‘Need All Hands on Deck’: A Look at Income Supports, Teen Workers, Amid Aging Workforce and High Job Vacancies

A sign announcing hiring at the General Motors facility in Oshawa, Ont., on April 4, 2022. The Canadian Press/Frank Gunn

High job vacancies, low unemployment rates, and an aging Canadian workforce are major challenges facing the economy, say two academics, who also point to COVID income supports and declining teen labour participation as issues demanding significant responses from employers and policy-makers alike.

Late in April Statistics Canada announced that the country has more people aged 55 to 64 years than those 15 to 24, the age at which people enter the workforce. This news followed a record-low unemployment rate of 5.3 percent in March, which refers to the percentage of workers who are unemployed and actively seeking work.

And despite the hunger for workers, teen labour participation was just 50.7 percent in the first quarter of 2022, noticeably lower than its peak of 59 percent in 1989 or even the 56.5 percent of 2008.

Rafael Gomez, a professor of employment relations at the University of Toronto, believes income assistance during the pandemic is partly responsible.

“We’ve made it very easy for people to access income supports during the last two years, and that was by design. But it’s clearly had an effect too, in raising the reservation wage, which is the lowest wage possible that will get you to enter the labour market,” he said in an interview.

“It’s not so bad if kids are staying in school longer as a result. But generally young people, if they’re not entering the labour market and they find that their choice set is greater than it’s ever been, then they might carry that attitude for the rest of their life.”

Ian Lee, a professor of business at Carleton University, shares those concerns.

“Certainly for the next 50 years, all the countries including Canada are going to be facing massive labour shortages,” Lee told The Epoch Times.

“We cannot afford the luxury of a million and a half or a million able-bodied people staying at home costing hundreds of billions of dollars.”

Lee says practicality, not ideology, will drive policy change, as the ratio of retirees to working-aged people will be higher than ever before.

As part of the government’s pre-budget consultations, Lee testified before the House of Commons Finance Committee on Feb. 7, where he said that “it is urgent that budget 2022 shift and pivot away from policies that unwittingly incentivize people to remain out of the workforce.”

“Examples are COVID supports without conditions to require recipients to seek and accept job offers, or policies that incentivize early retirement, before the age of 67 strongly advocated by the OECD [Organisation for Economic Co-operation and Development],” he told the committee.

Ready to Hire the Young

More than 915,000 jobs were left unfilled in the fourth quarter of 2021, a vacancy rate of 5.3 percent. Accommodation and food services had the biggest labour shortages, one that teenagers could help fill. An analysis by Restaurants Canada determined that there would be over 100,000 more workers if teens were as likely to work today as they were in 2008.

Employers seem ready to hire the young. An Angus Reid survey of Canadian businesses conducted in March on behalf of the workplace safety non-profit Threads of Life found that 75 percent of respondents either have young workers on staff or plan to hire them this year.

Gomez says the 1960s were a similar time when it was easy to get entry-level jobs. Now that those days are returning, medium-sized businesses are shifting away from conducting multiple levels of interviews in order to sort out dozens of candidates.

“They’re paying people—I’ve seen this in HR circles now—to come to the interviews because what they’re finding is people aren’t even showing up to the interviews. They don’t bother,” Gomez said.

“People are being more judicious, say, in their decision to enter the labour market. And when they’re entering, being more picky about where they work and who they work for. It is a function of people who exited the labour force during COVID [and] the income support programs.”

Gomez said job shortages were made worse when immigration slowed to a trickle during the pandemic, while “the rebirth of manufacturing jobs” has created new demands.

Toward Higher Wages, More Automation

Lee says parents’ affluence and greater competition for teenagers’ time have suppressed their employment levels. He believes worker shortages will drive higher wages but also push more automation.

“The costs of these automated checkout counters are down to about $50,000,” he says.

“You’re going to see more and more of that as the response, not just to save wages but also because they don’t have enough workers. So you'll see it especially in hotels, restaurants, or retail where you can automate as much as possible.”

Lee adds that higher female education correlates with lower fertility rates in Canada and elsewhere and means enduring challenges for employers.

Regarding the need for policy change to tackle labour shortages,  he said “the NDP will fight like crazy, and they'll say it’s terrible and you’re punishing people. But we’re going to do it not to punish people—we’re going to do it because we desperately need those people at work.”

“The public support will be there this time when someone finds that their elderly mother or father can’t get their bum cleaned, to be blunt,” he said.

“We’re short of plumbers, we’re short of electricians, we’re short of teachers—we’re short of everything. We need all hands on deck.”