Youth unemployment surges across Canada

Commentary
By Philip Cross

In recent years in Canada, youth unemployment has grown at an unprecedented rate for an economy not in recession. In 2025, 437,000 people aged 15 to 24 looked for but could not find a job, up 57 per cent from 290,000 in 2022. The unemployment rate for youths jumped from 10.0 per cent in 2022 to 13.8 per cent in 2025.

In a new study published by the Fraser Institute, I explain how this surge in youth unemployment is exceptional in several ways.

First, it reverses a long downward trend that began in the early 1990s. Young people usually have higher unemployment than everyone else, but their 10 per cent unemployment rate in 2022 was the lowest on record since the modern Labour Force Survey was introduced in 1976. The rapid growth of youth unemployment since 2022 is also without precedent in a growing Canadian economy. For teenagers, the increase has exceeded those during the recessions starting in 1981, 1990 and 2008. As a result, youth joblessness is at a level normally associated with severe recessions, and the difference between young people’s unemployment rate and adults’ is near a record high.

Young people’s unemployment spells are also lasting longer—at a time when the average duration of adult joblessness is little changed. With both the incidence and duration of youth unemployment rising, in 2025 young people represented more than one-quarter of all unemployed Canadians, which is nearly double their weight in the working-age population.

Finally, the surge of youth unemployment is specific to Canada; the U.S. rate for youths remains close to historic lows.

The unique speed and severity of rising unemployment among Canada’s young people argues against global factors, including new technologies such as artificial intelligence or telework being its cause (they’re being introduced everywhere). It’s also a myth that young people today lack the skills or personal traits required by employers. Jobs for young people continue to grow robustly where the overall economy remains strong. In Alberta, for example, youth employment rose faster than for adults between 2022 and 2025, led by a 15.6 per cent increase for teenagers. It helps that Alberta’s minimum wage of $15 an hour is the lowest in Canada.

Instead, rising youth unemployment can mostly be attributed to government policies that expanded labour supply while preventing the labour market from adjusting efficiently. Ottawa raised immigration quotas after 2020, especially for non-permanent residents, and loosened restrictions on the work week of foreign students. The resulting increase in the supply of labour put downward pressure on wages. If wages had been allowed to fall, that would have stimulated labour demand and rebalanced the market. But that normal adjustment—an increase in supply causing a reduction in wages that induces offsetting demand—was short-circuited by higher minimum wages in all provinces. On average, governments more than doubled the minimum wage over the past two decades. Because young workers typically have lower productivity than workers who have been on the job longer, higher minimum wages disproportionately reduce their job opportunities.

For years, the negative impact of rising minimum wages was obscured by the long time it often takes firms to adjust their inputs of labour and capital, and by a buoyant labour market, in which young people’s employment rate hit a cyclical peak in 2022. The damage became apparent, however, when the labour supply shock changed labour market conditions.

Since 2022, youth employment has been particularly weak in retail trade and accommodation and food services, the two largest employers of young people and the two industries that hire the most minimum-wage workers. Tellingly, these industries nevertheless continued to hire more adults, and youth employment continues to grow rapidly outside them.

The word “crisis” is overused but it does aptly describe Canada’s current labour market for young people. We've never seen their labour market situation deteriorate so rapidly and diverge so markedly from what adults are experiencing. But this very real problem for young people largely results from government policies that ignored perfectly predictable negative effects that could end up scarring them for the rest of their lives.