Higher Education Strategy Associates

Tag Archives: Youth Employment

December 07

Two (Relatively) Good News Studies

A quick summary of two studies that came out this week which everyone should know about.

Programme for International Student Assessment (PISA)

On Tuesday, the results for the 2015 PISA tests were released.  PISA is, of course, that multi-country assessment of 15 year-olds in math, science and reading which takes place every three years and is managed by the Organization for Economic Co-operation and Development (OECD).  PISA is not a test of curriculum knowledge (in an international context that would be really tough); what it is instead is a test of how well individuals’ knowledge of reading, math and science can be applied to real-world challenges.  So the outcomes of the test can best be thought of as some sort of measure of cognitive ability in various domains.

In addition to taking the tests, students also answer questions about themselves, their study habits and their family background. Schools also provide information about the kinds of resources they have and what kind of curriculum structure they use, there is an awful lot of background information about each student who takes the test, and that permits some pretty interesting and detailed cross-national examination in the determinants of this cognitive ability.  And from this kind of analysis, the good folks at OECD have determined that government policy is best focused in four areas.

But heck, nobody wants to hear about that; what everybody wants to know is “where did we rank”?  And the answer is: pretty high.  The short version is here and the long version here, but here are the headlines: Out of the 72 countries where students took the test, Canada came 2nd in Reading, 7th in Science and 10th in Math.  If you break things down to the sub-jurisdictional level (Canada vastly oversamples compared to other countries so that it can get results at a provincial level), BC comes first in the world for reading (Singapore second, Alberta third, Quebec fourth and Ontario fifth).  In Science, Alberta and British Columbia come second and third in the world (behind only Singapore which as a country came top in every category).  In Math, the story is not quite as good, but Quebec still cracks the top three.

CMEC also has a publication out which goes into more depth at the provincial level (available here).  The short story is our four big provinces do well across the board but the little ones less so (in some cases much less so).  Worth a glance if comparing provinces rather than countries is your thing.

One final little nugget from the report: the survey taken by students asks if the students see themselves heading towards a Science-based career in the future.  In Canada, 34% said yes, the second highest of any country in the survey (after the US).  I’d like to think this will put to rest all the snarky remarks about how kids aren’t sufficiently STEM-geared these days (<cough> Ken Coates <cough>), but I’m not holding my breath.

Statscan Report on Youth Employment

Statistics Canada’s put out some interesting data youth employment by Rene Morisette on Monday.  It’s one of those half-full/half-empty stories: the youth unemployment rate is back down to 13% where it was in 1976 (and hence lower than it has been for most of the intervening 40 years), but the percentage of youth working full-time has dropped.  The tricky part of this analysis – not really covered by the paper – is that the comparison in both time periods excludes students.  That makes for a tricky comparison because there are proportionately about 3 times as many students as there were 40 years ago.  To put that another way, there are a lot fewer bright kids – that is, the kind likely to get and keep jobs – not in school now than in 1976.  So it’s not quite an apples-to-apples comparison and it’s hard to know what having more young people in school actually does to the employment rate.

Aside from data on employment rates, the report (actually a condensation of some speaking notes and graphs from a presentation made earlier this year) also includes a mishmash of other related data, from differing recent youth employment trends in oil provinces vs. non-oil provinces (short version: they’re really different) to gender differences in graduate wage premiums (bigger for women than men, which may explain participation rate differences), to trends in overall graduate wage premiums.  Intriguingly, these rose through the 80s and 90s but are now declining back to 1980 levels, though whether that is due to an increase in the supply of educated labour or reflects broader changes in the labour market such as the “Great Reversal” in the demand for cognitive skills that UBC’s David Green and others have described is a bit of a mystery.

But don’t take my word for it: have a skim through the report (available here).  Well worth a few minutes of your time.

May 31

Moral Panics About Kids in Basements

Every once in awhile you see a news story saying something along the lines of “oh my, so many people in their 20s living with their failure to launch, my God, won’t somebody do something” followed usually by some freaking out about housing prices and – if we’re really lucky – something about humanities and working at Starbucks as well.  Like this one from the CBC last week.

The excuse for that CBC piece was an American study which noted that 2014 was the first time that the most common type of dwelling for American 18-34 year olds was NOT under their own roof with a spouse/common-law partner.  That of course has as much or more to do with changing patterns of university attendance and family formation as it does with patterns of leaving the parental house.  Yes, the percentage living with their parents has risen from 20% to 32% over the last fifty-five (!) years (not exactly a fast-moving phenomenon), but the percentage living with a spouse/CLP has fallen from 62% to 32%.  In fact, if you read a little further down, you realize that the percentage of 18-34 year olds living at home in the US today  is…slightly lower than it was in 1940.

So, you know, maybe this isn’t such a big deal after all.

But still, people want to make it a story.  For instance, in that CBC story, they note that “according to the most recent Statistics Canada census, 42.3 per cent of people in their twenties lived at home in 2011. That’s well up from previous generations, including 32.1 per cent in 1991 and 26.9 per cent in 1981.”

That’s technically true.  But as with so many of the horror-stories about youth out there, most of the big changes happened before 1996, not recently.  Here are the actual census numbers:

Percentage of Canadians aged 20-29 living with parents, 1981-2011.


In other words, this clearly isn’t a recent phenomenon.  It’s not something caused by the great recession or housing prices.  It’s something that’s happened quite gradually over time.  What could it be?

First, note that the issue has a lot more to do with 20-24 year olds than it does with 25-29 year-olds.  And what’s changed over the last 30 years among 20-24 year olds?  Higher education, mainly.  University participation rates have almost tripled in that time; colleges have increased as well.  Call me crazy, but I think that increased rates of study – and hence decreased labour market participation – might have an effect on living arrangements.   

Second, the youth demographic of this decade looks a lot different than the one of the 1980s.  It’s a lot less white, for one thing.  In 1981, visible minorities made up 4.7% of the Canadian population.  If you look at the 15-24 age group in 2011, it’s about 25%, three quarters of which are of Asian descent.  Asian cultures don’t really share the perspectives of those of British, French and North European descent about the need for kids to get out of the house early.  It would be useful to look at the “living at home” data by ethnicity over time; it may well be that part of the change we are seeing is due to the changing ethnic make-up of the country rather than actual changes in behaviour.

Now, it’s hard to quantify the effects of increased study and changing demographics, so there might be some underlying economic changes to blame for the changing rates of leaving home.  But I think those two factors offer enough common-sense explanation for this phenomenon that we should avoid making too big a deal over it.

September 24

Youth Unemployment: Some Perspective, Please

Every once in awhile, you’ll hear folks talking about the scourge of youth unemployment.  If you’re really lucky, you’ll hear them describe it as a “crisis”.  But how bad is youth unemployment, really?

Well, the quick answer is that you can’t really separate youth unemployment from general unemployment.  As Figure 1  shows, one is a function of the other.

Figure 1: Youth Unemployment Rates, 15 and Over vs. 15-24 Age Groups, Canada, 1976-2015 (Source: CANSIM 282-001.  Seasonlly-Adjusted)














As Figure 1 also shows, compared to most of the last 40 years, youth unemployment is currently fairly low.  In the 476 months since the Labour Force Survey began, it has been lower than it is today only 29% of the time.  If this is a crisis, it is of exceedingly long duration.

Now, what some people get upset about is the fact that youth unemployment is “twice the overall rate”.  But is that really historically unique?  Figure 2 shows the answer.

Figure 2: Ratio of 15-24 Unemployment Rate to 15 and Over Unemployment Rate (Source: CANSIM 282-001)














So, there are two things here on which to remark.  The first is that 2:1 isn’t an immutable ratio: it has changed over time, most notably in the mid-90s when it increased significantly.  The second thing is that the ratio is a lot more seasonal than it used to be.  It’s not entirely clear why this happened.  I had thought initially that it might have something to do with increasing PSE participation rates, but that doesn’t seem to be the case.  A mystery worth pursuing, at any rate.

In any case, we should also ask: how does Canada look in comparison to other countries?  In Figure 3, I show the ratio of youth unemployment to overall unemployment in various countries.  Canada’s current ratio – about 1.96 – is not world-beating, but significantly better than the OECD average (2.2). It suggests that the question of youth employment ratios is actually something all economies – with the exception of the Netherlands and Germany, perhaps – deal with.

Figure 3: Ratio of Youth Unemployment Rate to Overall Unemployment Rate, Selected Countries (Source: OECD)














To get right down to brass tacks: workers gain value with experience.  By definition then, young workers are, on average, less valuable than older workers.  This is the reason why they have trouble getting hired.  And this is why, in the end, the only way to bring down youth unemployment is to give them more value to employers; which is to say, they need more job-ready skills.

Could we do better than we are doing?  Yes, of course.  But even the best countries in the world aren’t doing much better than we are.  So, let’s work on this problem, but maybe tone down the rhetoric about the its extent.

March 28

Enough with the Youth Declinism, Already

Can we please just stop with the “Generation Y are screwed” meme, already?  It’s utterly without foundation.

Last week, the Canadian Press ran an article about a poll, which said that, due to inflated housing prices, 72% of Canadians aged 19-33 were pessimistic about ever owning a house.   This sounds terrible – until you look at the actual data.

Census data shows that, in 2006, home ownership among 20-29 year olds was, in fact, at an all-time high.  True, the Teranet House Price Index does show that average house prices went up 40% since 2006, but that’s been offset by 5-year mortgage rates declining during that same period, from about 5.75% to 3%.  The result: although average housing costs have risen 40%, the cost of servicing a loan for an average house has only risen 6% (or, slower than inflation as a whole) since 2006.

Another big piece of youth declinism came via Rob Carrick of The Globe, who began his piece, “Young Adults really do Have it Tougher”, with the sensational claim that, “people aged 20-24 are 41% worse-off financially than their counterparts were in 1976”.

Here’s what the actual data looks like, going back to 1976.

Average and Median Incomes, 20-24 year-olds, Canada, in Real 2010 Dollars













It is indeed true that today’s students have it worse than those from 1976.  But since all that change effectively happened prior to 1992, it’s also true that students today are no worse off than they were 20 years ago.

So what happened in the 80s that changed youth incomes so much?  It’s not that employment rates have fallen; they’ve bounced around a fairly narrow range, in the high 60s and low 70s, for pretty much the entire past 40 years.  But when we look at hours worked, the puzzle solves itself nicely.

Average Hours Worked, 15-24 Year-Olds, Canada













Average overall hours worked dropped from 35 hours-per-week, to 28 hours-per-week – or, by roughly 20%. In 1976, among 15-24 year olds (Cansim doesn’t break it down to 5-year blocks, unfortunately), over half were working 40 or more hours per week; in 2010, less than 35% were.

And why did working hours fall?  The obvious answer is that PSE attendance in that age bracket nearly doubled in the period from 1976 to 1992, which left people with fewer hours available for paid work.  According to The Globe, this large increase in access now has to be re-interpreted as a disaster for young people, because enrolment curtailed their income in the short-term.  Yeesh.

For those of you still convinced there’s a generational crisis going on, have a look at this data from the Labour Force Survey.

Average Hourly Wage Rate by Job Status, 15-24 Year-Olds, Canada, in 2012 Dollars













A prize for anyone who can turn that graph into a convincing tale of generational woe.