Canadian youth and full-time work: A slower transition

Families across the country often discuss the job prospects of young people and how these prospects have changed since the days of their parents and grandparents. These conversations can be full of anecdotes and questions about generations past. How have the employment opportunities of young women changed since Canada's Centennial in 1967? Can a young man still follow in his father's footsteps and get a full-time job out of school? Can young people expect to make more than their parents did when they were young?

This month's edition of Canadian Megatrends takes a more empirical approach to some of these questions, looking at labour force participation, unemployment, full-time and part-time work, and real wages for workers in Canada from 1946 to 2015.

The transitions to the labour force have slowed as young people spend more time in school or training, and then enter a workforce that has changed significantly over seven decades.

Youth participation in the labour force has changed remarkably over time Since the 1940s, Canadian youth aged 24 and younger have participated in the working world at a very different rate than older adults. From 1946 to 2015, the youth labour force participation rate (those who are employed or seeking employment) has varied from a low of 47.6% in 1964 to a high of 71.2% in 1989. Description for Chart 1 Participation rate by age group, 1946 to 2015 Year 15 to 24 years 25 years and older percent 1946 57.3 54.2 1947 57.2 54.1 1948 56.1 54.1 1949 57.1 53.7 1950 55.7 53.0 1951 55.9 53.0 1952 54.9 53.0 1953 54.5 52.7 1954 53.8 52.6 1955 53.0 52.9 1956 53.1 53.6 1957 52.5 54.5 1958 51.6 54.6 1959 50.4 54.8 1960 50.3 55.4 1961 49.2 55.6 1962 48.3 55.7 1963 47.8 55.9 1964 47.6 56.3 1965 48.1 56.7 1966 56.2 57.6 1967 56.6 58.0 1968 56.5 58.0 1969 56.4 58.3 1970 56.0 58.4 1971 56.7 58.6 1972 58.1 58.8 1973 60.5 59.5 1974 62.5 59.8 1975 62.9 60.5 1976 63.6 60.8 1977 64.6 60.9 1978 65.6 61.7 1979 67.4 62.3 1980 68.6 62.8 1981 69.3 63.6 1982 67.3 63.4 1983 67.6 63.8 1984 68.0 64.2 1985 68.6 64.8 1986 69.7 65.1 1987 70.3 65.5 1988 70.6 65.9 1989 71.2 66.3 1990 69.9 66.5 1991 68.1 66.2 1992 66.2 65.6 1993 64.4 65.5 1994 63.9 65.4 1995 63.2 65.2 1996 62.2 65.2 1997 61.5 65.6 1998 61.8 65.8 1999 63.5 65.9 2000 64.4 66.0 2001 64.7 66.2 2002 66.5 66.9 2003 67.3 67.6 2004 66.8 67.6 2005 65.9 67.4 2006 66.2 67.2 2007 67.0 67.5 2008 67.3 67.6 2009 65.3 67.4 2010 64.5 67.4 2011 64.5 67.1 2012 63.5 67.1 2013 63.8 66.9 2014 64.2 66.3 2015 64.2 66.1 While adults aged 25 and older joined the labour force at a fairly steady rate from 1946 to 2015, the participation rate of young people was much less stable during this time. Following the Second World War, the proportion of youth aged 14 to 24 who were either working or seeking employment declined steadily for almost two decades, from 57.3% in 1946 to 47.6% in 1964. This decrease coincided with all provinces raising their school-leaving ages. In 1965, Canada stopped including 14-year-olds in the Labour Force Survey. Following this change, the labour force participation rate for youth rose sharply, jumping from 48.1% in 1965 to 56.5% in 1966. After plateauing during the rest of the 1960s, youth participation increased again in the 1970s, so that in 1981, almost 7 in 10 Canadians aged 15 to 24 (69.3%) were either employed or looking for work. Youth labour force participation reached its highest point in 1989, peaking at 71.2%. The increase observed from the mid-1960s to the late 1980s was driven mainly by the growing entry of young women in the labour market, which in turn was fostered by the growing importance of service sector jobs and changes in women's attitudes towards family and work. Following the 1990–1992 recession and the ensuing slack labour market that persisted until the late 1990s, participation declined, falling back to the same levels observed in the mid-1970s. The turn of the millennium saw young people initially returning to the labour force, then stepping back slightly after the recession of 2008–2009. However, youth participation in the labour force was fairly steady through the 2000s and 2010s, staying close to the levels of the early 1990s and mid-1970s.

Youth unemployment always higher However, participation rates are only one part of young people's experience of the labour market. A second major factor is whether youth are able to find employment once they enter the workforce. The youth unemployment rate varied widely from 1946 to 2015. Relatively low until the mid-1950s, it climbed 5.9 percentage points from 1956 to 1958, peaking at 11.1%. While youth unemployment briefly dropped below 6% again in 1966 (5.6%), it was back up to 11.1% in 1971. The unemployment rate for workers aged 15 to 24 rose further during the 1970s as the relatively large cohorts of baby boomers entered the labour market. Following the 1981–1982 recession, youth unemployment reached its highest point in 1983, when 19.2% of young workers were unemployed. The recovery of the Canadian economy from 1984 to 1989 led to a steady decline in youth unemployment through the rest of the 1980s. Youth unemployment rose in the early 1990s after the 1990–1992 recession, and again following the 2008–2009 recession. From 1990 to 2015, it remained between 17.2% (1992 and 1993) and 11.2% (2007). The levels following the 2008–2009 recession were similar to those observed in the mid-1970s. Description for Chart 2 Unemployment rate by age group, 1946 to 2015 Year 15 to 24 years 25 years and older percent 1946 4.9 2.8 1947 3.4 1.8 1948 3.8 1.8 1949 4.5 2.2 1950 5.6 3.0 1951 4.0 1.9 1952 4.6 2.4 1953 4.6 2.5 1954 6.9 3.9 1955 6.7 3.7 1956 5.2 2.9 1957 7.3 3.9 1958 11.1 5.9 1959 9.4 5.0 1960 11.0 5.8 1961 10.9 6.1 1962 9.4 4.9 1963 9.3 4.4 1964 8.0 3.7 1965 6.5 3.1 1966 5.6 2.6 1967 6.5 2.9 1968 7.7 3.4 1969 7.5 3.4 1970 10.0 4.2 1971 11.1 4.5 1972 10.9 4.6 1973 9.6 4.1 1974 9.3 3.9 1975 12.0 5.0 1976 12.4 5.1 1977 13.8 5.8 1978 14.0 6.2 1979 12.7 5.6 1980 12.8 5.5 1981 12.8 5.7 1982 18.2 8.6 1983 19.2 9.6 1984 17.4 9.4 1985 15.8 8.9 1986 14.7 8.1 1987 13.2 7.6 1988 11.5 6.8 1989 10.9 6.7 1990 12.3 7.1 1991 15.8 9.1 1992 17.2 9.9 1993 17.2 10.2 1994 15.9 9.3 1995 14.8 8.4 1996 15.4 8.5 1997 16.3 7.7 1998 15.1 7.0 1999 14.1 6.3 2000 12.7 5.7 2001 12.9 6.1 2002 13.6 6.5 2003 13.6 6.4 2004 13.4 5.9 2005 12.4 5.7 2006 11.7 5.3 2007 11.2 5.0 2008 11.6 5.1 2009 15.4 7.0 2010 14.9 6.8 2011 14.3 6.3 2012 14.4 6.0 2013 13.7 5.9 2014 13.5 5.8 2015 13.2 5.8 Regardless of the period considered, the youth unemployment rate has always been higher than the unemployment rate of older workers. The difference reflects a variety of factors. Whenever firms implement layoffs based on seniority rules, young workers are more likely to lose their job than their older counterparts. In addition, young workers are overrepresented in small firms, which tend to have higher-than-average layoff rates. Finally, at the beginning of their career, young workers change jobs more often than older workers, looking for a position whose requirements fit their skills. Such job searches sometimes entail some unemployment. The result is that from 1946 to 2015, the youth unemployment rate followed similar patterns to the unemployment rate of older workers, but was always at least 1.6 times higher. The greatest disparities between the unemployment rates of youth and older workers occurred in the mid-1970s—when young people were just over 2.5 times as likely to be unemployed as older adults—and in 2012, when youth unemployment was 2.4 times higher than the rate for older workers. Description for Chart 3 Ratio of youth unemployment rate to the unemployment rate of older workers, 1946 to 2015 Year Ratio 1946 1.75 1947 1.89 1948 2.11 1949 2.05 1950 1.87 1951 2.11 1952 1.92 1953 1.84 1954 1.77 1955 1.81 1956 1.79 1957 1.87 1958 1.88 1959 1.88 1960 1.90 1961 1.79 1962 1.92 1963 2.11 1964 2.16 1965 2.10 1966 2.15 1967 2.24 1968 2.26 1969 2.21 1970 2.38 1971 2.47 1972 2.37 1973 2.34 1974 2.38 1975 2.40 1976 2.43 1977 2.38 1978 2.26 1979 2.27 1980 2.33 1981 2.25 1982 2.12 1983 2.00 1984 1.85 1985 1.78 1986 1.81 1987 1.74 1988 1.69 1989 1.63 1990 1.73 1991 1.74 1992 1.74 1993 1.69 1994 1.71 1995 1.76 1996 1.81 1997 2.12 1998 2.16 1999 2.24 2000 2.23 2001 2.11 2002 2.09 2003 2.13 2004 2.27 2005 2.18 2006 2.21 2007 2.24 2008 2.27 2009 2.20 2010 2.19 2011 2.27 2012 2.40 2013 2.32 2014 2.33 2015 2.28

Young people increasingly likely to hold part-time jobs In the mid-1970s, it was more common for young individuals who were not full-time students to be employed full time (i.e. in jobs that involve at least 30 hours per week). From 1976 to 1978, the full-time employment rate—the percentage of the population with a full-time job—averaged 76% for men aged 17 to 24 and 58% for women in the same age group who were not in school full time. By the mid-2010s, i.e. from the beginning of 2014 to the third quarter of 2016, the corresponding percentages were 59% for men and 49% for women. The drop in full-time employment rates among non-full-time students was already apparent in the late 1990s and thus originated long before the 2008–2009 recession. Individuals aged 17 to 24, both with and without a university degree, experienced a substantial decline in full-time employment from the late 1970s to the mid-2010s. The decline in full-time employment rates among youth was driven mainly by gains in part-time employment rather than by decreases in labour force participation or higher unemployment. In other words, young people were more likely to work in part-time positions, often involuntarily, rather than be unemployed or leave the labour force.

Wages decreasing for youth with full-time jobs Among those young workers with full-time jobs, wages varied substantially from the 1980s to the 2010s. The median hourly wage (in constant dollars) earned by youth aged 17 to 24 with full-time jobs declined steadily from 1981 to 1998, following similar patterns for both young men and young women. At the lowest point, in 1998, young men with full-time jobs earned 22.2% less than their predecessors in 1981, while young women were paid 18.8% less than young women in 1981. Wages for this cohort improved unevenly over the 2000s and early 2010s, increasing around 2004 as world oil prices increased, the housing boom intensified and general economic activity gained momentum. However, this increase did not offset the losses in the 1980s and 1990s. In 2015, full-time wages for male workers aged 17 to 24 were 11.2% lower than in 1981, while wages for their female counterparts were 3.0% lower. Slightly older workers—those aged 25 to 34—had a different experience over this time, especially women. While full-time wages for women aged 25 to 34 stagnated from 1981 to the mid-1990s, they began to climb steadily in 1997, reflecting strong growth in educational attainment and the move to better-paying occupations. Meanwhile, full-time wages for men aged 25 to 34 dropped through the 1980s and first half of the 1990s, then were stagnant until 2005. It was not until 2013 that men in this age group earned the same real wages as men of the same age in 1981. In 2015, this group's wages were 2.1% higher than they had been in 1981.

Oil-producing provinces remained an exception There is a notable exception to the trend. From the late 1990s to the mid-2010s, median wages grew much more in the three oil-producing provinces of Newfoundland and Labrador, Saskatchewan, and Alberta than they did in Ontario. Spillover effects of the oil boom accounted for a substantial portion of these interprovincial differences in wage growth. Up until the middle of 2015, full-time employment rates also evolved much more favourably in these three provinces than they did elsewhere in Canada.