The nation’s youth are suffering the most in Canada’s slowing

job market

, and the repercussions of this “cruel summer” could linger for years to come, according to a report from Desjardins Group.

Businesses are curbing hiring amid uncertainty over U.S. President Donald Trump’s

tariff war

and its economic impact and the group that is most affected are young people at the beginning of their careers, said the note by principal economist Sonny Scarfone.

“Many are finding that the road to employment is riddled with obstacles in what has become an increasingly challenging labour market,” he said.

The

jobless rate

for people aged 20 to 24 has exceeded 11 per cent since last summer, the highest level over a sustained period since the

2009 recession

, outside of the pandemic.

For those who were students this past spring, the rate is 14 per cent, a high not seen since 1993, when Canada was coming out of a lengthy recession.

For twenty-somethings just starting out the impact of this struggle can linger for years.

The “scarring effect” on young people who begin their career during an economic downturn is well-documented.

A study done in Canada

in the early 2000s found that the annual wages of this group were 9 per cent lower in the first year after graduation. After five years, the wage gap dwindled by half and after 10 years is eliminated.

“But that decade playing catch-up makes it harder for these workers to accumulate savings and assets, and the chasm widens when you consider the decades of compound interest they might have earned on these unrealized savings,” said Scarfone.

This theory has been used to explain

Generation X

‘s struggle to accumulate wealth through the economic downturns they faced in the 1990s and 2009.

Evidence of similar trends in the United States suggests the problem may go beyond the economic cycle to structural changes, said Scarfone. In the U.S. the unemployment rate for university graduates aged 22 to 27 is now higher than the overall workforce.

Artificial intelligence

has been flagged as a possible driver of the job losses, but Scarfone said it’s too early to tell. Nonetheless, AI will be another challenge for the incoming generation as they launch their careers.

While some suggest its use will allow new graduates to enter the job market in more advanced roles, AI will also bring “a new set of risks, including increased precariousness, job insecurity and more frequent retraining as workers are required to adapt,” he said.

Government, therefore, is crucial in easing the transition through hiring incentives and reskilling programs.

“Navigating this transition period will be tricky but important in order to limit the long-term fallout for younger cohorts,” said Scarfone.

“Otherwise, they could face stalled career progression, reduced savings potential and lower overall life satisfaction.”

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Canada’s

job vacancy rate

has sunk to its lowest level in eight years, recent data showed. The rate fell to 2.7 per cent in May, down half a percentage point from a year ago, said Douglas Porter, chief economist for BMO Capital Markets.

The U.S. rate, meanwhile, has stabilized close to pre-pandemic norms at 4.4 per cent.

“As the [Bank of Canada] noted this week, “the labour market remains soft,” wrote Porter. “This is the single most compelling reason to keep the flame alive on rate cuts.”

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Whether through necessity or the love of the job, you might want to keep working past 65, but there can be financial pitfalls.

Financial planner Jason Heath explains

what you need to know about the Canada Pension Plan, Old Age Security and tax planning.

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@postmedia.com with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column

can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his

mortgage rate page

for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s

YouTube channel

for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at 

posthaste@postmedia.com

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