The Minimum Wage: The True Root of Youth Unemployment in Canada

The Minimum Wage: The Real Root of Youth Unemployment

Lately, much blame has been heaped on Indian immigrants for the unemployment crisis facing Canadians aged 15–26. This analysis misses the mark. While high levels of immigration have exacerbated Canada’s youth unemployment problem, the real culprit is the minimum wage and recent country-wide hikes of it.

The connection between youth unemployment and the minimum wage is well-established in the economic literature. Milton Friedman famously criticized these mandates, and Murray Rothbard articulated the issue clearly in Making Economic Sense:

"In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal... for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed... Remember that the minimum wage law provides no jobs; it only outlaws them."

The Mechanics of the Entry-Level Shortage

Currently, Canada suffers from a shortage of entry-level work. In a free market, when supply (job seekers) exceeds demand (available positions), the price of labor should drop. This adjustment allows the "worst" or least experienced applicants to compete. If they cannot compete on skill or experience, they should be able to compete on price by accepting a lower wage. This allows them to gain the very experience needed to leverage higher wages in the future.

In Canada, the minimum wage hovers around $15. If this floor were removed, we would see jobs appearing at $14, $12, or even $10 an hour. Eventually, the market would stabilize as some seekers opt out and more employers—attracted by lower costs—opt in. This "low" wage would be temporary; the influx of new entrepreneurs would eventually create a bidding war for labor, naturally driving wages back up as workers gain skills or start their own ventures.

People line-up to attend a community-wide job fair at the Sudbury Community Arena in Sudbury, Ont. on Wednesday May 7, 2025. Photo by John Lappa/Sudbury Star/Postmedia Network

The Myth of the "Entry-Level" Job

We often hear complaints that "entry-level" jobs now require years of experience. The truth is that true entry-level jobs have been legislated into oblivion. A real entry-level position—one requiring zero specialized training—is not economically viable for many businesses at $15 an hour.

By outlawing lower-wage contracts, we have made it illegal for the unskilled to get their foot in the door. Consider that much of the world lives on far less than $15 CAD per day; a daily wage of $100 is a significant sum that could sustain many while they build a resume.

Intervention Begets Intervention

The current situation proves that government intervention is a self-perpetuating cycle. Officials create a problem (unemployment via wage floors), and then advocates call for further interventions to "fix" the results.

Canada is the second-largest country on Earth, boasting massive natural resource wealth and proximity to the U.S. market. We are underpopulated. Since domestic birth rates are low, we must welcome foreigners to thrive. The ideal solution is a policy of open borders paired with a free labor market. While there would be transitional friction, we would emerge as a wealthier, more diverse nation.

Conclusion: A Clash of Conceptions

The youth employment crisis is not the fault of immigrants looking for a better life; it is the result of economically illiterate policies.

To a socialist, employment is an adversarial struggle where workers must fight for "fairness" through state-mandated floors. This is an attractive but flawed narrative. The reality is more elegant: the relationship between employer and employee is mutually beneficial. A worker trades labor because they value the money more than their leisure; the employer trades money because they value the labor more than the cash. It is a win-win exchange. Any government intervention then which prevents mutually beneficial exchanges from happening is necessarily going to negatively impact on social wellbeing. To fix Canada's youth labour market, there is only one solution. Eliminate the minimum wage.