Why young men are being left out of Alberta's economic recovery

The recession may be over for most Albertans, but for young men between 16-24, it's worse than ever.

'Alberta's recession ended in 2016. But not for everyone.'

Recent employment numbers are encouraging but mask a distressing gap between those experiencing the recovery and those left behind, writes economist Trevor Tombe. (Getty Images)

Alberta's recession ended in October 2016. But not for everyone.

Employment, earnings, exports, manufacturing, retail, oil production, GDP and so on are all rising. The latest jobs report put Alberta's unemployment rate at 6.7 per cent in February. That's down significantly from its 9 per cent peak in 2016.

While this is clearly positive news, the headline numbers mask a distressing gap between those experiencing the recovery and those left behind.

The recession saw thousands of people leaving Calgary office towers with cardboard boxes in hand. Many managers, engineers, administrative staff and so on were let go as oil prices fell. Today, most are finding opportunities elsewhere.

While perhaps the jobs they find are not as good or as high paying, and certainly not without costs along the way, for many the recovery is real. But for young men, it's actually gotten worse.

Those left behind

Consider the following chart created with Statistics Canada data.

It illustrates the change in employment rates for Albertans of different age and gender. That is, it shows the change in the share of each group that has a job. One group is clearly not like the others.

Younger men were hit hardest by recession, and their situation continues to deteriorate.

When the recession started in October 2014, 67 per cent of men aged 15 to 24 had a job. Two years later, when the recession (formally) ended, 60 per cent had one.

But today, after nearly a year and a half of recovery, only 55 per cent are employed. Some have left the workforce, but most still want a job and are looking. 

At the same time, the employment rates for women of all ages have remained largely stable both during and after the recession. And while older men saw declining employment during the recession, they have since recovered much of those losses.

While other demographic groups are doing well, the employment rate for young men is now 12 percentage points below what it was at the start of the recession. (Norm Betts/Bloomberg)

So the problem is with young men, and it's big. The drop in employment rates from 67 per cent to 55 represents 30,000 young men without work.

For perspective, Alberta's overall employment is roughly 40,000 below where it needs to be to have kept pace with population growth since the start of the recession. So the lack of employment for young men accounts for three-quarters of the province's entire employment gap.

To be sure, young workers tend to be hit hard by recessions in general, but the persistent and consistent decline for young men this time is different. We need to respond. But first, we need to understand how we got here.

Dropping out for oil

In the high-growth years before the recession, Alberta's high-school graduation rate was the lowest among all the provinces — at 69 per cent — according to Statistics Canada. Compare this to British Columbia's graduation rate at 85 per cent, or Ontario's at 86 per cent.

This is concerning, but not surprising. The opportunities for young Albertans to earn significant incomes without formal education was widely observed during the boom. A 2008 headline in Maclean's magazine — Dropping Out for Oil — says it all.

During the economic boom, young men were dropping out of school for high paying jobs in the oilpatch. That option no longer exists. (Gregory Bull/Associated Press)

Workers in resource, construction, manufacturing and related sectors were in high demand. But not anymore.

Of the job losses for young men recently, three-quarters are found in these sectors. And despite a broad recovery, adjusting to the new reality is proving extremely difficult.

The labour many young men have to offer is not what employers are looking for. And it shows.

The Alberta unemployment rate for all men and women without a high-school diploma is over 14 per cent. But for young men who didn't graduate, it's more than 23 per cent.

Meanwhile, the unemployment rates for Albertans with a post-secondary diploma or university degree is less than 6 per cent.

If you made a lot of money in a particular job or sector, it can be hard to think about change — think about trying something new — about going back to school. But today, it's necessary.

Going back to school

An education delayed is not an education lost.

Recent research by economists Ana Ferrer and Alicia Menendez finds — perhaps puzzlingly — that workers who delay their education earn more than those who stayed in school without interruption.

This is an encouraging result for many displaced young workers.

High unemployment for young Albertans not only costs us today, but creates longer-term damage as well. There are social consequences.

Of course, returning to school or other skills-training programs is never easy, nor is it cheap. Government may have to redirect resources to help. It could increase investment in technical schools, diploma programs, apprenticeships and so on to create the needed capacity to retrain workers and ensure programs suit the needs of employers.

Increased financial aid to displaced workers should also be on the table. And in the longer-term, we could explore ways of increasing high-school graduation rates.

It's unlikely there will be any single solution to the challenge facing young unemployed men. But it's clear there is a problem. And we need to fix it.

High unemployment for young Albertans not only costs us today, but creates longer-term damage as well. There are social consequences.

Research consistently finds that a long duration of unemployment can affect the quality of jobs a worker later gets. It can potentially harm the worker's health and increase substance abuse. Recent work from economist Hans Gronqvist also finds a strong link between youth unemployment and certain types of crime. And it can cost taxpayers directly as social assistance rolls increase.

A great deal of ink has been spilled analyzing our economic recovery. Our province has experienced significant pain brought on by low oil prices, and is now emerging into a new reality. As we go forward, we must look less to the health of the overall economy — which is by most measure performing well — and focus instead on the still deep pockets of pain among those our recovery is leaving behind.


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About the Author

Trevor Tombe

Trevor Tombe is an associate professor of economics at the University of Calgary. He's on the Alberta Market Access Task force, which provides advice to government for promoting market access for the province's oil and gas.