Bank of Canada Governor Stephen Poloz cited in his last speech of 2017 "the tough job market for young people" as one of a trio of things keeping him awake at night.
The data, however, should prove a soothing lullaby.
The rising tide of Canadian employment – which has expanded for 13 straight monthly readings, punctuated by a whopping addition of 78,600 jobs in December – has been lifting even the youngest boats. The latest data show 57.2 per cent of Canadians between the ages of 15 to 24 have a job, the highest share since January, 2009. The past calendar year saw the largest improvement in the employment rate for this age bracket since 2002.
"Labour markets are healthy, with falling youth participation the result of increasing education levels – a positive long-term development," Brian DePratto, senior economist at Toronto-Dominion Bank, said in a research note Tuesday on the issue.
For Mr. Poloz, suboptimal outcomes among young Canadians would be a cause for concern. Their lack of participation limits the top speed at which the economy can grow, while impressionable youth who can't make their way into the labour market may end up grappling with "a scar that could last a lifetime."
In his December speech, the governor bemoaned how the youth labour-force participation rate had fallen nearly five percentage points over the past decade. His concern about youth employment is perceived as a dovish signal, an indication he sees continued slack in what is otherwise a red-hot labour market.
Mr. DePratto thinks the concern is overplayed. "This is an area where we disagree that the signal is worrisome," according to the TD report. "To begin with, a decade ago was a precrisis cyclical high" for youth participation rates "and so perhaps should not be viewed as the best point of comparison"
Young Canadians not in school are just as likely to be in the labour force as they were a decade ago, Mr. DePratto notes, with the participation rate among non-students currently just off its postcrisis peak.
Digging more deeply into the data, subdued youth participation is acutely attributable to Canadian teenagers: a group with a historically low rate of labour-force attachment.
"The data suggest that any deviations in participation have been driven by high school kids changing their behaviour," said Randall Bartlett, chief economist at the Institute of Fiscal Studies and Democracy. "That doesn't support the narrative that monetary policy should be formulated on the basis of any supposed weakness in these youth labour-market metrics."
Indeed, more than 90 per cent of young Canadians outside of the labour force say they don't want work.
That means the room for cyclical improvement in youth underemployment seems fairly limited, no matter what the central bank does.
The Bank of Canada's main tool – changes to short-term interest rates – is considered to be a particularly blunt means of influencing economic activity.
Unemployed youth are more likely to look for a part-time job – a sign that a rising youth employment rate might not pack all that big of a punch for the growth of labour input. For example, less than one-fifth of young workers who have a part-time gig say they really want full-time employment, a share that has fallen for three consecutive years.
"Finding a negative story in the employment data is something of a data-mining exercise," Mr. DePratto writes.
That's reflected in the fact that all of the country's six biggest commercial lenders are now predicting the Bank of Canada will raise its policy rate by 25 basis points to 1.25 per cent next week, on the heels of an unemployment rate that's dropped to its lowest level in more than 40 years and signs that companies are reaching capacity constraints.
"There's probably less slack in the labour market than there even is in the economy – for me, that's a big concern and it should be for the bank," Mr. Bartlett said.