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Economic Viewpoint

Why Has the Youth Unemployment Rate Increased By So Much, So Fast?

September 4, 2025
Kari Norman, Economist • LJ Valencia, Economist • Randall Bartlett, Deputy Chief Economist

Highlights

  • Despite the relative resilience of the Canadian labour market in the face of trade war uncertainty, the youth unemployment rate has spiked. The increase has been particularly pronounced among Canada’s youngest workers.
  • Current economic weakness helps to explain part of the recent rise in the youth unemployment rate. But it doesn’t explain all of it. The sharp rise in Canada’s population of young, temporary residents since the pandemic has also played a role. The changing nature of work in sectors where youth comprise a large share of the labour force, including in the growing gig economy, likely has as well. Rising labour costs in these sectors resulting from increased minimum wages may have also caused some companies to invest in labour-saving technology, which paradoxically has raised the median real earnings of Canada’s youngest workers.
  • Federal and provincial employment programs may help improve labour market outcomes for youth. Stronger integration between various levels of government, as well as between governments, post-secondary institutions and employers, could give Canadian youth more of the training and early experience they need to succeed in today’s labour market.
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