Why student unemployment is rising and what it could signal about a looming recession

Young Canadians are having a tough finding summer employment. Kamil Karamali on what it signals about the economy.

The unemployment rate for students looking for summer jobs is the highest it’s been in a non-pandemic year since 2009, when Canada was going through a recession — and some economists worry that the latest numbers could signal another one is just around the corner.

“That’s really concerning to me,” said Viet Vu, economic researcher at Toronto Metropolitan University. “Oftentimes, youth unemployment is a leading indicator to what could be a recession.”

Statistics Canada’s latest Labour Force Survey showed June’s data for “returning students,” which it defines as full-time students in March who intend to return to school full time in the fall, was 17.4 per cent. That’s up from 15.8 per cent in June of last year.

The agency defines “returning students” as those aged 15 to 24.

While the first year of the pandemic saw a 33.1 per cent ‘returning student’ jobless rate, last month’s figure marks the highest since June 2009, when the rate was also 17.4 per cent.

“The reason why this is bad is when you look at how an economy is doing, you look at how many people are getting fired and how many people are getting hired -- and oftentimes, when companies squeeze their budget ... the first positions to go tend to be the most junior,” added Vu.

“Which tells you that these companies aren’t doing well because they can’t afford to hire a summer student.”

Meanwhile, Statistics Canada’s unemployment rate for the broader “youth” category — which includes all 15- to 24-year-olds, not just students — stood at 14.2 per cent in June. That’s up 0.7 percentage points from last year, and well above the pre-pandemic average of 10.8 per cent between 2017 and 2019.

“This has been a brutal summer for students to look for a job... the openings are just not there,” said Jim Stanford, director and economists at the Centre for Future Work in a Zoom interview with CTV News Saturday.

Trade war to blame, economists say

Economists say the U.S. trade war is playing a significant role in the growing student unemployment rate. Many companies are choosing not to take on new hires because of the amount of uncertainty that comes with constantly changing U.S. tariffs on Canadian exports to America.

“I think the blame for the high student unemployment rate rests solely at Donald Trump’s doorstep,” said Stanford. “In the last few months, companies have had no idea where the economy is going. The last thing they’re going to want to do is take on a few extra heads for the summer.

The border city of Windsor, Ont., saw the highest unemployment rate among all demographics in June with 11.2 per cent, indicating the tariffs have had a major impact on Canadian industries.

Stanford isn’t ready to say a recession is guaranteed to happen just yet.

“We’ve all been watching for signs that the toll of the Trump tariffs could push Canada into a recession — and if he goes ahead with the 35 per cent tariffs, we could have a recession. Not yet, though," he said.

Brendon Bernard, senior economist at job search site Indeed, said there is a silver lining: the year-over-year increase in the student unemployment rate has narrowed compared to previous years. The rate jumped from 11.9 per cent in 2023 to 15.8 per cent in 2024, but climbed more modestly this year to 17.4 per cent.

“There’s been some caution that employers have undertaken because the situation could go in multiple directions,” Bernard said.