Tax hikes hobble young people’s job prospects

Thanks Justin… another job (not) well done.


Small businesses, the biggest employer of young workers, will have to cut jobs to cover taxes.


Canada’s youth are facing an employment crisis. In December there were 40,000 fewer youth jobs than the year before. That’s a three per cent decrease! Most worrisome is that youth have been relegated by the finance minister to a career of insecure part-time and contract work, unable to make a proper life for themselves because of the “job churn.” In fact, the tax increases and red tape introduced by the Liberal government have severely diminished employment opportunities for young workers.

For the youth making the jump from studying, either in secondary or post-secondary, into the workforce, success depends on factors beyond the skills and education youth bring. Businesses will cover the training/mentorship costs of bringing on a new employee, even if a skills mismatch exists, if their profit margins allow for these costs. If employers do not have the resources to take on young workers, then it doesn’t matter how well educated young graduates are; there will be no jobs. This is why some of the most significant policy matters that affect youth have nothing specifically to do with youth.

Some of the greatest concerns I have heard from Canadian youth relate to the shape of the economy and the impact government policy has on their job prospects. This is why the carbon tax, the increase to the Canadian Pension Plan, and the rumoured new tax on health benefits are all top-of-mind concerns. These tax increases have had and will have a significant impact on the job market for young workers because small businesses, the biggest employer of young workers, have cut jobs and will need to cut them to cover these taxes.

This is particularly true in high-tech jobs, as many young professionals are hired by small startup companies, or grow their own startups from scratch. With the current economic conditions, young entrepreneurs are unable to find financial backers for their business plans. In a fragile economy, banks and angel investors are less willing to fund startups. This has a direct impact on Canada’s innovation agenda.

In Alberta, one of the largest industries to employ young workers has been hobbled by government policies. The oil and gas sector has witnessed multinational companies pull out of Alberta, instead of weathering the price drop like they have in previous downturns. Why? Because of regulatory uncertainty.

With an American business tycoon promising lower taxes and no carbon pricing, the economic prospects are more appealing to global investors in the United States. This goes for agriculture, manufacturing, as well as natural resource extraction.

The solution is to keep government spending under control and to reduce the cost of doing business in Canada—both in terms of taxes and government red tape.

The other significant issue I hear about is the cost of post-secondary education. Students are graduating with far too much debt. This means that students have to hold out for a higher-paying job they often don’t have the prerequisite experience for, or they have to find any job that will pay them enough to pay off their student loans. This also effectively eliminates the ability of recent graduates to start their own businesses.

I believe students should bear an element of financial responsibility for their future and have some “skin in the game,” so to speak, but I also believe that universities should steward their capital well and ensure that tuition costs are only as high as they need to be.

Provinces have the regulatory authority over post-secondary institutions. The cost of running Canadian colleges and universities has been growing at rates that outpace inflation for more than a decade. Without the provinces challenging post-secondary institutions to keep their costs in check, it doesn’t matter how much money is poured into post-secondary by the federal or provincial governments; there will never be enough.

The solution is greater student involvement in university governance. This will ensure that the needs of students come first, both to keep costs in check and to ensure the education is relevant to the jobs students are pursuing. Increasing transparency in post-secondary financials will allow for a more informed discussion about how to reduce costs without affecting the quality of education.

The federal government can construct buildings and fund research on campuses across the country, but until the federal government cuts the cost of doing business to remain competitive in a global economy and reduces the regulatory burden on Canadian businesses, we are going to see the employment prospects of Canadian students decrease over the life of this government.



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