Bill Morneau, Canada’s new finance minister, sounds like a great guy.
He’s a successful business executive and philanthropist who is well-liked, well-respected and well-qualified for his new post. But Mr. Morneau also suffers from a particular form of blindness affecting people of his generation (he’s 53). Let’s call it millennial blindness.
In a profile we recently posted online for Globe Unlimited subscribers earlier this month, Mr. Morneau said concern about job prospects for young adults is blown up by the press. “Most of the really smart people find jobs,” he said, “even when there’s high youth unemployment.” The reality is, it’s 13 per cent. That means 87 per cent are employed.”
Another great moment in baby boomer engagement with millennials. Put it right up there with Bank of Canada Governor Stephen Poloz’s comments a year ago that young people struggling to find employment should buff up their résumés by working for free.
Mr. Morneau and Mr. Poloz, the economy you’re both in charge of isn’t working as well as it should for young adults. Even the ones who are smart or who did unpaid internships are too often stuck in jobs that are below their capabilities and their needs.
This isn’t about not being able to buy enough lattes or iPhones. It’s about a generation’s ability to pay the taxes required to support an aging population and participate in a real estate market where boomers will increasingly be trying to cash in on their long-term gains by selling their houses.
The latest tally of youth unemployment came in at 13.5 per cent, which compares with 7.1 per cent for the broader population. There’s nothing new in this – youth unemployment has traditionally been higher. What’s worrying is the underlying trend in the job market for young adults. “All the numbers are very much going in the wrong direction for new graduates,” said Patrick Snider, policy analyst at the Canadian Alliance of Student Associations.
According to the 2015 graduate survey from the Council of Ontario Universities, the employment rate for students six months after graduation fell to 87.6 per cent in 2012 from 94.1 per cent in 2006. Average annual salaries two years after graduation averaged $49,001 in 2012, less than the $49,468 average of 2006. The parliamentary budget office says the percentage of university-educated 25- to 34-year-olds working in jobs they’re overqualified for based on their education hit 40 per cent last year, up from the low 30-per-cent range 25 years ago.
The biggest problem faced by millennials is a job market that is increasingly offering part-time, temporary or contract work instead of the full-time work that is more likely to offer benefits and a company pension. In a report issued in March, CIBC Economics reported a record low reading from its employment quality index, which looks at things like the distribution of full and part-time jobs and the split between self-employment and paid employment.
It may be that young people are caught in a larger trend of companies regarding their work force less as an asset and more as a cost that can be adjusted as needed to deliver satisfactory financial results. Telus Corp. recently announced it was cutting 1,500 positions while also increasing its dividend to shareholders. Highly profitable banks are also cutting staff.
Catch phrases are emerging to describe the job market of temporary work. Some call it the “gig economy,” or the “freelance” economy. This may work well for the experienced, connected boomer. For young adults with no experience and no contacts to give them leverage, these terms describe an economy of junk jobs that make them demonstrably poorer than people with permanent jobs.
Should young people just create their own work, then? Successful entrepreneurs are celebrities in our culture, but CASA’s Mr. Snider describes a less glamorous side to starting your own job. “It means more precarious employment and intermittent work for those people. Self-employment is not necessarily a sign of a healthy job market.”
Viviane Bartlett, CASA’s interim executive director, said millennials are reacting to their job challenges by pushing back milestones like getting married, buying homes and having kids – what she describes as “participating in the economy.” These are trends a finance minister should be digging into, not dismissing. Back to you, Mr. Morneau.Report Typo/Error