entry-level postings declined, permanent roles gave way to temporary and part-time contracts, and the bottom rung of the ladder slowly gave out. Coinciding with deepening uncertainty around U.S. trade policy has only accelerated the pullback. Youth, who depended almost entirely on external hiring, bore the heaviest share of that cost. The epidemic of ghost hiring also rubbed salt in the wound. Under this context, education, it turns out, no longer appears to insulate the way it once did. The degree-to-job pipeline, long held as the implicit promise of higher learning, is still struggling against “credential inflation.” The difficulty occurs where faith is strained in the value of diplomas.
Finally, artificial intelligence continues to grow. As far as employment goes, its effects remain genuinely uncertain, yet in the short term, adoption has proven harder on productivity than many anticipated. In occupations most exposed to automation, though, experienced workers have held their ground while losses have gathered among early-career employees in routine and administrative roles. Whether that trend deepens as the technology matures remains to be seen. For now, it’s just another reason for Gen Z to be anxious, a group already facing plenty to worry about.
The Scar That Lingers
Unemployment also leaves a mark that extends well beyond financial statements and government reports. It shapes earnings, social mobility, and the very trajectory of our generation's future; behind the figures are people, absorbing the weight of conditions they did not create.
Research on labour market scarring is unambiguous on this point. Graduates who enter weak hiring environments suffer an average first-year earnings penalty of roughly nine percent, and the wage gap that opens tends to persist for up to a decade. At a broader level, this means constrained career mobility and pressures on income distribution that ripple well beyond any business cycle. In short, a bottleneck at the point of entry does not stay there.
Worth noting too is that 59 per cent of Canadians expect the employment situation to worsen in 2026. On current evidence, that pessimism is not difficult to understand, and even globally, youth unemployment has peaked from China at 18.9 per cent in August, to Nepal at 20 per cent in September.
For many young Canadians, and youth at large, this is a moment of right talent, wrong time. It’s a generation arriving with skills in hand, only to find the door jammed by forces beyond their control. Whether that door widens again will shape not just individual careers, but the long arc of Canada’s economic future.