Ep 43: Canada’s Stuck Economy & Quiet Labour Market Crisis with Brendon Bernard

The numbers say Canada’s economy is stable. Everyday life tells a different story.

We sit down with Brendon Bernard, Senior Economist at Indeed, to explain that disconnect and translate the labor market data into what it means for your job search, your workplace, and your family decisions. 

We get into why Canada is stuck in a low hire, low fire cycle, how that freezes opportunity even when unemployment doesn’t spike, and why young workers and career switchers feel the pain first.

From there, we dig into a pressure point that shapes everything from household budgets to labor force participation: childcare. Brendon shares what his parent-focused research reveals about Canada’s $10-a-day childcare policy, including the uncomfortable truth that lower fees don’t help much if you can’t get a spot. 

We talk about what the employment data actually shows in child daycare services, why waitlists persist, and how municipal politics and infrastructure decisions can quietly determine whether new childcare capacity ever materializes. If you care about productivity, GDP, and who can afford to work, this part connects the dots.

Then we tackle the two-letter topic that keeps changing the rules: AI. We break down AI-driven productivity gains, the difference between tools that augment workers versus systems that automate entire tasks, and what that could mean for entry-level jobs, wages, and inequality. 

Finally, we ask why Canada isn’t seeing a full AI boom in the numbers yet, what’s different in the US, and where Canada might still win through investment, energy, and critical minerals. 

Subscribe, share the episode with a friend, and leave a review so more people can find the show.

Quick heads up: This episode was recorded on February 19, 2026 so while the news may have changed since this conversation was recorded. The thoughts and ideas still remain relevant. 

Everything you hear in this episode is for educational purposes only. Not financial advice. 

Transcript

Why The Economy Feels Off

Julia Pennella, Host 0:00

Let's start with a simple question. Why does Canada's economy feel so confusing right now? On paper, the numbers, everything looks fine. Unemployment isn't exploding, growth hasn't completely collapsed. But talk to anyone and you hear a very different story. People are living paycheck to paycheck. Young people can't find jobs. Families can't find affordable childcare spaces. And I'm not even gonna get into the price of housing. Canada's economy might be stable, but it's also stuck. Welcome back to Let's Talk Politics, the podcast where we break down the policies shaping your daily life and help you make politics make sense. Joining us again to talk about all things labor is our senior economist friend from Indeed, Brendan Bernard, who has also recently had to add diapers to his grocery list. As a new parent, Brendan just released his first parent-focused research on childcare in Canada, and it exposed a major bottleneck. We simply don't have enough childcare spaces. Which raises a bigger question: how effective is the $10 day childcare policy if families still can't find a spot? From there, we dig into the labor market, why the numbers look steady while millions of people feel like they're hitting a wall trying to get hired, move up, or even switch careers. And finally, we tackle the two-letter word on everyone's mind: AI. Will it make workplaces more productive or start replacing people altogether? And where does Canada fit in the global AI race that's already reshaping markets? There's a lot to cover. So let's talk politics and the economics behind it with Brendan Bernard.

Municipal Politics And Housing Power

Julia Pennella, Host 1:50

What is your political hot take right now? There's so much happening in the world, and obviously economics is fueling that. What are you seeing? What are you feeling? Uh, what's your hot take?

Brendon Bernard, Senior Economist at Indeed 1:59

My hot take is going to be a little more technical in a sense, in that from a Canadian perspective, we should spend more time thinking about municipal politics. We've got the big cities in Canada and not just the municipal areas, but their metro areas account for a large share of the Canadian population uh and and the and the Canadian economy. And policy developments, including a big one being around the housing market, are so much tied to politics and policy at the municipal or regional level. Canada is not like the US, where the US has hundreds of metro areas where the developments in any one metro don't have the same weight in for fearing the overall economy. Canada is uh different. And so uh municipal politics is a big deal.

Julia Pennella, Host 2:51

Yeah, absolutely. Well said. And that's a really big theme and main hot take I've been getting a lot from these interviews is how much responsibility is downloaded onto the municipalities, at least through the last 10 years, and yet they still have the lowest tax collection. And as we're talking about the market right now, I also want to ask you your specialty is in labor and tracking the metrics around that.

Stable Numbers Low Churn Reality

Julia Pennella, Host 3:14

So, what's the pulse of Canada's labor market right now? As we're heading into Q2, are we on some stable footing? Do we have this persistently high unemployment, especially among young people? Like, is there any signal of deeper structural problems?

Brendon Bernard, Senior Economist at Indeed 3:29

Past year or so, uh, a really tumultuous time for the Canadian economy, the labor market actually was more stable than that. The Canadian labor market really weakened in the years coming out of the pandemic era. Boom. Things were really hot in 2021 and 2022. And over the next few years, dishes steadily deteriorated. 2025, despite being hit with this uh trade shock and everything like that, things held up relatively steady. And the unemployment rate starting uh 2026, pretty close to where it started 2025. So steady in the aggregate sense of like joblessness, similar if we look at other metrics like the working age employment rate, that's a share of 15 to 64 year olds with a job, steady in the aggregate, and then in some ways, static underneath that. And what I mean by that is Canada, as well as other economies, we've seen this in the US as well, has been experiencing a low hire, low fire environment. Economists call this labor market churn, where not many people are changing jobs, not many people are losing their jobs, and not many people are starting jobs. And what it's created is a bit of like a two-track market. This is a theme that's uh developed over uh the past few years that has continued into 2026, where folks employed in stable career track jobs have been faring relatively well. Their wages have actually been growing faster than inflation. Uh, job security has remained pretty solid. But from that weakening in between 22 and 24, and then persisting in 2025, job seekers uh were uh facing a lot of challenges. We saw it in elevated youth unemployment, but not just that, job hopping was slow in long-term unemployment and non-employment of people leaving the labor force has built up a bit, a sign that job seekers in a variety of circumstances have

Job Hugging Urgent Search Stress

Brendon Bernard, Senior Economist at Indeed 5:24

been struggling.

Julia Pennella, Host 5:24

As I'm seeing in the headlines and pop culture, people are hugging their jobs now. They're less likely to leave because of all this uncertainty. Have you been seeing that in the job market? And what does that mean for the economy more broadly? If people are maybe staying stagnant in the roles, does that impact Canada's productivity? What are your thoughts around that?

Brendon Bernard, Senior Economist at Indeed 5:44

Yeah, I think uh hugging is one way of putting it. When people change jobs both for push and pull factors, the pull factors are what are the outside options? What else is out there? And as the job market weakened over the past few years, job opportunities, job openings have been steadily declining. So for job seekers, there's just less out there to jump to. And so this is probably one of the factors that's caused people to stay put. Not necessarily hugging jobs, but uh knowing no other job to hug them instead. But uh I don't think that's the only thing. I think there's also probably some other aspects of people staying put because the future is unknown. And also um these reasons don't necessarily have to be all negative. A big reason people search for new jobs is because they don't like their current ones. Uh, we actually run a survey at Indeed where we ask workers a whole different range of questions about uh what they think about their job, how satisfied they are across a variety of dimensions, and compare them people who are searching, people who aren't searching, and people who are searching urgently. And as you go from the non-searchers to the urgent searchers, there's a very clear gradient that urgent searchers are much more negative about basically every facet of their job on average than the people who aren't searching. And so the people staying put can be both due to negative reasons, both economic uncertainty or fact there aren't aren't as many job opportunities out there, but there are also potentially positive factors that could also be driving it.

Julia Pennella, Host 7:23

And on that point, what's considered urgent? Like why are these in that survey that you mentioned, what are the typical reasons that someone would be in an urgent scenario and what are those negative aspects? Like, is it a toxic workplace? Is it unstable, unreliable work hours? You can give us just a brief snapshot of that.

Brendon Bernard, Senior Economist at Indeed 7:40

So we asked job seekers a few different types of questions on both their current employment and what they're looking for in a new job. The top thing that people are looking for in a new job is higher pay, usually followed then by better benefits and then opportunity for career growth or to to change their career path. From the point of view of employers looking to recruit, these are the areas of like the value proposition that they offer potential candidates. And so that's kind of like what people are looking for. But then what they're looking to get away from, uh, or what are they unsatisfied with their workplace? It's a whole range of things. Uh questions like my workplace allows me to thrive professionally or at home. And a big one uh where there's this huge gap, especially urgent versus non-searchers, is just around stress. My work causes me stress at work. My work causes me stress at home. These are huge predictors of whether people are searching urgently or not. And so it highlights how work well-being is a big factor, both in recruitment and employers need to want to be able to authentically convey that they have a positive workplace, but also retention, those areas of the value proposition like pay, benefits, opportunity for growth, workplace flexibility, whether it's like remote work, things like that. Those are the terms of the deal that candidates and employers will make at the start when the match happens. And they're really important for attracting candidates. But once the match happens, those kind of factor to pay, it's generally set and it'll change over time, but there's kind of a set expectation from there. What matters for keeping people after those expectations are set are things like work well-being.

Julia Pennella, Host 9:30

More and more people say their decision about whether or when to start a family isn't just about child care costs. It's also about workplace culture, flexibility, and whether employers actually support employee overall well-being from an economic and labor market perspective. How much do things like remote work, flexible schedules, and maybe even family-friendly policies factor into people's decisions to have children or grow their families?

Brendon Bernard, Senior Economist at Indeed 9:56

I've got a location flexible job, and it's a huge help with a one-month-old at home. Time saved, not commuting, is huge. And I think there was a recent study between location flexibility and couples having more kids. So there's lots of things going on driving uh people's

Childcare Waitlists And The Bottleneck

Brendon Bernard, Senior Economist at Indeed 10:16

family formation. But uh I can definitely say from personal experience that location flexibility definitely has made things easier. Another thing that I've been uh thinking about, um, and it was is my first parent-focused uh research piece so far this year, is around childcare in Canada and specifically what's going on in the jobs in the childcare industry, because the Canadian childcare sector has been transformed in a lot of ways since the federal government's new childcare program came into force in 2021. And uh, one of the things that people in the know tell you after you tell them that you're having a kid is oh, have you signed up for for child care yet? And that's because with this new program, while the out-of-pocket costs for childcare, at least in the regulated sector, have plunged, uh, which was kind of like the main uh point point of the policy, it's tough to get a spot. A lot of families report wait lists and other challenges accessing care, both location-wise or a place they'd like to use. And so this was a topic uh that uh caught my eye. And there's actually some good stack can data that allows us to track what's going on in employment in this sector, specifically the formal sector. So I looked at a data from uh the survey of employment payrolls and hours. Doesn't get as much coverage as the LFS, but it provides way more detail at the industry level around what's going on in the economy. And one of the things that really struck me just at first cut of this data is that particularly outside of Quebec, Quebec has had its own subsidized care model for decades now. But outside of Quebec, formal child care employment has soared over the past few years. Between late 2021 and late 2025, payroll employment in child daycare services was up 48%. That's way more than the 9% overall economy-wide job growth over that period. And so clearly the sector has uh ramped up uh in response to this new policy. And yet, g given all the wait lists that are out there and the and the challenges that people uh are having, there seems to be a disconnect still, and there seems to be a shortage of subsidized spaces.

Julia Pennella, Host 12:38

And on that point, I think it was interesting too, with the data, and this has been, I think, something consistent since the $10 day uh childcare program uh was implemented, was the lack of infrastructure. It's less about the actual labor shortage and it's the last lack of infrastructure spaces, whether it is commercial or going back to your point about your hot take on municipalities, municipality zoning areas where a daycare could be done within a home. Yeah, it should be interesting to see that shift because I'm curious too, like without having affordable childcare, does that impact our GDP? Does that drag our productivity down? Because we're assuming a parent would have to stay home to care for that child. Could you share a little bit about the economics behind the benefits of affordable childcare?

Childcare Policy GDP And Participation

Brendon Bernard, Senior Economist at Indeed 13:21

The first stage of thinking of how childcare interacts with the economy is there's already childcare being done, just determined by the number of kids that are are around. Whether it, though, is in the paid formal economy or not, is the first question of whether it starts entering the labor market statistics and things like GDP. So one of the things we'd expect when the government pushes subsidizes the price of childcare is a shift away from inform, unsubsidized care, whether it's by parents themselves or family members or informal providers to the subsidized sector, where we're now easily tracking that in our economic data. And so in the job market data, first of all, it's going to show up in hours worked and people's labor force participation. And in in Quebec, when uh the this policy came into force in the in the late 90s, there was this huge surge in labor force participation among uh mothers with with young kids. The good the group you'd expect uh to be most uh sensitive to the policy change. And then when it comes to paying for the policy, well, all that formal labor, folks who are doing uh the unpaid childcare labor goes into the formal sector and folks find a job elsewhere. That has a boosting effect on overall employment, which translates to the overall economy. And so, in terms of like the cost of the program, from the government's point of view, it's probably getting as much back in tax revenue, or it's offsetting at least a lot of the cost from the subsidy uh that it's getting back from tax revenue. But at the same time, of course, you know, there is uh definitely a question about the quality of childcare and how that changes as a policy that shifts and long-term impacts of that. And so I think there are like lots of moving uh parts going on, but it's it's definitely a case where we see the world of home economics being transitioning to the official formal economy that our statistics really cover.

AI Value Creation Versus Job Loss

Julia Pennella, Host 15:23

As we're looking at the labor market and the impacts of AI, well, there's a lot of research and reports that are projecting that AI could add uh nearly $13 trillion to the global GDP uh within the next four years. So, from an economist's perspective, is this new value or is it just simply a massive transfer of wealth from labor wages to capital and software owners? Because we know from the data that a lot of those entry-level jobs that were typically for youth are starting to be lost. And it's correct me if I'm wrong, some data I've seen is there's actually less laying off in substituting for having more AI and actually just less people hiring because of the new AI capacity. So yeah, I'm just curious if you can either debunk some myths or you know, what is your perception around this new value, if any, around AI?

Brendon Bernard, Senior Economist at Indeed 16:12

Yeah, I so I should probably like divide my answer in two there. I think, first of all, just like the way GDP is calculated, if GDP is going up faster than it would otherwise, that's by definition new value. If it was just one capital gaining at the expense of labor, that can happen without GDP change. The boom that's happening, it's gonna produce new value on net. Now that, but that doesn't that doesn't mean there also won't be major shifts in the balance between capital and labor. How that works out, it's tough to answer how the technology works today, but that is not gonna be how things are six months from now, let alone two years, four years. And so things really shift. And so I'll I'll let me give you an example. Thinking about this back in 2023, so Chat GPT went public at the end of 2022. Thinking about it in 2023, it was widely adopted. But for most people, like really good chatbots, really good Google, really good search engines, and really beneficial for doing many tasks at work, but primarily beneficial in the way that it helps workers do their existing jobs, like augmenting their labor. You can outsource some tasks, how it's often used in things like call centers and for customer service reps is aggregating the knowledge of all the workers in a place. So when a customer calls in, now the the AI is taking down all their problems and identifying the likely solutions that the rep uh can provide. And so a real companion to help them with their jobs, that augmenting effect and the implications of that for the labor market are much different than the automation potential that I think we can call like agentic AI, where AI is taking over tasks and in some cases like full-on responsibilities from start to finish, at least to a substantial degree. And that is just a different ball game in terms of the labor market implications and the economic implications. For the aggregate economy, it's the agentic one, the full takeover automation of tasks that is the probably true game changer, but it's also the one that's probably like the biggest risk to people's jobs and the labor market. Whereas the augmented world, that's one where in many contexts, it's actually uh inequality-reducing technology. There have been lots of experiments about this where the workers who were less proficient or newer at the job were the ones who benefited the most from having that sort of like companion technology. But things really change if we're in a world of full-on automation of tasks. And the thing is, the way the technology has evolved over the past few years, we've probably gone from more of like an augmentation to an automation world. And that means huge potential transformations of the economy where I do think output could substantially increase, but also with the potential for labor market

Canada’s AI Gap And How To Win

Brendon Bernard, Senior Economist at Indeed 19:28

dislocation as well.

Julia Pennella, Host 19:29

And building on that, would you characterize this AI boom as you know, a productivity revolution? Or would you say it's more of we're seeing a power shift because who is capturing the value in the market rather than how much of that value is being created and produced? So I'm curious, like putting it in that perspective, especially if we are gonna see less people coming into the labor market for these jobs, wealth inequality is also gonna be distributed differently. So, how would you characterize it?

Brendon Bernard, Senior Economist at Indeed 19:58

So the base way of calculating productivity is the amount of goods and services produced per total hours of work. Definitely uh see this as a productivity uh changing event. But in a lot of ways, I don't think we're really there, especially in Canada. Like, I mean, Canadian GDP is growing. It's supposed to grow like 1.5, 1.6% year over year in 2026. The AI boom is not showing up in our output numbers. Professional scientific and technical services, the information communication technology sector, even more down in the weeds, data processing and computer infrastructure. These sectors are pretty flat over the past few years, even amid the new AI era. Now, this is in Canada. In the US, things are different. But in Canada, we're not in the AI boom yet. We are on the cusp, though, of it, potentially. And chances are like we're gonna be like dragged into it based on how things evolve abroad. So I'm downplaying how the impact so far, though, of course, these AI tools are now a major part of many people's jobs today. Uh, we ran a survey last year of Canadian workers. I believe it was 29% of workers reported using AI multiple times per week at work. So clearly people are using it, but it's not showing up in the aggregate Canadian statistics. In the US, I think there's more signs of it show sho showing up, both in the application of the data, just everyday workers incorporating AI more into their workflow, but also in the investment boom involved in AI. And so though those are some of the key drivers of why the US economy has grown been growing relatively quickly recently, even as the labor market, US labor market has been pretty flat over the past um few years. There we're seeing more of the productivity gains. And part of the productivity gains. Are coming from the actual physical investment in software and hardware, data centers and things like that that are driving the economy that we're not seeing in Canada right now.

Julia Pennella, Host 22:10

And you know, like why is it we're not seeing that? Is it because the government policies don't allow for scaling up? And that's a big challenge with small businesses specifically, is scaling up. Are we not investing in the talent to actually bring AI? Do we not have the infrastructure? Like, what have you seen more broadly that makes us that such grave discrepancy, I would say, between US and Canada?

Brendon Bernard, Senior Economist at Indeed 22:32

Yeah. So I think like this factors that are both like specific to this AI boom, like just how so many of the companies that are the real like drivers of the space, the ones outlaying billions and billions of dollars in investments, are American companies and they're and often like based in like certain corners of America, not just um across the board. And so uh, you know, I think that's part of the aspects that are specific to the AI boom itself. But at the also just uh from historical experience, even pre-this new AI age, Canadian businesses uh don't invest uh the same amount in new technology. And the gap is uh larger between small businesses in Canada and the US, there's uh um a larger gap uh between those than there is between big businesses between uh Canada and the US. So there's a gap across both sizes. And so in that sense, I I think it's gonna take time in Canada for for these technologies to start having an imprint on the economy. But time doesn't mean it's not gonna happen. What we're talking about is what is happening today, but that doesn't mean uh we're not gonna see major changes going forward.

Julia Pennella, Host 23:41

And I think too, like I take your point. Like you said, the companies are American. I think an interesting part of this whole equation as well is like how we're looking at the chips and the costs. So we have Taiwan, all IC are there with semiconductors and the chips to run AI, but also the minerals. Um Canada's very rich in minerals.

Brendon Bernard, Senior Economist at Indeed 24:00

The ki the TSX has has been booming over the past um few years. And so like the way AI impacts the economy isn't just directly through the potential replacement of workers and tasks being automated. The buildup of the infrastructure both requires activity within the tech sector, but there's a ton of inputs, like you said, both foreign high-tech electronical components, but the raw materials and a massive amount of electricity that that's gonna be also really important. And I think we see it in the Canadian stocks that this is Canada's initial link to the AI boom. And while over time we're gonna see the economy change right now, this is also having having a main effect. And for Canada to take advantage uh uh of this economic boom that's happening, we've got to uh uh supply many of those materials.

Julia Pennella, Host 24:59

And we have uh the land to support a lot of those data centers and you know, with if we want to incorporate renewable energy. So I am hopeful, like I think there is a place for Canada to insert itself in the conversation, but hopefully we can see government move quickly as fast as this is evolving to your point of CatGPD coming on uh in 2023, only three years later. And the the way it has inserted itself in our society and our day-to-day life is just beyond comparison. Well, that's a wrap on this episode, but don't go too far. The conversation continues in part two, where Brendan and I dive deeper into all things AI and what it means for the future of work and the economy. So go check that out. And if you like this episode, make sure to hit that like button, subscribe, leave a review, or share it with a friend. It really helps support the podcast and keeps these conversations going. I'm your host, Julia Pinella. This is Let's Talk Politics, and I'll catch you in part two of my conversation with Brendan Bernard, senior economist at Indeed.