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Ontario youth unemployment rivals EU, U.S. Rust Belt: report

Finding work for a lost generation
They have been called, ‘The Lost Generation’, the young people across Europe who cannot find work. In some countries the figures for youth unemployment are reaching record highs. Can a treasure trove of around six billion euros ease the situation and offer the young a hope for the future? That is the amount available in the EU’s Youth Guarantee scheme. How will it work and just who is going to benefit? In this edition of Real Economy we get some of the answers.

Toronto parents of young adults can expect their kids to be living at home a lot longer given the bleak employment picture in Canada’s largest city.

A new report says the employment rate for people aged 15 to 24 is 43.5 per cent in Toronto, the worst of any region in Ontario.

Toronto also has the greatest gap between youth and adult employment in the province, at 21 per cent.

“In Toronto, the youth joblessness problem is so bad, it’s driving that city’s overall unemployment and employment rates, both of which are tracking worse than the national rate,” says the report from the Canadian Centre for Policy Alternatives.

Other cities with high youth unemployment include Windsor, Oshawa, Brantford and London, with rates above 20 per cent. The lowest rates of unemployment in the province were in Sudbury, Waterloo Region and Hamilton, between 13 and 14 per cent.

The report, which uses data from Statistics Canada’s Labour Force Survey, focuses on Ontario’s employment picture, but compares it to other regions. It says Ontario’s youth unemployment rate fluctuated between 16 and 17 per cent so far this year, which is higher than the Canadian youth unemployment rate of between 13.5 and 14.5 per cent.

It’s also higher than American states such as Indiana, Minnesota, Ohio, Pennsylvania and Wisconsin. Illinois and New York are worse off, with youth unemployment rates of around 18 per cent, the report says.

“The big story is that five years after the Great Recession, youth remain largely shut out of Ontario’s slow economic recovery,” writes the study's author, University of Waterloo doctoral candidate Sean Geobey. “The Help Wanted signs might have re-emerged, but Ontario’s young workers find themselves on the outside looking in — and the province’s current youth employment strategy isn’t fast enough nor robust enough to turn things around.”

Skeptics might argue today’s teenagers are more reluctant to get a job, and more reliant on their parents so don’t need one. There’s also the growing number of 20-somethings that are pursuing graduate degrees to beef up their credentials in response to the job shortage.

Still, the report argues youth unemployment is worse now that before the recession, with young workers are twice as likely to be laid off as adult workers.

What’s more, younger workers are the first to be laid off in a market downturn and competing with older workers that are staying in the workforce past planned retirement dates.

Why is Ontario struggling?

“These are the cyclical elements of the macro economy, where young workers feel the greatest impact,” the report says.

Ontario has been harder hit than other provinces because of the shift towards a resource economy, which creates more jobs in Western Canada, and away from manufacturing, which has been a cornerstone of Ontario’s economy.

The report follows a flurry of recent studies examining the youth unemployment picture, including one from CIBC economist Benjamin Tal showing higher education "may be a necessary condition for a good job in Canada, but it is no longer a sufficient condition."

Tal's report, released in late August, shows a narrowing employment and earnings premiums for students that go on to higher education after high school.

"Canada is experiencing an excess supply of post-secondary graduates. And the risk attached to the investment on that education has never been higher," Tal says.

That has an impact on the overall economy, particularly given that young people without a job aren't buying homes, cars or other big-ticket items that help to drive economic growth.

Living at home with parents is also on the increase for people in their twenties. StatsCan’s 2011 census data shows 42 per cent of adults aged 20 to 29 are living with their parents, well above 1981’s level of nearly 27 per cent.

It seems parents waiting for an empty nest will have to keep waiting, especially in Ontario.