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No easy answer to underemployment of twentysomething men

What are youth today doing with their time? Are they really worse off in the labour market than earlier generations? What should policy makers do to help them?

This week I've been sifting through the data trying to find answers to these questions for a report I'm preparing. It was clear that most youth are doing exactly what parents hope their kids will do after leaving high school – three-quarters of young men and women age 17 to 21 are either working full time or in school full time. I'm not terribly worried about them.

I focused instead on young men aged 25 to 29. Typically, they are finished with school. They're struggling to establish careers and their families. In 2012 and 2013, 75 per cent of these guys were working full time. But what about those who haven't found full-time employment?

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I've heard concerns that young men are extending their education because of poor labour market prospects. That may be true for those under 25 (which isn't a bad thing), but it's not true for those 25 to 29. In 2002-03, when job prospects seemed better, the same proportion – 7 per cent of men aged 25 to 29 – were in school full time as in 2012-13.

I've heard concerns that young men were hit harder by the recession than older workers. It is always the case that youth unemployment rates are higher, but the gap between youth and older workers' unemployment rates did not increase significantly during the most recent recession (especially when compared with past recessions). Furthermore, youth tend to have shorter jobless periods than older workers.

I've heard concerns that young men aren't being counted in unemployment statistics because they are discouraged and gave up searching for work. I've found 0.1 per cent of men aged 25 to 29 in 2012-13 would fit this category – and that number hasn't changed much in the past decade.

Is it a matter that employment relationships are simply less stable than in the past? No. Research by Pierre Brochu at the University of Ottawa has shown that job retention rates have actually increased for new employees since the mid-1990s, and were recently at record highs. For women, it is clear that job opportunities far exceed those available to past generations.

What about the notion that youth investments in education are simply being wasted? As long as employers are willing to pay for the skill, it's not wasted in the market. Investments in education continue to have high returns; discouraging youth from obtaining higher education is counterproductive.

Where is the scope for policy makers to step in? The same place it has always been. There are important market failures to address. Policies that improve information about the skills market – especially the wages paid for particular skills – need to be readily available to young people (and their parents). We need to ensure access to education and training, particularly for youth in low-income families who face binding credit constraints and may have less information about the benefits of higher education. We should avoid policies that blur market signals and act to suppress wages when skills shortages appear.

Over all, it is and always has been difficult to be a young person in the labour market. The future is uncertain, it's stressful, and every generation of youth believes their parents simply had it easier.

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Tammy Schirle is an associate professor of economics at Wilfrid Laurier University in Waterloo, Ont.

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