The Canadian government’s response to US President Donald Trump’s tariff threats must also contend with the growing weakness of our labour market.

A weak labour market is always bad for workers. But it is an even bigger problem as we deal with Trump’s attacks on Canada’s economy.

Canada’s current unemployment rate is 6.6 percent, down from a recent high of 6.9 percent. However, it is well above the 4.8 percent achieved in 2022, or even the 5.5 percent reached in 2019. The higher unemployment rate means hundreds of thousands of extra workers without paid work.

When labour markets are weak, workers from marginalized groups, such as young and racialized workers, or workers with disabilities, will feel the harmful effects sooner and more deeply. The labour force data for these groups is sounding an alarm.

The unemployment rate for workers from marginalized groups is always higher than the overall rate. The gap narrows when labour markets are strong as structural disadvantages are overcome by employers’ need for workers.

Among groups of marginalized workers, we have the longest data series for young workers. As seen above, the youth unemployment gap is pushing at multi-decade highs, which have always been reached during significant economic downturns. Before the pandemic, it was near record lows.

But it gets worse.

Historic numbers of young people are not participating in the labour market. Some might be inclined to blame today’s youth culture. That tired trope gets trotted out against every generation of young people. But the fact is that a strong labour market entices more participation.

Unemployment is the most familiar concept for representing the state of the labour market. But it can be misleading.

The unemployment rate is the number of unemployed workers as a share of labour force. But that means if an unemployed worker is so discouraged that they leave the labour force, the unemployment rate will actually fall.

An alternative measure is the employment rate, which is the share of the population that is employed.

There are many legitimate reasons that people might not be in the labour force such as being a full-time student, caring for children, dealing with a debilitating illness, or retiring. Schooling and family care should probably both be treated as labour with appropriate remuneration, but that is a bigger discussion. Regardless, when labour markets are tight, workers have more bargaining power, which pushes up wages and draws people into the labour force.

A high employment rate indicates a robust economy that is good for workers. But, as already indicated, there is divergence between younger and older workers.

The employment rate for workers aged 25 to 54—what economists call ‘core age’—has been at record highs since the recovery from the pandemic, although it has slipped in recent months. After the initial shock of the pandemic, the employment rate for 15- to 24-year-olds returned to its pre-pandemic level. But it has fallen sharply over the last 18 months. The last time the employment rate for young workers was this low was 1999.

As mentioned, young workers are just one of the marginalized groups more impacted by weak labour markets. Like younger workers, workers who are racialized or have a disability experience persistently higher rates of unemployment.

Consider the 2023 unemployment rates for workers who are non-racialized, Black, or have a disability. The rate for non-racialized workers was 4.8 percent, while the rate was 8.9 and 7.6 percent for workers who are Black or have a disability, respectively.

As unemployment rises, the impact is worse for workers from marginalized groups. The 2024 unemployment rate for non-racialized workers rose to 5.3 percent compared to 12.3 percent for Black workers. Workers with intersecting marginalized identities are generally the most likely to struggle in the labour market. The 2024 unemployment rate for young Black people was 21.5 percent.

Workers who are already unemployed will experience even greater difficulties as Trump’s tariffs lead to layoffs and less hiring.

The federal government needs to improve our social safety net immediately, beginning with a return to the lowered EI thresholds used during the first years of the pandemic. But this will be insufficient for workers who are already struggling to find jobs. For those currently collecting EI, the eligibility period must be extended. But we can be more ambitious and offer even more support for workers that also improves Canada’s economy.

Support for workers is one more reason the government needs to make significant investments in health care, housing, and infrastructure. This will create a variety of good jobs. We should also implement a public work program to ensure everyone who wants a job has one. This provides income and experience for participants. But it can also set a wage and benefits floor that employers must exceed to attract workers.

There is no valid reason to leave unemployed any worker struggling to find a job for an extended period of time. This is bad for them and bad for Canada. There is so much work to be done. Why wouldn’t we match workers with that work just because the private sector doesn’t see any profit in it?

D.T. Cochrane is senior economist with the Canadian Labour Congress, Canada’s largest labour organization.