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Young people at a jobs centre

Fred Lum/The Globe and Mail

Earlier this week I was asked if our youth are facing unprecedented difficulties in the labour market. The simple answer is no, it's looking just as bleak as other downturns. Then I found some numbers that made me slightly more optimistic.

From October, 2008, to May, 2009, (peak and trough months, according to the C.D. Howe Institute), the employment rates of men age 25-54 fell to 83 per cent from 87 per cent. The employment rates of men age 20-24 fell to 68 per cent from 73 per cent. Put some standard errors around that difference, and our youth are doing just as poorly as the older, more experienced folks.

Compare that with the drop in the employment rates of men age 20-24 in earlier recessions, and this is really no big deal. Between March, 1990, and April, 1992, the employment rate of men age 20-24 fell to just 66 per cent from 77 per cent.

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For the most part, the labour market has been slowly recovering since 2009. The employment rates of men age 25-54 gradually increased, reaching 86 per cent last December. However, the employment rates of young men age 20-24 started recovering, but then reversed trend: After reaching 70 per cent in September, 2011, their employment rate fell to 67 per cent for most of 2012. I'm reluctant to suggest the past year is something unprecedented – youth employment rates are generally quite volatile and medium-term fluctuations are not unexpected – but it does raise concerns that many youth could be permanently scarred by the slow economic recovery.

Should we be alarmed? That depends on what young men who left employment are doing with their time. The unemployment rates of men age 20-24 have remained quite stable (around 12.5 per cent since mid-2011), so the recent decline in youth employment rates isn't resulting in more young people actively searching for work. Instead, young people are leaving the labour force and are enrolling in school. In September to December, 2008, 14.5 per cent of young men age 20-24 were enrolled fulltime in school. In the fall of 2011, 17.4 per cent were enrolled fulltime, and by 2012, 18.8 per cent were enrolled fulltime.

So a good portion of those leaving the labour market appear to be doing something productive with their time – investing in skills that should help them when they try to re-enter the labour market again in a year or two. As Tavia Grant pointed out last week, this is exactly where policy should be pushing our unemployed youth.

What really matters is what happens a year or so from now – there are clearly diminishing returns to years spent in postsecondary education. (Just look at the return to a PhD here. ) Eventually, you have to get a job. Or live with your parents just a little while longer?

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