Factors Effecting Youth Employment Rates Economics Essay

What factors effected youth employment rates in the past which can impact future youth employment?

This year, 2009, has so far been the worst year for high school students trying to find jobs (Godbout, 2009). However, many teenagers in high schools across Canada currently have jobs or have been employed. Whether it is delivering the newspaper on a cold and rainy day or working at the bank, the labour workforce consists of many young workers.

With the increase of businesses and franchises, more people are hired – many young workers are hired for mass-sale/franchise businesses, where not much experience is required to work (ex. a grocery store). High school students need money for personal spending, and various savings such as university and car savings.

Many teenagers are currently searching for jobs, however at this point in time, not many are able to get employed. As students struggle to find jobs, it is important to consider the factors which cause youth employment to increase/decrease, and how the rate youth employment can be predicted in the future.

By knowing the factors that influence the amount of young workers in the labour force in the past and present, predictions can be made whether or not these factors will be able to effect youth employment again in the future. Predictions could help youths realize when and where they should apply for jobs, and can increase their chances of getting hired in the future.

Background:

In Canada, there are 2.4 million full-time students part of the national workforce (Statistics Canada, 2009). Employers have hired many students over the last 8 years. During the 2004-2005 school year, around four out of every ten (38.9%) full-time students between the ages of 15 and 24, were employed (Statistics Canada, 2006). While job availability has improved in recent years, the amount of 15 to 24 year-old employed students is still lower than it was in 1989, the previous peak employment period.

Younger students (aged 15 to 17) are much less likely to be working while attending school than they were a decade and a half ago. The summer job market has not improved to the same extent as it has during the school year. Approximately 51.7% of students were employed during the summer of 2005, well below the 61.4% of students who were employed in 1989 (Statistics Canada, 2006).

Past youth unemployment rates have fluctuated along with the economy. As the economy goes into a recession, the youth unemployment rates rise. It is a clear correlation. Other factors that can effect youth employment include the level of educational attainment, experience in the workforce, seasons (ex. summer has a higher rate of youth employment; more students apply for summer jobs), as well as gender.

Students have always been an important part of the national workforce. They can learn quicker then adults, as their brains are still developing and they can intake much information at their age. It is important to include youth in the workforce because they are the leaders of tomorrow, and if they work now, they will be prepared for the future.

Results:

In this report, the following sources of statistical data were used for analysis: (1) youth employment statistics from the Statistics Canada website (www.statcan.gc.ca), (2) a report on youth unemployment in Canada by Kevin B. Kerr, found on the depository services program on the government of Canada website (http://canada.gc.ca/home.html) and (3) a survey completed by 44 high school students across Oakville, Ontario from December 9 2009 to December 11 2009.

A survey regarding youth employment was conducted online from December 9 2009 to December 11 2009. 44 High School students across Oakville were surveyed. The survey contained close-ended questions (9 multiple choice questions and 1 Likert scale question). Here is a link to the survey: http://spreadsheets.google.com/viewform?formkey=dC0xRWVSdlVGamY1TExCTnBFUHUzMVE6MA.

The survey conducted was convenience and voluntary sampling. This can cause bias, due to the fact that people were not forced to take the survey, and more people who are interested in the topic will actually complete the survey then people who do not care about the topic. Also, since the survey was conducted online and it was anonymous, anyone could have submitted a variety of false results.

It is not guaranteed that the survey was completed truthfully. The survey has a few other potential limitations: measurement bias (Inaccurate answers which bring program errors). For example, one question asked ‘If you are not hired, are you currently applying/looking for a paying job?’ People who answered in the previous question that the have a job answered this question as well. They misread the question.

Therefore, this provides a miscalculation (inaccurate answers), which leads to inaccurate interpretation of the data. Also, the last question on the survey was a rating on a scale. The question asking ‘How happy are you with your current salary from your job?’ is rated from 1 being very happy and 5 being not happy at all.

Some people may be happy with minimum wage whereas others are not; therefore the answer for this question varies from person to person. Also, each person has their own interpretation of the 2, 3, and 4 rating on the scale; there is not text accompanying the 2, 3, and 4 ratings.

Therefore, each person answering the question may interpret the middle ratings differently; one person may think that the 2 rating falls under ‘happy’, while another person may think that it falls under ‘O.K’.

Out of 44 high school students surveyed in Oakville, only 14 have jobs, while the other 30 are unemployed. Employment figures for June show a loss of 33,000 jobs among those 15 to 24 years old, increasing the unemployment rate among young people to 15.9 per cent, the highest it has been in 11 years (Stoody, 2009).

In July 2009, the youth unemployment rate reached the highest rate recorded since Statistics Canada began collecting data on the subject in 1977 (Godbout, 2009). The current economic crisis has had a great effect on youth employment during the summer of 2009; many students could not find jobs.

Figure 1 below represents the amount of students who are and are not employed (out of the 44 students sampled). It is supporting evidence of the decreasing youth employment rate in Canada, since over half of the 44 students surveyed are currently unemployed.

Figure 2 shows that out of the 44 students surveyed, 21 are looking for jobs and 15 are not. It is evident that out of the sample surveyed, there are more students who do not have paying jobs but would like to be hired.

Figure 1:

Figure 1 is a bar graph (relative frequency table) that shows the number of students who answered yes, they do having paying jobs, and the number of students who answered no, they do not have paying jobs. Over half of the 44 students surveyed are not hired.

Figure 2:

Figure 2 is a bar graph (relative frequency table) that shows the number of students who answered yes, they are currently looking for a job, and students who answered no, they currently are not searching for a job. More students are searching for jobs then students who are not.

Figure 3:

Labour Force Statistics – Youths aged15-24 years old

This chart shows that the amount of unemployed young workers in Canada has increased from October to November 2009. The youth unemployment rate has increased by .3% in only one month time.

http://www.statcan.gc.ca/subjects-sujets/labour-travail/lfs-epa/t091204a1-eng.htm

Periods of unemployment vary in frequency and duration depending on workers’ skills, the nature of jobs, the level of economic activity and the structure and operation of the labour market itself (Kerr, 2000). Throughout the 1970s, demographic factors were the major reasons for an increased trend in youth employment rates; during the 70s, the youth population (aged 15-24) grew drastically (Kerr, 2000).

Today, the size of the youth labour force is declining; the number of young individuals in the Canadian labour market has declined every year since 1982 (Kerr, 2000). One of the most familiar causes of unemployment is a decline in the economy. This is known as cyclical unemployment, and it occurs due to deficient total demand for goods and services; it is not related to how well a labour force is trained or deployed (Kerr, 2000).

Since labour is required to produce goods and services, demand for it falls during a downturn in the level of economic activity. Businesses attempts to reduce the level of employees so they can cut back on costs and save money for production. The rate of wage change is also inversely related to the level of unemployment (the level of excess demand for labour) and the rate of change in prices is directly related to the rate of change in wages (Kerr, 2000).

Figure 4:

http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/bp448-e.htm

The graph above represents youth employment rates from 1976 to 1996. The dashed line with the circles represents the amount of youth aged 15-19 unemployed. From 1982 to 1984, the youth unemployment rate peaked drastically.

It decreased from 1985 to 1990, and then began to increase again. It began to decrease in 1993, and then began to increase again in 1995. There was an economic recession from 1981-1982, and another one from 1990-1991. It is clear in this chart that as the economy recessed, the rate of youth unemployment increased. The state of the economy has a great influence on youth employment.

Another reason for youth unemployment rate fluctuation attempts to generate jobs for the young stand little chance of success. In a situation of deficient demand adult workers are also laid off. Since adult workers are generally more marketable and attractive to employers at the going wage, they will be the first to be rehired as soon as the economy begins to experience the effects of the government stimulus.

Figure 5:

http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/bp448-e.htm

The chart above shows the percent of youth unemployment by year, and four different lines – each line representing an educational attainment. The line with the highest percentage of unemployment represents the percentage of unemployed youths with grade school educational attainments. The line with the highest percentage of unemployment represents the percentage of unemployed youths with university degrees.

It is clear that there is a very distinct different in between the percentage of unemployment with a grade school attainment, and a university degree. Clearly, the more experienced youths will have more jobs because they are more experienced in school and the workforce, and they will have a smaller percentage of unemployment rates. The more experienced and older workers that are hired, the less young workers who are just entering the workforce will be hired.

The high percentage of unemployment rates in youth with grade school attainments is because of the low percentage of unemployed youths with university degrees, because they take up job positions and are more likely to get hired then grade school youth.

An employment rate gap also exists between male and female students, and it has never been wider. In the 2004/2005 school year, 34.3% of female students aged 15 to 17 were working, much higher than the proportion of 28.2% among males the same age (Statistics Canada, 2006). On the chart below, there is an increasing difference in between the proportion of males employed compared to the proportion of females employed.

The difference becomes relatively greater every year, especially from 2003-2004. Female students were more likely to have jobs than male students, in part because of better job opportunities in retail trade and accommodation and food services sectors, where women are more likely to work. Therefore, gender could have an impact on the rate of youth employment.

Figure 6:

Employment rate during the school year, full-time students aged 15 to 17, by gender, Canada, 1976-1977 to 2004-2005

Figure 6 is a line graph showing the employment rate of full-time students, aged 15-17, from 1976 to 2005 (in Canada). The two lines are separated – one for women, one for men. This chart shows that women tend to have a higher employment rate than men.

http://www.statcan.gc.ca/pub/81-004-x/2006001/9184-eng.htm

Seasonal unemployment is also caused by seasonal effects on the supply of labour (Kerr, 2000). At the end of each school year, a large number of students enter the labour force aimed towards getting a summer job. Although many are successful in getting hired before the school year ends, many are not and end up being unemployed while they search for a summer job

These jobless students often require more than a month of search before becoming employed. This is evidenced by the fact that the absolute number of unemployed youth peaks during the months of June and July (Kerr, 2000).

Figure 7:

Summer employment rates, returning full-time students, by age group, Canada, 1977 to 2005

Figure 7 is a line graph showing the summer employment rates. The line representing the 15-17 year age group has a much lower employment rate then the 1824 year age group. The older students that apply for summer jobs get the first pick, due to their greater experience in the workforce and higher education level.

Figure 8:

Employment rates of full-time students during the school year, by gender and age group, 1989-1990 and 2004-2005

1989-1990

2004-2005

Percentage point difference

Both sexes

Percent

 

15 – 24 years old

41.7

38.9

-2.8

15 – 17 years old

40.8

31.2

-9.6

18 – 24 years old

42.6

45.9

3.4

Men

 

 

15 – 24 years old

41.0

34.5

-6.5

15 – 17 years old

40.8

28.2

-12.5

18 – 24 years old

41.3

40.7

-0.5

Women

 

 

15 – 24 years old

42.3

43.1

0.8

15 – 17 years old

40.9

34.3

-6.6

18 – 24 years old

43.9

50.5

6.6

Source: Statistics Canada, Labour Force Survey.

http://www.statcan.gc.ca/pub/81-004-x/2006001/9184-eng.htm

The chart above shows the drop in the employment rate of both the male and female youth population. The percentage of employment for 15-24 year olds was 41.7% from 1989-1990. It dropped to 38.9% from 2004-2005, totalling a 2.8% decrease of youth employment (male and female population; Canada). Males aged 15-24 years employment rate dropped a total of 6.5% from 1989-1990 to 2004-2005.

On the other hand, women aged 15-24 years employment rate increased by 0.8% from 1989-1990 to 2004-2005. This further supports the statement made previously; that female students are more likely to have jobs than male students, because of better job opportunities in retail trade and accommodation and food services sectors, where women are more likely to work.

Future Work

After reviewing the survey results, there is an additional question on the survey which should have been added to provide more correlation statistics:

How many times were you fired this year? Last year? Over 3 years ago? (This question could have helped explain the relevant trend of youth unemployment compared to economic activities of the years. For example, the highest number of people getting fired was in 2009, when the economy was in a greater recession then previous years. The economic activity reflects the amount of people getting fired).

44 students completed the survey. A greater amount of people completing the survey would have provided a greater and more accurate representation of the entire student body (youth) population. If more time was given to conduct the survey there would have been a higher number of results, providing a greater representation of the student body (greater variety of inputs/opinions).

If money was invested into the survey, more surveys could have been provided for students to complete (ex. Surveys could have been printed out on paper, not just conducted online). Also, it is unknown if any previous data of Oakville youth exists on the subject of youth unemployment. If this data was available, the trends could have been compared and further studied to help provide a further explanation to youth unemployment trends.

Conclusion:

In conclusion, this report examined the factors which effect youth employment rates. More specifically, factors that effect youth employment rates in the past which can impact future youth employment. These factors include economic activity, the rate of wage, educational attainment, gender, and seasons.

The economic fluctuations in the past have directly impacted youth employment rates. The state of the economy reflects employment rates in general. As the economy prospers the rate of youth employment increases, because the businesses are making more profit and are able to pay more workers.

As the economy recesses, the rate of youth employment decreases because businesses do not have enough money to pay many workers and in order to cut back on costs they must fired/not hire workers.

The rate of wages effects the rate of youth employment; the higher the wage, the more people will want to apply for jobs because they can earn a higher salary and get more money. The lower the wage, the less people will want to work because they will not be getting salaries that please them.

University students have a higher chance of getting a job then grade school students. Youth with more experience will have more jobs because they are more experienced in school and the workforce. The more experienced and older workers that are hired, the less young workers who are just entering the workforce will be hired.

The high percentage of unemployment rates in youth with grade school attainments is because of the low percentage of unemployed youths with university degrees, because they take up job positions and are more likely to get hired then grade school youth.

Females have a higher employment rate then men. Female students were more likely to have jobs than male students, because of better job opportunities in retail trade and accommodation and food services sectors, where women are more likely to work. Therefore, gender could have an impact on the rate of youth employment.

Youth employment rates could also fluctuate due to the season of the year. Seasonal unemployment is caused by seasonal effects on the supply of labour (Kerr, 2000). At the end of each school year, a large number of students enter the labour force aimed towards getting a summer job.

Although many are successful in getting hired before the school year ends, many are not and end up being unemployed while they search for a summer job; there is much competition to get hired for jobs because many students apply. These jobless students often require more than a month of search before becoming employed. This is evident by the fact that the absolute number of unemployed youth peaks during the months of June and July (Kerr, 2000).

If students gain knowledge about these factors effecting youth employment, they will be able to predict future unemployment rates and they will know why they are occurring. Also, students could increase their chances of getting hired by knowing these factors.

If an economic recession is taking place, students should know not to apply for jobs; however, wait until the economy prospers and then apply for jobs in various sectors of the workforce (their chances of getting hired will be increased greatly).

By knowing that youth employment rates decrease at the beginning of the summer season, students gain knowledge about when to apply for jobs; they will know that they should apply for jobs before the summer break begins, when not many people apply, in order to increase their chances of getting hired.

The rate of youth employment increase as the level of educational attainment increases; students will therefore be determined to get a higher education in order to increase their chances of getting a job.

The factors effecting youth employment rates in this report are studied in an attempt to explain the fluctuations in youth employment rates and furthermore, educate youth about the factors causing the rates to fluctuate, and how they can predict these factors possibly occurring again in the future in order to decrease their chances of unemployment.