It’s a wild world: Changing labour market conditions after the postwar boom

Economic conditions in Canada have changed substantially since the 1960s and early 1970s when the first wave of the baby boom left home. Many of these changes have effectively slowed the transition from adolescence to adulthood; indeed, in some instances, it is fair to say that they may have changed the definition of adulthood.

After the Second World War, demand for skilled labour increased and enrolment in postsecondary education skyrocketed. By 1971, 46% of the prime working-age population (aged 25 to 54) had more than twelve years of schooling, compared to 10% in 1951. Over the same period, the percentage with a university degree more than doubled from 2% to 5%.

Due in part to the rapidly improving educational levels of the workforce, the 1950s and 1960s produced the biggest earnings gains of the century in real terms – almost 43% and 37%, respectively. This was the job market into which the first wave of the baby boom graduated.

The labour market which greeted the second wave of the baby boom was considerably different. In 1973, the oil crisis catapulted the economy into a period of simultaneous high unemployment and high inflation. In the late 1970s, interest rates were increased sharply to beat down inflation. Economists generally agree that the resulting recession of 1981-82 was the most severe since the Depression.

By 1983, the economy was pulling out of recession and job growth accelerated. However, it became apparent that the position of workers under age 35 was worsening. In the late 1970s, the real earnings of young workers began to fall in Canada and other industrialized nations. Young men bore the brunt of this trend, although young women also experienced relative declines in earnings. So although the mid- to late-1980s are frequently remembered as years of excessive conspicuous consumption, most young workers were comparatively worse off.

The recession of 1990-92 was not as severe as that 10 years before, but it lasted longer. Downsizing — the permanent elimination of jobs — was significantly higher, the recovery was slower to take hold, there was little full-time job creation until late in the decade, and wages remained flat.

In the 1990s, firms increasingly began to control their costs using non-permanent workers, and Gen X found itself looking for work in a job market that would probably be unrecognizable to their parents. Instead of hiring new employees, firms contracted their work out to other firms and self-employed individuals. This strategy effectively blocks work opportunities for young people, who are usually too inexperienced to successfully bid for contract work. In addition, even though unemployment rates remained above 10%, unemployment insurance regulations were tightened up and the new restrictions fell particularly hard on young people.

However, the 1990s ended with a strong economic recovery. Unemployment levels were lower than they had been for 10 years, income tax rates began to drop and disposable income started to rise faster than inflation.

Throughout these uneasy years, many young people stayed in school to improve their education and skills. But at the same time, postsecondary tuition fees more than doubled and governments offered students less grant assistance. Now more dependent on loans to pay for their studies, Gen Xers were entering the labour market with substantially increased debt loads.

For more information, see
“100 Years of Labour Force”, Canadian Social Trends 57: 2-14;
“100 Years of Education”, Canadian Social Trends 59: 3-7 and
“100 Years of Income and Expenditures ”, Canadian Social Trends 59: 3-12.