A Closer Look

Canada / Youth unemployment to cost $23 billion

The rise in youth unemployment in Canada during the recent recession will cost Canadian youth $23.1 billion in lost wages over the next 18 years, according to a new report by TD Economics.

The unemployment rate for Canadians aged 15-24 was 11 per cent in July of 2008, peaking at 16.4 per cent in July of 2009. In the past three years, it has yet to fully recover, still sitting at 14.1 per cent in December of 2012.

This stubbornly high unemployment rate will have a big impact on both young Canadians’ current wages, as well as their wages in the future.

‘Wage scarring’

High unemployment has meant lost wages due to fewer young people working, which the report says has taken $10.7 billion out of young Canadians’ paycheques.

According to the report’s author, senior economist Martin Schwerdtfeger, another significant impact is what’s known as ‘wage scarring’.

“Being unemployed at a young age can have a long-lasting impact on an individual’s career prospects,” Schwerdtfeger writes.

“A period of unemployment at the time of entry into the labour market is associated with persistently lower wages.” This ‘wage scarring’ will strip the equivalent of $12.4 billion dollars from future earnings for Canadians who entered the workforce during the recession,” he said.

Choosen excerpts by Job Market Monitor from

cbc

via Youth unemployment to cost Canadian economy $23 billion – Business – CBC News.

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