Youth Employment In Ontario: An Interview With Sean Geobey

I recently had the opportunity to pose some questions about Ontario's youth labour market to Sean Geobey. Sean is a Ph.D candidate at the University of Waterloo and a McConnell Fellow with SiG@Waterloo. Earlier this fall he authored a groundbreaking report on youth employment issues in Ontario (download it here) for the Canadian Centre for Policy Alternatives' Ontario office. The questions cover a range of topics, but essentially focuses on the current problems that we're seeing in the youth labour market and what public policy options are available to address these problems.

Q: You recently wrote a groundbreaking piece of research for the Canadian Centre for Policy Alternatives. Can you briefly summarize the findings of your report for my readers?

Sean Geobey

A: Sure Andrew. The key finding from the report is that here in Ontario are really living in a province with two different economies, one for the old and one for the young. For older workers we have seen a tepid recovery in employment rates since the 2008 recession, not back up to employment rates prior to the recession but there has still been some recovery and Ontarians 25 and over have employment rates slightly higher than the national average at 63.5%. For workers aged 15 to 24, employment rates remain low at just over 50%, the second-lowest provincial youth employment rate in the country.

While employment rates are usually lower for young workers than for older workers, what is striking is that Ontario really stands out as an outlier. Generally youth employment rates track adult employment rates pretty directly and we see higher employment rates for both youth and adults in the Prairies and low employment rates for both youth and adults in the Atlantic provinces. However, while in every province youth employment rates are lower than adult employment rates, Ontario’s gap of 13.5% is by far the largest. Across the Ottawa River Quebec, only has a gap of 3%. While both provinces are middling performers on adult employment but while Quebec only lags behind the Prairies in providing jobs for young workers, Ontario is duking it out with Newfoundland for last place.

Q: Ontario currently appears to be in modest economic recovery. Youths in Ontario did not fare very well in the wake of the global financial crisis, but even before the crash there were troubling structural problems in the youth labour market. How much of the current problems related to youth unemployment are related to the fallout from the global financial crisis and what arise from structural labour market problems?

A: Youth joblessness not merely result of cyclical up-and-down caused by the 2008-09 global financial crisis: the problem of youth unemployment in Ontario is turning out to be chronic. It’s why the problem merits urgent attention.

What we see following the recession is an acceleration of a pattern that had already taken hold in the province. The parents and grandparents of today’s young workers who grew up in Ontario always saw a province that outperformed the national average in youth employment. However, for the first time in 2002 Ontario’s youth employment rate was below the national youth employment rate and the gap has been growing steadily ever since with the recession accelerating this shift.

These are structural changes in youth employment and there is a strong role that policy decisions have played in driving them. It is no coincidence that youth employment really started declining in Ontario at the same time that we first saw the rapid appreciation of the Canadian dollar resulting from the decision to shift towards natural resource exports and allow a decline in manufacturing.

This much commented upon ‘Dutch Disease’ has been central but is not the only policy-induced change that has hurt youth employment, as also manufacturing-dependent Quebec has shown us. Unlike Quebec, young Ontario workers have never lived with a provincial government that hasn’t been working from an austerity footing. The consequence has been that Ontarian governments have let the burden resulting from the decline in manufacturing employment really rest heavily on its young workers.

Q: A trend that has been growing in Ontario's labour market is that of precarious employment. Many youths today are precariously employed, hold multiple part-time jobs, and are underemployed at the same time, do you have thoughts on these trends?

A: This is an area where young workers really are the ‘canaries in the coalmine’. Not only has there been a decline in youth employment in Ontario, but those young people who do have jobs are more likely to be precariously employed than they have been in the past. In 1997, about one-in-four young workers with jobs were precariously employed. Today the number is one-in-three, the trend shows no sign of slowing and ultimately this pattern is moving out to the rest of the labour market.

While these trends are troubling in their own right for young workers just starting their careers, at a broader level they are also speak to a withdrawal of investment by employers in their workers. The low pay and low job security of young workers has really broken the social contract between employers and employees. Tied to this, since its peak in 1993, Canadian training expenditures per employee fell by 38% to $688 per employee in 2010. This withdrawal from worker training has been a key driver behind both lagging labour productivity in Canada and the perception of labour shortages amongst some employers.

Q: Some commentators have estimated that the annual number of illegal unpaid internships in Ontario at well over a 100,000. Alongside this trend, we've seen an increase in post-secondary education institutions pressuring students to undertake unpaid internships for for-profit employers and in broader public sector organizations. Is the rapid growth of intern culture playing a role in creating structural problems within Ontario's youth labour market? There's a lack of official statistics on the deployment of unpaid internships, do we need better data on this form of labour?

A: Great question Andrew, and I certainly appreciate the work you’ve done in this area. The effects of unpaid internships are deeply pernicious, particularly given the ‘wild west’ attitude towards the enforcement of existing labour laws taken by regulators in Ontario. Work for the promise of payment alone is simply a violation of the most basic of social contracts we have in this society.

The growth of intern culture hollows out labour markets and undermines the very promise of meritocracy in our society. Collectively unpaid labour in an industry reduces operating costs in that industry, making it difficult for those organizations that pay their employees properly to compete without using unpaid interns themselves. The consequence is an industry-wide depression in wages and job security, and we have certainly seen evidence of this in the media and social sectors in which unpaid internships have long been common. Furthermore by limiting employment opportunities to those who have a secondary source of income or support unpaid positions prevent people from marginalized backgrounds from really getting a shot at success. In the words of a recent New York Times article on unpaid internships, they help those who already have ‘a leg up’ to get the other leg up too.

When compared to paid work placements these unpaid internships are a further cause of lower workforce productivity. An employee who doesn’t cost anything also doesn’t provide much incentive for an employer to invest in their productivity either by providing meaningful training or meaningful work experiences, compounding the already existing trend of lowering expenditures for training. Furthermore, the exclusion of marginalized young workers from unpaid internships reduces the pool of potential qualified applicants, further contributing to lower worker productivity.

As for data on unpaid internships, it is clear that we need better data and that this information should be collected by Statistics Canada at least occasionally as part of the Labour Force Survey. Although unpaid internships may seem like a side issue, the scale suggests that they are not. At over 100,000 in Ontario, if would not be an unreasonable estimate to assume that there could be 40,000 – 50,000 unpaid interns in Toronto under 25 years of age. If this back-of-the-envelope estimate is true that would be the difference between Toronto having a youth employment rate of 48% rather than its current 43% youth employment rate.

Q: One of the big findings from your research is that Toronto has a terrible problem with youth unemployment and it's driving overall unemployment rate. Why do you think there's a chronic problem with youth unemployment in Toronto when the overall job market in Toronto has been steadily improving? Toronto has deep divisions along racial and class lines, does this feature into the picture of youth unemployment in Toronto?

A: Yes, the situation in Toronto is truly shocking. At 45.3%, the youth employment rate in Toronto is the lowest in the province and lower than Montreal’s 53.6% youth employment rate and Vancouver’s 49.8% youth employment rate. This is particularly troubling given that Toronto’s adult employment rate, at 65.3%, is stronger than that in either Montreal or Vancouver. The gap between youth and adult employment in Toronto of 21.8% is the largest among Canada’s three largest cities and by far the largest our of any census metropolitan area in Ontario.

Given the size and complexity of the Toronto economy, it would be impossibly to point to a single cause although a few key ones seem to contribute. The first reason is the already mentioned concentration of unpaid internships in Toronto. Second, Toronto is a “sink”, meaning that people who cannot find work elsewhere in the country often end up in Toronto searching for employment. As a result, young workers who may have challenges finding employment in Thunder Bay and Oshawa actually contribute to their local employment rates and reduce the Toronto employment rate by moving to the big city when they cannot find work.

The third contributor is the diverse and often divided nature of Toronto’s population. While all young workers face barriers to employment, these are compounded for poor and racialized youth. Unfortunately we do not have reliable data on how much of a share of Toronto’s youth population poor and racialized youth are. However, it is worth noting that although Toronto’s youth are still likely more diverse than those in Montreal and Vancouver, it is unlikely that the youth population is different enough to account for the stark differences between the three cities.

This suggests a fourth contributor tied to Ontario’s history of austere public policy. The barriers raised by having a weak social safety net and public infrastructure are most acutely felt by the young, poor and racialized. This is further compounded by the deep dysfunctionality of the GTA political system. For example, I grew up in south Etobicoke but now live in downtown Kitchener. I can get from my home in Kitchener by mass transit to Union Station in Toronto, door-to-door, in less than 2.5 hours if I time it right. There are parts of Etobicoke where I can’t do that. That failure in public infrastructure really limits the employment opportunities available to young, carless workers.

Q: It strikes me that the story of youth unemployment in Ontario is one of regional narratives. You have mentioned that Waterloo, Hamilton, and Sudbury have lower youth unemployment rates than the Ontario average. What driving the relative success in these regions in keeping youth unemployment in check? On the other hand, beyond Toronto it appears that some cities in South-Western Ontario (i.e. London, Brantford, and Windsor) and Durham region (i.e. Whitby and Oshawa) have levels of youth unemployment in excess of 20% which is comparable to the European Union, what do you feel is driving these regional trends?

While the Toronto youth labour market is a complex and unique one, there are three other distinct regional trends in Ontario’s youth labour market.

The first if these is the decline in manufacturing employment already mentioned. Here it is young workers in places like Windsor, London and Oshawa that have been hit hard and are seeing the lowest employment rates outside of Toronto.

The second trend, which is a bit more difficult to pull out because of its overlap with the decline of manufacturing, is the rise of new high-skill service industries. Waterloo Region is the poster child for this trend, with the tech sector leading the highest youth employment rates of any region in Southern Ontario. However we also see similar trends with the tech sector in Ottawa and the biotech and health sciences sector in Hamilton. Indeed, at 3% Hamilton actually has the lowest gap between adult and youth employment rates in Southern Ontario as the decline in manufacturing has made its adult employment rates relatively weak while the rise of new employment opportunities has made its youth employment rates second only to those in Waterloo Region.

Finally, in Northern Ontario the export of natural resources has driven high youth employment rates. Youth employment in places like Sudbury and Thunder Bay actually look more like those in the Prairies than those in Southern Ontario. Indeed, these communities are the other side of the ‘Dutch Disease’ effect that has hurt the manufacturing-dependent parts of the province. While these communities are still wrestling with the decline migration of their young workers out of the North, natural resource extraction is helping slow and possibly even reverse this long-term trend.

Q: A $295 million Youth Job Strategy was unveiled in 2013 Ontario budget to address youth unemployment. It appears that this amount falls short of what's needed to get a handle on the structural problems related to youth unemployment, as a province are we spending enough to transition youths into the labour market? Are policy makers taking the issue of youth employment seriously or is the Youth Job Strategy a band-aid solution that won't address the underlying problems?

A: In May the Ontario government announced a $295 million two-year plan to create 30,000 youth jobs in the province. While this will certainly be of immediate benefit to the young people who gain employment from it, if successful these new jobs will do little more than bring youth unemployment to the national average and barely dent the largest youth employment issue.

This funding is going to four separate programs. The largest, at $195 million, is the Ontario Youth Employment Fund. This is a wage-subsidy program for employment stints of 4-6 months and is supposed to help transition young workers into permanent employment. Whether this will happen or not depends on how the program is implemented and although it is most well-defined and largest of the four youth programs, if implemented improperly we could see those subsidized jobs disappear once their funding does. Given the current regulatory weakness on unpaid internships I am pessimistic and inclined to think the funds could better be spent elsewhere.

While the three remaining programs intend on tackling structural issues there is almost no public detail on what they will look like. These programs are a $45 million Ontario Youth Entrepreneurship Fund, a $30 million Ontario Youth Innovation Fund and a $25 million Youth Skills Connections Fund. While the titles of these programs suggest that the funds will go into areas that could help turn around broader negative trends, we really know little detail beyond the titles. However, if this funding comes with additional policy changes it may catalyze broader changes in youth employment.

Acknowledging that, one concern that can already be flagged right now is the regional nature of youth employment. Specifically, I am skeptical that the $75 million for innovation and entrepreneurship will go towards young workers anywhere other than Toronto and regions that are already outperforming the rest of the province on youth employment like Waterloo Region, Hamilton and Ottawa. It would be troubling if an initiative this large were to simply abandon many of the places where young workers are struggling hardest.

Q: What are some public policy solutions that could be enacted to address youth unemployment and the structural problems in the youth labour market?

A: Youth employment in Ontario is a complex issue and while some of the policy solutions are broad and impact the entire labour market, there are some specific ones that will impact youth more directly. At a national level, the strong policy tilt towards resource extraction and export has hit the manufacturing sector hard and a more robust strategy of revitalizing the manufacturing sector while also developing the export-oriented high-skill service sector is needed. In Ontario the provincial government must abandon general austerity-style programming to close the gap between adult and youth employment in a manner that more closely resembles what we see in Quebec than what we currently see in Ontario. Finally, dealing with the GTA’s dysfunctional governance could produce as one of its many benefits a reversal of the youth employment challenges so heavily concentrated in the region.

More directly, as has already been noted the structural youth employment challenges vary greatly by region. Local roundtables including business, labour, educational institutions and different levels of government could help develop effective strategies to meet local needs. It is unlikely that the multi-sector strategies that can broaden the social and economic benefits of new industries in Guelph will be the same ones that can manage the consequences of declining manufacturing in Windsor or make remaining in Sault Ste. Marie more attractive to the young workers there.

That being noted, one particular area where a larger strategy should be pursued is in strengthening connections between education and training. When we look to jurisdictions that have performed well in providing youth employment elsewhere such as Germany, Switzerland and Denmark a common theme is well-developed, robust apprenticeship programs. While there are features of those economies and education systems that aren’t really transferrable to Ontario, their use of apprenticeship programs that provide education, training and work experience with payment extends to a wider variety of fields than the trades-based apprenticeship programs here. Expanding existing trades apprenticeships as well as co-operative education programs in Ontario high schools, colleges and universities would help connect young workers with industry, and in particular this may involve supporting the development of viable positions in small and medium sized enterprises.