The Grad Gap

Today’s Labour Force Survey release from Statistics Canada showed there was little change in the labour market between February and March but there’s a longer term trend that I’m keeping an eye on. It’s graduation season at universities and colleges, and things are tough out there for young workers.

This chart shows the rate of unemployment for new university grads, relative to the overall population. As you can see, back in the 1990s, recent grads had a lower unemployment rate. But it’s been getting steadily harder for new grads to find work, and for most of the past 20 years, recent grads have been unemployed at a higher rate than the overall population.
And it has gotten even worse since the pandemic. The average gap is almost a full percentage point higher now than it was in the years leading up to 2020.

The long-term trend isn’t about any short-term factors like geopolitics or AI. There’s something structural that’s been happening for a long time. The data released today showed a small uptick in grad unemployment.

Policymakers need to understand what’s driving this trend and think about ways to correct it. It’s not good for the economy if freshly educated, energetic young people can’t find work.

Last year at HUMA, Shield presented some preliminary ideas like bridging the gap between learning and earning, modernizing hiring and labour market systems and making good jobs that utilize the skills our system has as potential policy responses to these trends.