Mental health claims from Gen Z and younger millennials are rising faster than any other group – and vary depending on their political persuasion
Ask most HR directors what their biggest claims headache is and you will get the same answer. Young workers. Mental health. Anxiety, adjustment disorder, burnout - all trending up, all concentrated in employees under 35, all landing in the disability queue faster than they used to.
The TELUS Health Mental Health Index for Q1 2026 puts Canadian workers aged 20-29 at a score of 54.4 - the lowest of any age group, against 71.4 for those aged 60-69. Gen Z employees are experiencing the fastest growth in mental health issues and chronic disease compared with all other age groups, according to a Sun Life analysis. Adjustment disorder and generalised anxiety disorder now account for over 40% of mental health long-term disability claims in Canada, up from 25% in 2019 - and these conditions skew heavily toward younger workers.
The gap at the heart of the debate
Reported mental health problems vs functional limitation, Canadian youth, 2007–2024
Among young Canadians, the share reporting poor or fair mental health has risen nearly fivefold since 2007. The share who say mental health limits their daily functioning has roughly doubled. Both are real — but they are not the same problem.
Sources and methodology: Self-rated mental health (red line): Statistics Canada Canadian Community Health Survey (CCHS), as analysed in a peer-reviewed repeated cross-sectional study of 96,683 youth aged 15–24 (Published 2024, PMC12378166). Confirmed anchors: 4.3% (2007–08) and 20.1% (2021–22). Functional limitation (blue dashed line): Statistics Canada CCHS Functional Health, Table 13-10-0966-01 (released March 2026). Confirmed anchors: 2015, 2019, 2023 and 2024. Note: CCHS underwent methodological redesigns in 2015 and 2022; comparisons across these breaks should be treated as indicative. Intermediate values are interpolated to reflect trends described in the source publications. Neither series should be read as a precise annual measure.
Employers are responding accordingly. A survey of 800 US managers and executives found that more than a third are now actively avoiding hiring recent graduates in favour of older candidates - not out of age bias, but out of accumulated frustration with the management overhead involved. Nearly half said they would take an overqualified older hire over a younger one just to sidestep the coaching and sensitivity required. Three in four managers say Gen Z is harder to work with than any previous generation they have managed. Research by FranklinCovey in 2025 found that almost 40% of managers would rather delegate a task to an AI tool than work through it with a Gen Z employee.
Mental health challenges cost Canadian employers roughly $110 billion a year through disability leave, accommodations, lost productivity and compliance costs, according to a CSA Public Policy Centre study published this year. Mental disorders account for almost 40% of all long-term disability claims. The numbers keep moving in one direction.
John Burn-Murdoch, the Financial Times's chief data reporter, published an analysis this week asking whether we are actually measuring what we think we are measuring.
What the FT found
Working across data from the UK, US and other countries, Burn-Murdoch found that the share of young people reporting a mental health problem has risen sharply over the past decade. But the share who say a mental health condition limits their day-to-day functioning has barely moved. In England, one measure has risen steeply while the other stayed flat.
The finding that lands hardest for employers: in the US, when people were asked whether someone experiencing "broad happiness but occasional moments of worry, frustration or loss of confidence" has a mental illness, more than half of young Americans now say yes. Fifteen years ago, one in five said the same. Older Americans' views have not changed.
The rise in reported mental health problems is also significantly higher among people who identify as left-leaning than right-leaning - but that gap disappears entirely when the same question is asked about physical health. The divergence is not about underlying health. It is about how different groups label and conceptualise their experience.
Read next: "Toughen up, buttercup": Michelle Obama talks Gen Z
This does not mean younger workers are fine. Hospitalisation rates for self-harm among teenage girls and young women have climbed sharply across multiple countries - a concrete signal that is not dependent on how people label their experiences. That is real distress at the severe end of the spectrum.
But between that extreme and the broad wave of reported mental health problems sits a large and complicated middle ground. That is where most of your claims are coming from.
The Canadian Gen Z picture
Canada's own data makes the generational divide specific. The MHRC's latest quarterly survey found unmet mental health needs were highest among adults aged 18 to 34, with 52% reporting needs that were unmet or only partially met. Young women aged 16 to 34 were the most likely to report moderate or severe anxiety symptoms, at 32%. As HRD reported on the MHRC findings, burnout affected 26% of Canadians overall, with the toll falling disproportionately on younger workers.
The Sun Life claims data adds a specific wrinkle. Depression-related LTD claims have proportionally decreased even as total mental health claims have risen. What is surging is adjustment disorder - defined as a negative and excessive response to a stressful life event or change. It is a time-limited diagnosis, typically resolving within six months of the stressor. But if untreated, it can become chronic and develop into anxiety or substance misuse. The condition is disproportionately prevalent among younger workers navigating career transitions, economic stress and housing uncertainty.
Some portion of this increase reflects a generation that has been taught, and that genuinely believes, that difficulty is illness. Reduced stigma around mental health is a genuine social achievement. But if normal life stressors are being classified as clinical disorders - by employees, by physicians, by benefits administrators - the response required is different from the response to clinical illness. Conflating the two wastes resources on the wrong intervention while leaving the people who are genuinely most unwell without what they actually need.
The ambition data complicates the picture further. Analysis of SurveyMonkey research found that eight in ten Gen Z workers say their goal is to reach the top of their field - a higher share than either millennials or Gen X expressed at the same career stage. More than half respond to out-of-hours messages immediately. A third say receiving out-of-hours contact makes them feel valued rather than imposed upon. A generation that managers describe as difficult turns out to have no shortage of drive.
What it may lack is the scaffolding. Many of today's youngest employees spent the formative years of their early careers working in isolation, without the informal social learning that office environments have always quietly provided - the overheard negotiation, the lunch where someone explains how things actually work, the senior colleague who models how to handle a difficult client without falling apart. PwC UK recognised this directly when it launched a dedicated resilience training programme for its 2025 graduate cohort, with the firm's chief people officer describing the goal as equipping new hires to navigate criticism and pressure: skills that previous generations absorbed without anyone needing to name them.
The systems problem
Burn-Murdoch identifies "systems medicalisation" as a key driver - the idea that inflexible binary frameworks in workplaces and benefits systems force employees with any level of difficulty, whether severe or mild, permanent or temporary, into a disability category that does not fit their actual situation. If the only way to get support is to claim to be disabled, more people will claim to be disabled.
This has specific legal weight in Canada. When navigating mental health accommodation requests, employers have a duty to accommodate mental health conditions up to the point of undue hardship - and a duty to inquire when an employee appears to be struggling, even if they have not asked for help. The consequences of getting this wrong are severe.
The Lifemark decision from the Human Rights Tribunal of Alberta in June 2026 puts a number on it. The company was ordered to pay a former employee over $1 million in lost wages and damages for failing to inquire about a mental health condition. The duty is active, not passive.
The binary creates a perverse dynamic. An employee with moderate, fluctuating anxiety gets no support unless they claim disability status - which triggers formal process, potential stigma, and a paper trail. So either they claim disability, adding to the claims count and the employer's costs, or they get no help and eventually deteriorate to the point where they do. The architecture of support itself is generating some portion of the claims it is supposed to manage.
The answer
Faye Gagné of Henry Schein Canada described a nine per cent decrease in mental health claims and a ten-day reduction in average claim duration after implementing a structured prevention programme. Canada Life's research puts the return on formal mental health strategy at $1.62 per dollar in the first three years, rising to $2.18 after that. Employees who receive timely treatment for anxiety disorders see a 40% reduction in absenteeism, according to Sun Life. For adjustment disorder - the fast-rising category among younger workers - early, short-term intervention typically resolves the condition. Waiting until it becomes an LTD claim does not.
The clinical answer is important. It is also insufficient on its own. Corey Seemiller, a professor of Leadership Studies at Wright State University and co-author of Generations in the World of Work, found in her research that Gen Z responds best to managers who set clear boundaries and explain their reasoning, rather than those who rely on hierarchy or assumption. The 28-day difference in annual productivity loss between employees who feel supported by their workplace culture and those who do not - identified in the TELUS Health data - is not driven by clinical intervention. It is driven by whether managers make expectations explicit, give feedback regularly rather than saving it for a formal review, and make the connection between entry-level work and long-term growth visible rather than leaving people to infer it.
When Michelle Obama spoke at SXSW in London this year, she described adversity at work as a curriculum - the bad boss, the boring assignment, the raise that did not come when you thought you deserved it. She is right. But a curriculum only teaches something when the person can see what they are building toward. Without that context, the same experience produces turnover and a disability claim.
For younger workers who score lowest on every mental health measure - those on the lowest incomes, those whose hours have been cut, those who feel least supported by their workplace culture - financial stress, job insecurity and feeling unsupported are not mental health conditions. They are working conditions. Treating the symptom without changing the conditions is expensive and temporary.
At $110 billion a year, Canada cannot keep confusing the two.
