The connection between youth unemployment and mental health
October 26, 2026
OMERS members’ families are not immune to the challenges of the job market; many members have a child or grandchild who has struggled or is currently struggling with transitioning to full-time work.
Throughout the past decade, financial strains on Canadian youth have grown significantly, and today’s weak youth labour market is making the transition into adulthood feel increasingly unstable. As of May 2026, Canadians between the ages of 15 and 19 had an unemployment rate of 19.4%. These numbers point to more than just a difficult job market. Many young people are dependent on parental support for living expenses, with 62% of adults aged 20-24 living with at least one parent. This delayed independence can worsen uncertainty about the future, making youth unemployment increasingly a mental health issue.
This matters because young people are already reporting high levels of anxiety and depression. In 2025, the University of Ottawa published two studies on anxiety and depressive symptoms among Canadians. Younger participants self-reported the most mental health symptoms across all age groups. 59% experienced depressive symptoms, with more than one in four (27%) classifying them as severe. Amongst young survey participants, 57% also reported anxiety symptoms.
While anxiety and depression occur more frequently during adolescence and early adulthood in general, research suggests that youth mental health has been declining steadily, with the COVID-19 pandemic accelerating this trend. These pressures make the transition from school to work especially crucial, as employment often shapes young people’s sense of stability, independence and optimism about the future.
Out of school, out of work
Obtaining employment after completing one’s education is a difficult transition for youth and may play an important role in their mental health. A recent survey found that 82% of Canadian youth felt stressed about their future careers, with 34% citing “not being able to find a job” as worsening their mental health. 76% of youth also believed that “bigger forces out of their control” would influence their financial futures, regardless of how hard they worked. “Unemployment lowers self-esteem, subjective well-being and overall mental health from the loss of financial independence and social resources,” says Dr. James Aw, OMERS Chief Medical Officer. “Low self-esteem in adolescence can predict the likelihood of later depressive and anxious symptoms whereas positive self-esteem can build resilience even during the stress of unemployment. Another vicious cycle is that depression can lead to low self-esteem, which makes it harder to seek employment.”
Unemployment can cause long-term mental health challenges
Across all groups, unemployment has negative consequences for mental health. However, younger populations may experience more pronounced long-term “scarring” effects. They lose potential earnings, face résumé gap-based discrimination and are more susceptible to long-term mental health challenges. A Swedish study found that in younger populations, unemployment was associated with higher hospitalization rates, decreased well-being, alcohol consumption and dependence, and an increased risk of receiving a mental health diagnosis. Altogether, these results suggest that employment aligned with educational pursuits is important for youth well-being. These opportunities can be difficult to find in the current labour market. Worsened mental health can make job searching harder, weakening confidence and motivation for the future.
Protecting mental health while unemployed
Despite these challenges, there are meaningful ways to protect our youth’s mental health as they are job-seeking. Volunteering is one possible support, as studies suggest that volunteering more than once a month can reduce the negative mental effects of unemployment. Volunteer experience can also strengthen a job-seeker’s soft skills, thereby increasing the rate of interview callbacks in certain industries (i.e. retail, real estate). However, volunteering is also associated with longer unemployment—at least 31% longer than those who did not volunteer. Volunteering can strengthen resumes and support mental health, but it is not a substitute for paid employment. Because of this, youth need strategies to protect their mental health while keeping their job search active and manageable. The Johns Hopkins School of Public Health suggests five tips for job seekers:
Prioritize self-care and be kind to yourself: This is essential for managing stress levels amidst a harsh labour market. Incorporate exercise, mindfulness, hobbies and time with your loved ones throughout the day to help you recharge and stay resilient.
Set time aside for job searching in your daily routine: To avoid job search burnout, it’s important to set boundaries so that you don’t lose sight of your health. Create a routine that includes applying and networking for a part of the day and spend the rest recharging.
Reach out for support from your community: Surrounding yourself with a supportive network who can offer you advice, perspective, and encouragement when necessary, is essential to staying afloat during difficult times.
Set manageable goals and expectations: The job search process is unpredictable and time-consuming, and you may not reach your goals immediately. Not recognizing this can lead to feelings of disappointment or inadequacy. Recognize that many young people are in your position, and that your perseverance can open doors in the future.
Seek professional support: Career coaches, recruiting agencies, reverse recruiters or professional resume writers can enhance your job search by providing access to opportunities, improving applications and offering personalized guidance.
Tips for family members
For parents currently supporting a job-seeking child losing motivation, family psychologist Dr. Jeffrey Bernstein provides furthertips:
Avoid accusing your child of wrongdoing and try to understand their feelings. Sit them down and have an honest and constructive conversation about their situation.
Help them think about next steps. Encourage small, achievable goals, like updating their resume, networking with people of interest, or applying for a few jobs in a certain time frame (e.g. three in the coming week).
Provide emotional support rather than endless resources. The latter may not encourage proactive behaviour.
Reframe failures. Teens and young adults looking for employment confess that a fear of failure is a big hurdle when it comes to putting themselves out there. Parents should try to reframe disappointments as opportunities for feedback instead of personal flaws.
Model calm perseverance. When you express frustration, panic, or anger, the focus shifts to conflict rather than growth. Steadiness communicates faith in your child’s quest to find a job.
Ultimately, supporting unemployed youth through a tough labour market requires a delicate balance of emotional support and practicality. Young people benefit from realistic goals, community support, professional guidance, and encouragement from parents and grandparents. In combination, these strategies can help them stay motivated and connected to future opportunities while protecting their mental health.
The Relatable Economist is an ongoing written series focused on how the economy, geopolitics, markets and more are impacting our day-to-day lives, discussing topics that matter to you, even if just to share with your friends at your next get-together or in the stands at your child’s or grandchild’s soccer game. Have a topic you want to learn more about? Write to us at therelatableeconomist@omers.com.
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