Canada's population skyrocketed, and so is (youth) unemployment (for now)

Canada took immigration to the max, and now entry-level jobs are scarcer than anyone would like . . . are we like Canada?

• A headline gets passed the censors!

• Canada’s rising youth unemployment, coinciding with Canada’s rising youth immigration—could it be a saturation point?

• A post-national quest for “no core identity” is firing on all cylinders

• Is Canada a peek at what’s next? Is California the first Canadian among us?

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Canada’s youth unemployment a sign of what’s to come?

Every now and again, a headline escapes containment, and you wonder whether the editor was on vacation or something.

I mean, how did this get past the censors at Bloomberg?!

“Cheap foreign labor soars . . . as young workers are left jobless!”

What is this, 1920?!

Normally, an observation (let alone suggestion) that immigration poses any tradeoffs is basically blasphemy, in the sense that it’s festooned with social and cultural taboos, as to make it unmentionable. If you said “soaring foreign labor is leaving workers jobless,” in most public places, people would nervously look around, to make sure no one has overheard.¹

So, Random Walk appreciates the break from tradition, if only for a moment. Taboos are where the fun’s at.

As for the story itself, it’s interesting because it presents an obvious question: is Canada giving us an early preview of what’s around the corner?

An historically large surge of immigrants is making entry-level jobs hard to come by

The gist of the article is pretty straightforward: a massive surge of immigrants has created a surplus of workers, that is leaving both newcomers and (young) Canadians looking for work:

Entry-level jobs for students and recent graduates are much harder to find as the economy weakens, yet the country has also imported hundreds of thousands of temporary foreign workers for jobs, many of them in the food and retail sectors.

That’s contributing to a soaring rate of youth unemployment. Two years ago, the jobless rate for people 15 to 24 years old was a little over 9%. Now it’s 14.2% — the highest level in more than a decade outside of the Covid-19 pandemic.

For younger immigrants — those who’ve landed in Canada in the past five years — the unemployment rate is around 23%.

An analysis of government data by Bloomberg News shows explosive growth in the number of temporary foreign workers in food and retail over the past five years. The number of them approved to work in those two sectors jumped 211% between 2019 and 2023.

A 211% increase in temporary work permits to immigrants, mostly for entry-level jobs, has brought the youth unemployment rate in Canada back to post GFC highs.

This is what Canada’s youth unemployment looks like now:

Bloomberg

At just under 15%, unemployment has risen pretty dramatically in the past two-years.

Note that all unemployment in Canada is above-trend, but only youth unemployment can fairly be described as “skyrocketing”:

Canada statistics

Both “core” and “total” unemployment have risen above their 2017-2019 averages.

Back to the story. The rise in youth unemployment seems pretty well attributable (at least in part) to a substantial rise in youths.

Canada went from adding basically no young workers, to having young workers constitute ~33% of net-additions to the labor force:

That’s ~38K new young workers in the last month alone—up from negative 2K in the month before the pandemic.

Surge in supply, meets static demand, and unemployment ensues (for now).

Canada’s quest for “no core identity”

The growth in young workers is obviously not the result of a Canadian babyboom that kicked off in 2007, such that a bumper crop of 15 year olds suddenly came of age.

That would be silly. Canada is getting old and forgot to make babies too. The added labor supply is almost entirely via immigration.

In general, Canada’s population is growing more quickly than it has since the early 70’s (but really since the 40s):