State of the labour Market

Recent Canadian University Grads: Slower out of the Gate, but Eventually Finding Their Place


As they age, recent university-educated Canadians are faring pretty well in today’s labour market.

Key points:

  • For some recent university grads, finding work in the years right out of school is tougher than in the past. Jobless rates among those under 25 with university degrees are higher than they were before the 2008-09 recession.
  • On Indeed, recent grads are much more likely to click on certain engineering, tech, and finance jobs postings than the average job seeker.
  • Those nervous about entering the world of work can take some comfort in that university grads from earlier years appear to be doing pretty well in today’s labour market, even though some got off to relatively slow starts themselves.

It’s convocation season in Canada and university grads will soon be putting away their caps and gowns to enter the world of work. Unfortunately for some, finding a job in the years right out of school is tougher than it used to be. Nevertheless, the longer-term picture for them is brighter. As they age, recent university-educated Canadians are faring pretty well in today’s labour market, notwithstanding such challenges as mediocre income growth that other groups of Canadians are also facing.

Unemployment is elevated among the youngest university grads

The overall Canadian unemployment rate is slightly lower than it was before the 2008-09 recession, yet jobless rates among those under 25 with university degrees are higher than they were pre-recession. In 2018, the unemployment rate among young grads was 8.9%, down a bit from two years earlier, but still above its 7.8% average between 2000 and 2008. Young grads could also be facing challenges affecting youth more broadly, such as a declining share of employees under 25 with permanent jobs.

Labour market outcomes look better as recent grads enter their mid-20s

Settling into the labour force right out of university might be tougher than in the past, but conditions look better for those who’ve been out of school longer. First, a university degree is typically associated with a substantial income premium. By 2015, the typical Ontario university graduate from the class of 2010 was significantly out-earning workers of similar age with fewer years of schooling.

Second, unemployment rates among somewhat older university grads are low by historical standards. In 2018, the unemployment rate among degree holders between 25 and 44 was 4.2%, just slightly above where it was in 2007-08 and below its 4.7% average between 2000 and 2008.

One concern is that recent grads older than 25 are increasingly working in roles that don’t require university education. However, while overqualification is common in Canada, the share of university graduates between 25 and 34 in jobs that don’t typically require a degree was fairly stable between the early 1990s and 2011.

Employment growth in more recent years has been led by mid- and higher-paying jobs and Indeed data suggest recent grads are benefiting from this. In 2018, degree holders between 22 and 27 clicked on certain engineering, tech, and finance occupations at rates 2.5 to more than three times higher than the average job seeker. This disproportionate interest is probably translating into well-paying work, especially for recent grads with technology and engineering backgrounds, who usually find positions in related fields.

Relatively elevated unemployment rates among university graduates under 25 suggest the transition from university to work isn’t as smooth as it was during the 2000s. Still, those nervous about entering the job market can take some comfort from the fact that slightly older university grads are doing pretty well, even though some got off to slow starts themselves.

Of course, older recent grads face their own challenges, like mediocre wage growth and high housing costs in major cities. But when it comes to finding work, slightly older degree holders are benefiting from the Canadian labour market’s recent strength.

Methodology

Statistics Canada only publishes unemployment rates by educational attainment for those between ages 25 and 44, not 25 to 34.

We analyze click activity of recent university graduates on Indeed by isolating clicks by job seekers with a bachelor’s degree between the ages of 22 and 27, according to information on their resume. Job clicks are organized based on each position’s corresponding six-digit Standard Occupation Code.

We determine the relative popularity of jobs among recent graduates compared with the average job seeker by calculating the share of clicks by recent graduates on Indeed postings for each occupation with clicks by all job seekers. We then divide the recent graduate share by the overall job seeker share to get an interest ratio for each occupation and occupational group. The higher the ratio, the more relative interest from recent graduates compared with the total job seeker population. In this analysis, we only included occupations that received at least 1,000 clicks from recent grads in 2018.

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