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EI Falls as Unemployment Rises

Statistics Canada reported today that the number of people receiving Employment Insurance (EI) benefits fell by 12,070 in May – the largest drop in nearly two years. (The last time Statistics Canada records indicate a larger decrease was 12,670 in July 2012.)

This substantial decline in EI benefits comes as unemployment is rising. The Labour Force Survey indicates that unemployment increased by 15,200 in May and by a further 25,700 in June.

Overall, only 37.5% of unemployed Canadians received EI benefits in May (i.e. 504,080 out of 1,343,800).

The fact that fewer Canadians can access benefits even as more are unemployed likely reflects the Conservative government’s cuts to the EI system. The federal government should instead improve the accessibility and duration of benefits for workers who paid into the program and are unemployed through no fault of their own.

Financial Risk and Alberta’s Tar Sands

When it comes to global warming, the Intergovernmental Panel on Climate Change notes that what matters is the total volume of greenhouse gas emissions going forward. This amounts to about 30 years of emissions at current levels – a global carbon budget that would provide the world a 66% chance of staying below 2°C. There is some debate about whether an upper limit of 2°C is itself too high – it poses unacceptable and catastrophic consequences for the most vulnerable countries – but nonetheless the 2°C target has been adopted in international negotiations towards a new treaty to address climate change.

Carbon budgeting is a fairly new way of conceptualizing the economic and public policy challenges associated with climate change. It restates a classic economic problem – how to allocate resources subject to a budget constraint – in the context of climate and energy policy research. A key implication that between two-thirds and four-fifths of the world’s proven fossil fuel reserves need to stay underground, forever.

This was confirmed by a recent report to the UN on Deep Decarbonization Pathways, which found that proven reserves of fossil fuels represented potential CO2 emissions some 3-7 times larger than the world’s carbon budget. And if we look more broadly at proven plus probable reserves (what they call “resources”), potential emissions are something like 35-60 times larger than the global carbon budget. The conclusion is inescapable: there are vast amounts of “unburnable carbon” out there.

The UK outfit Carbon Tracker was the first to point out this means we are seeing a “carbon bubble” in our financial markets – that  fossil fuel companies, whose business model is the extraction of carbon, are over-valued on the stock markets of the world. This analysis was subsequently picked up by Bill McKibben in his now-famous article, “Global Warming’s Terrifying Math,” which launched the fossil fuel divestment movement, plus some local content by yours truly in a CCPA report called Canada’s Carbon Liabilities.

The latest from Carbon Tracker looks at planned capital investments in oil production around the world (future reports will look at coal and natural gas). These have different costs of extraction, leading to a “carbon supply cost curve” for oil production. Carbon Tracker argues that in a world of constrained carbon, it only makes economic sense that it will be the high cost suppliers that get cut out of the action.

This logic is bad news for Alberta’s tar sands, which are among the highest cost reserves. Using an oil and gas industry database, Carbon Tracker looks at a potential $1.1 trillion of capital expenditure on oil projects between 2014 and 2025 that require a price of at least US$95 per barrel market price ($80 break-even) – i.e. those projects most likely to not go ahead in a carbon-constrained world. They find that a very large share of these projects (nearly 40%) are tar sands projects in Alberta (see Figure 7 in particular).

Their advice is to financial investors, highlighting the risk associated with exposure to the high end of the cost curve. Topping the tar sands list is Canadian Natural Resources, a company now infamous for an uncontrolled gush of oil from its in situ operations in Alberta. They have US$38 billion of projected capital expenditures in the tar sands. Suncor is next with $31 billion planned. Shell is next, though the “carbon majors” are less risky as they have diversified portfolios spanning the globe. Cenovus and Athabasca Oil Sands round out the top 5 most risky bets in the tar sands (see Figure 10).

This analysis made big headlines in the UK when it was released a couple months ago, but was essentially ignored by Canada’s mainstream media. Indeed, there is rarely a peep about climate risk as Canada deepens its reliance on fossil fuel exports for wealth generation: new pipelines for bitumen, expansion of coal ports, terminals to liquefy natural gas.

There is good reason to think that this is going to change. Pipeline resistance is BC’s largest social movement. Obama’s climate plans and action in China have breathed some optimism into climate negotiations aspiring for a new international treaty in 2015. There have also been important wins for the growing movement for divestment from fossil fuels on university campuses and within churches. Combined with legal risks arising from First Nation land claims, the bar is high and getting higher for Alberta bitumen.

For the most part, however, the underlying assumption of Canadian financial markets, including most Canadian pension funds, is that governments of the world will not get their act together, so there is no reason to pull out from fossil fuel investments. Some skepticism that governments will be able to reach a new deal is warranted, but the probability of them doing so is not zero either. But even in the absence of a global treaty, unilateral actions by Canada’s trading partners could impose de facto carbon constraints. Examples include the Keystone XL pipeline and European Fuel Quality directives.

There is a strong possibility that, sooner or later, Canada will be living in a carbon-constrained world, a development that would have significant (and, to date, widely ignored) economic implications. In this context, “responsible resource development” implies strategic management of fossil fuel reserves in order to maximize shared prosperity, within the context of a carbon budget. The good news is that Canadians have been bombarded with several decades of budget talk about “living within our means”  – now we just have to apply that to carbon.

 

 

Affordable Housing in the Yukon

Earlier today, over at the Northern Public Affairs web site, I blogged about a recent (and controversial) decision made by the Yukon government about affordable housing in the Yukon.  Points raised in the blog post include the following:

-Very little affordable housing gets built in Canada without federal assistance.

-Without financial assistance from senior levels of government, for-profit developers in Canada generally don’t find it worthwhile to build rental housing even for middle-income tenants (never mind low-income tenants).

-Going forward, federal funding for existing social housing in the Yukon is declining.

The full blog post can be accessed at this link.

More People Chase Fewer Jobs

Further to Angella’s excellent analysis:

Statistics Canada reported today that unemployment jumped by 25,700 in June because of shrinking employment and a growing labour force. Canada’s labour force expanded because of population growth, even though the participation rate did not increase. The combination of less employment and a larger working-age population depressed the employment rate to 61.4% – its lowest level since January 2010.

The Harper government has long trumpeted having a stronger job market than the US. In June, the unemployment rate rose in Canada but fell in the US. Statistics Canada reports that it is now the same on both sides of the border, even after adjusting for methodological differences between the two countries.

Continuing evidence of a weak Canadian labour market underscores the need for public investment in important services and infrastructure to help create jobs. Austerity is the wrong priority for federal and provincial governments.

UPDATE (July 12): Quoted by Canadian Press and today’s Toronto Star (page B1).

Dismal job numbers for June

Statistics Canada’s release of job numbers for June look truly dismal. The unemployment rate rose to 7.1%, and there was a loss of 9,400 jobs compared to May.  Year over year, employment rose by only 72,000. That’s a weak 0.4% and the lowest year-over-year increase since February 2010.

An even worse sign – all of that job growth was concentrated in workers over 65. One industry boasted over 80% of net new jobs year-over-year – health care and social assistance.

While there was an increase in full-time work and a a decline in part-time jobs, total hours worked actually fell (month over month AND year over year).  And, despite the fall in part-time jobs, underemployment remains elevated as over 1 million workers are working part-time jobs and need full-time work.

When you break the numbers down by province, well, I’m sure you can guess who is doing well and who isn’t. If we look at the change in both population and employment for 15-64 year olds by province, both Alberta and Ontario stand out.

working age pop

Year-over-year Alberta dominates both population growth and job growth. Ontario, on the other hand, comes in second for population growth, but is actually down nearly 30,000 jobs. Quebec is also notable, as it has had almost no working age population growth, but is down nearly 50,000 jobs compared to last June.

As for that long awaited pivot to business investment and exports, our own Andrew Jackson says that’s like waiting for Godot.

Edit: For those without Globe and Mail subscriptions, here’s Andrew’s analysis over at the Broadbent Institute.

Impact of Fur Trade in U.S.

The fur trade in Canada is often said to have been less malign than in the US, and it was, but that doesn’t say much given the extraordinary disruption it is said to have createn in colonial America by the American historian Bernard Bailyn in his recent (2012) book, appropriately titled The Barbarous Years: The Peopling of British North America: The Conflict of Civilizations, 1600-1675:
“[S]omething general and profound…was developing on the eve of English settlement in North America. Emerging slowly at a latent level were the beginnings of fundamental alterations in native culture that, within a single generation after 1600, would prove to be destructive beyond any contemporary imagining….[T]his was a deadly disease. The specific virus, unmistakable in the case of the Iroquois, was the fur trade…Concentration on fur hunts upset the ancient pattern of shifting seasonal activities, led to the neglect of horticulture, and since women were increasingly involved in the preparation of pelts, disturbed the traditional0 division of labour between the sexes…Competition [between tribes] led to bickering, then to skirmishes, then to warfare among peoples otherwise peaceful.”

Bailyn has been charged by at least one reviewer of denying agency to the Indians. If this is true in some momentary sense, the fact of the matter is that the Indians lost out totally in the historical long-run, and are only now winning back ownership of land and resources in Canada, but not in the U.S.

Call for Research

“The interpretation of the history of North America in terms of rum and brandy has not been written, but in the fur trade, rum represented the contribution of the West Indies to trade of the Old Empire, and brandy the emphasis on French vineyards and self-sufficienty.” Innis, 1933
So far as I know, still not written
Must be willing to travel.

Kari Levitt Honoured

Kari Polanyi Levitt, one of own, has been given the Order of Canada. Congratulations to Kari. Richly deserved.

How do we measure job vacancies – beyond Kijiji

The Federal Government and Minister Kenney got a pretty good ribbing over their flawed methodology in measuring job vacancies – and with good reason. Anyone who has used Kijiji for anything knows how unreliable it can be. The difference between Statistics Canada’s method and one that includes Kijiji is pretty easy to communicate.

But there is another method from the CFIB that gets some attention, and different results than Statistics Canada. I usually talk about the number of unemployed workers for each job vacancy, but the proportion of job vacancies to total labour demand (job vacancies + jobs) is a very useful measure too. CFIB finds a job vacancy rate of 2.5% for 2013 Q4 and Statistics Canada reports 1.3% in December 2013.

This is sometimes presented as a puzzle, but the different result is mostly because the CFIB measures something different than Statistics Canada. The CFIB is very transparent about what exactly they are measuring, and why they think it’s important. This measure adds information to the policy debate, and that’s great. I think a better understanding of the differences enhances the debate.

First, the CFIB only surveys private businesses. That’s useful for their membership, and understanding unmet labour demand in the private sector. Statistics Canada includes public sector jobs. The CFIB suggests that job vacancies are lower in the public sector, but we don’t have conclusive data on that. Statistics Canada tells us that the job vacancy rate in the field of Education Services (which is 90% public sector) is very low – only 0.4%. But Public Administration (100% public sector) is at the national average of 1.4%. So it’s unlikely that this could explain the whole difference between the two numbers.

But wait, it’s not possible that low public sector job vacancy rates would explain the difference in results, because the CFIB method finds more job vacancies in the private sector (295,700) than Statistics Canada finds in both the public and private sector combined (202,500).

So what explains the difference? Well, Statistics Canada requires that an actual position exist for it to be considered a job vacancy. CFIB does not require that a position exist, or that a business be actively advertising to fill that position. All that must exist is a need. This is clearly explained in the CFIB’s methodology section of their regular job vacancy releases. This is a broader definition of labour demand, that tells us something useful. It is comparable to including discouraged job seekers, who aren’t actively looking for work, but express a desire to work if a passive search connected them to a good match.

So Statistics Canada’s job vacancy measure is to the CFIB job vacancy measure as unemployment rates are to underemployment rates. For the most part. Maybe when we get the upgraded job vacancy survey that Minister Kenney has promised to fund, we’ll also get a public / private breakdown of statistics so that the two measures can be better compared.

Job Vacancies Falling

The number of job vacancies recorded by Statistics Canada are at a four year low (job vacancy data collection began in January 2011). The number of unemployed persons has changed very little, and so we have a relatively high number of unemployed persons per job vacancy.

Even though the data is not seasonally adjusted, you can see an overall trend toward fewer job vacancies, especially since 2012.

Vacancies

 

As of March 2014, there were only 206,000 job vacancies for nearly 1.4 million unemployed workers in Canada, giving us 6.8 unemployed workers for every job vacancy. If you add underemployment into the mix, there were 2.9 million underemployed workers in Canada in March 2014 (three month average, seasonally unadjusted). That gives us a national underemployment to job vacancy ratio of 14.3.

UNJV

There are very different trends in Ontario and Quebec. You can see that while Ontario has a higher number of underemployed workers per job vacancy than Quebec, this number is slightly better than it was in March 2011. On the other hand, Quebec’s ratio is higher in each subsequent March, and much higher in March 2014 than it was in March 2013.

Saskatchewan and Alberta boast relatively low ratios, but Saskatchewan saw a marked rise over last year. British Columbia’s unemployment to job vacancy ratio improved between March 2013 and March 2014, but their *underemployment* ratio worsened slightly.

If you’re interested in the number of underemployed workers in your province, and the resulting underemployed worker to job vacancy ratio, I’ve calculated the most recent numbers here.

March 2014
Seasonally unadjusted 3 month average
Underemployed Job Vacancies Ratio
Canada 2,946,545 206,200 14.3
Newfoundland & Labrador 65,821 2,700 24.4
PEI 19,561 500 39.1
Nova Scotia 96,907 4,400 22.0
New Brunswick 81,909 4,000 20.5
Quebec 684,505 37,100 18.5
Ontario 1,246,309 63,400 19.7
Manitoba 91,137 11,100 8.2
Saskatchewan 58,459 7,000 8.4
Alberta 216,606 46,300 4.7
British Columbia 383,557 28,800 13.3

 

If these numbers sound outrageous, that’s because they are. Recently in Nova Scotia, Giant Tiger received nearly 400 applications for 50 job openings. From the article: “Every individual that applied had great background in retail.”

Keep these numbers in mind this week (or next) as Jason Kenney announces changes to the Temporary Foreign Worker program, and every time an employer claims that they are unable to find workers in Canada.

Will Enbridge’s pipeline ever get built?

You have to wonder why the Harper government bothered with process at all. It’s like there was never any doubt that Enbridge’s Northern Gateway pipeline would get approved. But historians may look back on this moment as the beginning of the end of pipeline politics.

Opposition to Enbridge’s Northern Gateway Pipeline is BC’s largest social movement. A large majority of British Columbians are opposed to the pipeline. BC First Nations, who hold the ultimate trump card – the constitutionality of their rights and title, have said no means no. Thousands testified to the Joint Review Panel (and its arguably limited flawed process). Even friend of fossil fuels, Premier Christy Clark, maintains her five conditions for BC’s approval have not been met.

So the betting odds are that this pipeline will never get built. Even the federal decision came at the last minute, without ministerial fanfare, advertising campaign or the term “Harper government” on the media release. Moreover, by igniting a BC-based opposition, the 21 seats the Conservatives hold in BC could be the difference between a renewed majority or not in the 2015 election.

The Harper government’s relentless push to make Canada an energy superpower based on tripling production from the tar sands may now be its undoing. Blame Obama — the US president has had to delay and delay a decision on the unpopular Keystone XL pipeline. This pushed Harper to look to the west, only to find that Western alienation is now about BC not Alberta.

The proposed Kinder-Morgan Trans Mountain pipeline is in similar jeopardy, even as hearings on pipelines, post-Enbridge, have been hobbled. They no longer carry the risk that such large numbers will show up and make reasonable arguments against. I was denied the right to be heard at the upcoming Kinder-Morgan Pipeline hearings, even though I am one of just a few people in the country that has done research on the economic costs and benefits of pipelines.

Not that Enbridge had a stellar track record going into the JRP hearings, either. Enbridge’s poor handling of its Kalamazoo, Michigan pipeline spill was exposed at the same time the JRP hearings were underway (perhaps the three person panel was too busy to notice).  Indeed, Enbridge had over 800 oil spills on its North American pipeline network between 1999 and 2010, a total of 27 million litres of hydrocarbons or enough to fill 10 Olympic-sized swimming pools.

With hearings on, the company promoted maps missing islands along the Northern BC shipping route. It peddled grossly inflated job claims based on shoddy modelling. It made claims of First Nations support that disappeared in the daylight. And yet, after all of these gaffes, in production, communications and science, it is remarkable that their proposal is even being given serious consideration. But even in straight up dollar terms, projected construction costs have soared from $5.5 billion to almost $8 billion.

The Enbridge brand has become mud in BC. Across Canada, the Enbridge Ride for the Cure raises money for cancer research (the solution brought to you by the problem). But in Vancouver, Enbridge’s name is so toxic, it’s just the Ride for the Cure. Promo ads now run for Northern Gateway Pipeline but do not name the proponent.

In the opposition to Enbridge, Keystone and Kinder-Morgan, we are seeing a public response to a fossil fuel industry has gotten too large, its infrastructure causing too much damage. The costs of the carbon economy, local environmental damage due to spills and costs associated with climate change, were recently estimated at $1.2 trillion per year.

Climate change and changing attitudes about addressing it also suggest this pipeline may never happen. It’s been widely noted that two-thirds to four-fifths of the world’s proven reserves of fossil fuels need to stay in the ground, perhaps much more in Canada. A recent report by Carbon Tracker highlighted the highest cost sources of oil include most projects in Alberta. These are unfeasable in a carbon-constrained world (i.e. one that limits warming to 2 degrees).

These are the dying days of the old fossil fuel empires. The companies want to extract as much profit out of their investments as they can, and stick others with the bill for damages. They have won over political parties of all stripes across the nation, but lack the social license to proceed. In the interim they have shifted to Plan B – rail cars that periodically derail and explode – but the times they are a-changing.

We’ve reached a point now where the economics of renewables, knowledge of better building design and urban planning, “zero waste” approaches to materials, and so forth are transforming our economy even amid political support that is at best wavering and insufficient.

My bold prediction is that when we tell the Enbridge story in the future, it will be of a pivotal moment in how we view our economy and livelihoods, a rejection of dirty energy in favour of clean alternatives, and the collapse of a destructive economic dream.

Andrea Horwath’s Debacle

I can’t remember the last time I laughed out loud when I saw election results. I almost spat a mouthful of my breakfast across the room.

Almost nobody expected Ontario’s Liberals to win a majority, least of all the NDP’s Andrea Horwath. Her decision to pull the plug on the Wynne government has to go down as one of the worst political miscalculations in recent memory.

While the NDP are putting a brave face on the results, there is little question this was a debacle of Horwath’s engineering. While once she was in the driver’s seat, now the NDP are once again relegated to third party status.

Moreover, it didn’t have to go down this way. She could have used the election to stake out the ground left of the Liberals. Instead, she did quite the opposite. As a result, the NDP picked up just one seat, although lost important seats in the crucial Toronto region.

In a story published by the Toronto Star days before the election, written by Linda Diebel, Horwath was portrayed as being deeply angry with the Liberals for reneging on promises made the previous year. She was so pissed that she apparently didn’t bother to read this year’s budget before pulling the plug. A budget many considered the most progressive seen in years.

But instead of running to the left and portraying the Liberals as corporate sell-outs, the NDP campaign steered right. They set out to curry favour with small businesses, and vowed to set up a ministerial post to chop waste. And they attacked the Liberals, while ignoring the far more dangerous Tories.

In fact, the Star’s Thomas Walkom ran a column in which he said that Horwath might be willing to support a Tim Hudak government and join them in slashing the civil service (the difference was that she wanted to chop managers and he wanted to chop frontline workers). Such willingness to embrace elements of the right’s agenda was what raised the ire of the 34 prominent leftists but also – it turned out – the Ontario electorate.

The NDP’s strategy is important because of next year’s federal election. The NDP, in 2011, went after the Liberals in order to pick up seats, which finally gave Harper his long-coveted majority. The question now is whether the NDP will dust off this strategy once again, risking the Tories sneaking up the middle. If they are smart (which is debateable) the party will stay clear of the sectarianism of the past and go after the Tories from the left. Indeed, Hudak’s policy of taking a hard right turn has shown how the right-wing message is not resonating.

Still, what is getting lost in the aftermath is the fact that all three parties have embraced, with varying degrees of severity, the austerity agenda. All three wish to balance the budget on the backs of workers and the poor. None of them are really prepared to raise sufficient funds by taxing the banks, brokerages, corporations and multinationals that do business in Canada. Or plug the numerous loopholes in our tax code that allow the aforementioned to exploit offshore tax havens to tremendous effect.

Recently, in one of France’s daily newspapers, Alexis Tsipras of the Syriza party of Greece’s radical left, gave an interview about the impact of austerity on his country. There is a good chance that Tsipras could be Greece’s next prime minister.

Greece’s economic woes lie in the fact that its political elite basically took on way too much debt without collecting enough taxes to pay it off. Since the credit crisis began, the elite has attempted to solve the problem by cutting government spending, slashing wages, laying off civil servants and selling state assets to the private sector. They have not clamped down on massive tax evasion by the Greek bourgeoisie and corporate sector. The result has been 6 years of painful recession and 27% unemployment.

Tsipras said the crisis has been used by German capital, the EU and the IMF to turn Greece into a low wage state. Indeed, massive unemployment, as we know, freezes and even deflates wage growth. Tsiparis’s analysis clearly applies to Canada, where cuts to the public sector and growing unemployment tend to cow labour demands for higher wages.

In fact, Hudak’s agenda was clear on this: along with cutting 100,000 civil servants’ jobs, he planned to slash corporate taxes and turn Ontario into the cheapest place in North America to do business. And to think the NDP were open to forming a government with these guys.

The NDP could have tacked left and used the current economic conditions to emphasize the necessity to have big business and the rich pay their fair share. It was a lost opportunity, one they paid a steep price for.

Indeed, look forward to the Wynne government eventually taking an axe to the public service. And the NDP will now be sitting on the sidelines instead of preventing real damage being done. And it was all very unnecessary.

Until people begin to look at political alternatives beyond the three mainstream bourgeois parties, economic expansion is not likely to occur.

Labour market stagnant

Erin has already commented that the tiny silver lining of 26,000 net new jobs in May covers a net loss of full-time jobs. In fact, if you compare this May to May 2013, we see that all of the net job gain in the past 12 months is part-time work too.

To look at the trends, I broke down employment growth since October 2008 into part-time and full-time jobs. This shows that full-time job growth has been pretty much stagnant since January 2013.

FTPT

While we expect to see stronger growth in part time work earlier in a recovery, here we see the growth of part-time work accelerating again – over four years after the beginning of the recession.

The number of underemployed part-time workers (working part-time, wanting full-time hours) has remained elevated since the beginning of this recession. You can see from the graph that there was some easing in 2012, but with the recent increase in part-time work, the trend is moving upwards again.

underemployed

 

This May there were over 1 million underemployed part-time workers in Canada, and a total of 2.9 million unemployed and underemployed workers (not seasonally adjusted). Nearly 1 million of those workers were under the age of 24.

Ontario workers, in particular, are having a hard time. The underemployment rate for Ontario (not seasonally adjusted) was 16.6% in May – 2 percentage points higher than the national average. That represents 550,000 unemployed and 735,000 underemployed Ontario workers.

And Tim Hudak plans to fix that by firing 100,000 public sector workers. I think we need a better plan.

Jobs Up, But Hours Flat

On the surface, today’s employment numbers simply continue a recent trend: employers added some jobs but not enough to keep pace with Canada’s growing labour force. As a result, unemployment edged back up to 7%.

But just below the surface were some even worse developments. Employers actually cut 29,000 full-time positions while adding 55,000 part-time positions in May. Over the past year, the number of hours paid by Canadian employers edged up by only 0.1%, although these hours are now split between more employees.

By industry, the single largest change in May was the loss of 23,000 jobs in natural resources, a relatively well-paid sector. That was offset by more service-sector jobs, which tend to pay less. The average hourly wage edged up by only 1.4% over the past year, less than the rate of inflation.

I did the following interview yesterday comparing the Canadian and American job markets:

Short Circuited: Assessing Hudak’s Energy Policy

The following is a guest post by Brendan Haley:

Jim Stanford and I have written an assessment of the Ontario PC’s energy policy for Canadian Centre for Policy Alternatives entitled Short Circuited. In particular, we look into the idea that cancelling renewable energy policies will lead to job creation. Here are some highlights:

More Data Problems

There has already been extensive discussion of how the jobs estimates that come from the analysis behind the PC Plan have been over-estimated by a factor of 8. We find this problem for the electricity promise as well, but there is a more fundamental issue.

The PC Plan and the analysis by Benjamin Zycher are based on reducing electric prices to the “national average”. But, the data used for Zycher’s explanatory variable is not comparing electricity prices across provinces. Rather it is an index of the cumulative change in industrial electricity prices, between a particular base year and a particular month. These data do not tell us anything about the absolute level of electricity prices in Ontario versus other jurisdictions. We show that if you change the base year or the benchmark month, Ontario’s price index can be lower than the Canadian index. This makes the results of the econometric model essentially meaningless. The findings certainly cannot be given the interpretation that makes its way into the PC plan (namely that cutting electricity prices to the Canadian average would create over 40,000 new jobs). Read more »

Benjamin Zycher’s Eight-Year Itch

The controversy regarding the mathematical errors in the Ontario PCs’ “million jobs plan” went viral last week, after a critical mass of economists weighed in to confirm that the party had indeed badly misinterpreted the findings (by as much as 8 times over) of their own consultants’ studies.  This sparked a firestorm of media coverage, inspired the Globe and Mail’s Adrian Morrow to rename the Tory campaign bus (now called “The Million Person-Years Express”), and spawned a satiric hashtag (#Hudak8) that trended on Twitter. Read more »

PEF Events at This Year’s Annual Conference of the CEA

For the 15th consecutive year, the Progressive Economics Forum (PEF) will be sponsoring events at the Annual Conference of the Canadian Economics Association (which takes place this month in Vancouver).  PEF events will take place this Friday and Saturday; details pertaining to all PEF events can be found at this link.

Once again this year, I am the PEF Events Coordinator for the conference.  Feel free to contact me with any questions at falvo.nicholas@gmail.com.

More on Conference Board Model of Corporate Tax Cuts

Further to my post yesterday about how the Ontario PCs have vastly overstated their own consultants’ estimates of the number of jobs produced by their various policy proposals (including lower corporate taxes, lower electricity prices, interprovincial free trade, and regulatory reduction), some have asked me about precisesly how the Conference Board report simulated the corporate tax reduction I was discussing. Read more »

People are hungry for economics that works for people and the planet

As economics students around the world demand change in the curriculum and challenge their professors to open classrooms to pluralism in perspectives and views, the interest in heterodox economics is growing here in Canada too. You can see in the tremendous interest to this year’s PEF Summer School in heterodox economics, which we titled Economics that Works for People and the Planet. With less than a week to go to our day-long session on May 26, 2014, we are now at full capacity!

We asked the 2014 PEF Summer School applicants to briefly tell us why they are interested in learning more heterodox economics and the word cloud below illustrates their responses.

Word cloud PEF Summer School 2014

I removed the words economics, PEF and the phrase summer school from their responses.

We received a total of 60 applications for the PEF Summer School from a mix of undergraduate and graduate students in economics and related fields, practicing economists and researchers in higher education, the labour movement and NGOs, and engaged citizens. The local interest in heterodox economics far surpassed our expectations, forcing us to change venues to a bigger room to accommodate all qualified participants (thanks for the generous support of the Canadian Economics Association for making that happen!). I can’t wait!

Rental Housing in Yellowknife

Yesterday I blogged about rental housing in Yellowknife, over at the Northern Public Affairs web site.  Specifically, I blogged about a recent announcement by the city’s largest for-profit landlord that it plans to “tighten” its policies vis-a-vis renting to recipients of “income assistance” (which, in most parts of Canada, is known generically as social assistance).  Among other things, I suggest in the post that the for-profit landlord in question may be in a monopoly situation.  The link to my blog post is here.

Major Numerical Problems in Tim Hudak’s Jobs Plan

When Ontario PC leader Tim Hudak kicked off the current election campaign with a plan to “create a million new jobs” in Ontario, he tried to dress up the platform launch with a certain scientific respectability.  The party released a “technical backgrounder” showing the precise composition of the million new jobs, along with two commissioned consultants’ reports that were said to justify the estimates contained in the plan. Read more »

Hudak job cuts impact on communities

Today the Ontario Federation of Labour and CUPE Ontario published calculations I prepared of how Ontario Conservative leader Tim Hudak’s promise to eliminate 100,000 public sector jobs will be felt at the local level, on cities and communities across the province.

The original OFL release provides info on the magnitude of these impacts for the 15 largest census metropolitan areas across Ontario, for which labour force survey figures are available, a second release has the impacts for smaller communities, while CUPE Ontario has put a map on-line  that shows the impact for all the metro areas and a number of smaller cities and towns (or “census agglomerations”).   Below I include some details on how the numbers were calculated and provide the impacts for the full list of communities.

These job cuts–more extreme than  under Mike Harris–would be devastating for many communities.   As I outlined in a previous post, if the elimination of 100,000 public sector jobs plus the spin-off jobs led to an equivalent increase in unemployment, Ontario’s unemployment rate would reach 9.7% (based on an increase from current rates)– the highest in 20 years.

But the impacts would be even greater for particular communities.  What this analysis shows is if public sector jobs are eliminated proportionally, the impacts would be especially severe for mid- and smaller-sized cities and towns in the province–and could lead to double-digit unemployment rates in many.

Read more »

Huge Jump in Ontario EI Claims

Statistics Canada reported today that the number of Canadians filing Employment Insurance (EI) claims rose by 10,350 or 4.5 per cent in March, the largest monthly increase since the start of 2013.

This national increase was driven by a jump of 9,480 or 12.9 per cent in Ontario, the largest monthly increase in the province since February 2009.

Despite the surge in claims, the number of people actually receiving EI benefits edged up by only 1,790 nationally and 720 in Ontario.

These figures provide further evidence of a weak job market and of an inadequate EI system. The federal government should improve the accessibility, level and duration of benefits for workers unemployed through no fault of their own.

On the job: Why unions matter

The Parkland Institute is releasing a report on why unions matter. I contributed to the report, which was spurred by Alberta government restrictions on collective bargaining and anti-union labour law.

Perhaps not surprising for readers of this blog, we found that labour unions play an important role in improving wages, improving workplace safety, and reducing inequality – for all workers, not just those lucky enough to be covered by a collective agreement.

Canada’s richest province also has the highest level of inequality as measured by the Gini coefficient – and as of 2011 that measure was at its highest point in Alberta since Statistics Canada began measuring it 36 years ago.

Growing inequality in Alberta illustrates the problem with the “we just need to grow the economy, and everything will be fine” approach. Between 1982 and 2011 the real average wage for the bottom 99% increased from $41,749 to $48,800 – only 13%. For the top 1% the increase was 93%. We found a strong correlation between falling unionization rates and growing income inequality in Alberta. The benefits of the boom have not been shared with workers.

While there are differences between the Alberta context and other provincial jurisdictions, many of the broad findings are applicable across Canada. A healthy union movement insists on sharing the wealth we create.

Update: Press Progress provides a summary of the report’s findings on inequality and union density.

Jason Kenney, TFWs, and Canada’s Services Trade

When he announced the sudden moratorium on new Temporary Foreign Workers (TFW) in the restaurant industry, Employment and Social Development Minister Jason Kenney tried to reconcile this dramatic about-face with his government’s long-standing support for the whole idea of migrant guest-workers.  So while strongly criticizing a few particular restaurants for their high-profile “abuses” of the program (even though it was usually hard to see what rules were actually broken), he at the same time mounted an energetic defense of the whole TFW program.  (Here’s my Globe and Mail column on the political reasons for Kenney’s reversal.) Read more »

Alex Usher Needs to Consider Taxation

My debate with Alex Usher on tuition fees continues, over at the Academic Matters web site.  In my latest post, I make the case that Mr. Usher needs to consider Canada’s tax system when suggesting that reducing tuition fees is “regressive.”

Not Trickledown But Gush-Up

“Trickledown hadn’t worked. But Gush-Up certainly has. That’s why in a nation of 1.2 billion, India’s one hundred richest people own assets equivalent to one fourth of the GDP.” [Yesterday's election results only promise to worsen that.] That’s how the extrordinary writer-and-activist Arundhati Roy, one of the world’s leading public intellectuals, describes contemporary capitalism in her new collection of essays titled Capitalism: A Ghost Story after the first and longest essay.

It’s hardly surprising that there are some most quotable quotes.

Minerals are a major export. “India’s new megacorporations…are those that have managed to muscle their way to the head of the spigot that is spewing money extracted from deep inside the earth.”

“Gush-Up concentrates wealth onto the tip of a shining pin on which our billionaires pirouett, tidal waves of money crash through the institutions of democracy – the courts, the parliament – as well as the media, seriously compromising their ability to function in the ways they are meant to.”

Roy sees the Occupy movement as having giving us a new language to replace There Is No Alternative.

The foundations, she insists, are the new missionaries of capitalism, fronting for the corporations. She cites a disgusting, creepy, example of how the legacy of Martin Luther King Jr. has been remodeled. King, Roy reminds us, “made the forbidden connections beween Capitalism, Imperialism, Racism, and the Vietnam War.” That has not stopped major US corporations from supporting the creation of the Martin Luther King Jr. Center for Nonviolent Social Change. And what did it do? “It cosponsored the Martin Luther King Jr. Lecture Series called ‘The Free Enterprise System: An Agent for Nonviolent Social Change.’”

Roy’s last word on this atrocity is “Amen” as in “Enough Said.”

Alex Usher is Wrong on Tuition Fees

Earlier today, over at the Academic Matters web site, I addressed the issue of whether Canada’s current system of high tuition fees and means-tested student aid is in fact “progressive.”  My post was a response to a Alex Usher‘s May 9 blog post.  My blog post can be found here.

NDP Sectarianism Returns with a Vengeance

You have to wonder what Andrea Horwath was thinking. By bringing down the Ontario government a week ago and launching an election as a result, the NDP risks opening the door for the provincial Tories reclaiming power. Which would be a disaster for working people across the province, let alone the social fabric of our communities.

Yet Horwath’s decision is in keeping with the NDP’s tradition in recent years of embracing hard-line sectarianism – of bashing the Liberals and thereby allowing the Tories to win. The Tories then go on to wreak their own special brand of devastating class warfare and economic mismanagement.

Let’s go back to 2005, when the federal NDP helped bring down the Liberal government of Paul Martin Jr. What was the outcome of this brilliant strategy? The election that ensued brought Stephen Harper’s Tories to power. Fast forward to the 2011 election and the NDP’s insidious strategy of designing its election campaign around targeting Liberals, then led by Michael Ignatieff. While the NDP won 103 seats, they also allowed the Tories to finally win their long-coveted majority. (In both these elections, the sainted Jack Layton pulled the switch…)

Sectarianism is defined as attacking your allies or potential allies with the result that it allows your enemies to win the upper hand. It’s a toxic and highly dangerous phenomenon, as history keeps demonstrating. For example, few now remember the sectarianism of the Communist movement in the 1920s and ‘30s when it labeled social democrats “social fascists”. It was a decision that prevented German communists and social democrats from forming an alliance against the Nazis, who won the 1933 election. The Communists and social democrats were soon sharing the same concentration camp bunks, while witnessing the catastrophic consequences of the Nazis’ horrific agenda.

In more recent times, we see the consequences of sectarianism in Syria, where a loose opposition alliance against the Assad regime seemed to be on the verge of toppling the dictator from power as early as two years ago. But infighting and a murderous internecine campaign launched by Islamist jihadists has so divided opposition forces that Assad has regained most of the territory he lost and is firmly in control of the country once more.

In the case of the NDP, the party’s sectarianism is harder to fathom. After all, only the slow-witted can see that the ideological differences between the NDP and Liberals are tiny to almost non-existent. The only clear demarcation is that the NDP is closer to the top leadership of the labour movement. But policy-wise, the differences are harder to see.

In fact, the Ontario NDP decided to bring down the Liberal government after that government introduced one of the most progressive budgets seen in years. Moreover, the current premier, Kathleen Wynne, is from the left-wing of the Liberal party and is an open lesbian.

Yet the NDP took this particularly awful decision despite the fact Ontario’s Tory Party leads in the polls and are currently led by a far-right troglodyte, Tim Hudak, a repellant creature whose entire agenda is based on destroying trade unions and their legal rights, laying off 100,000 public servants, cutting taxes and gutting government programs. Indeed, the already besieged labour movement is now having to spend precious resources launching an advertizing campaign against the Tories – money they could have put to better use. I wonder how many labour leaders are thanking Horwath for her decision to pull the plug on the Wynne government?

The thing that seems to blind sectarians like the NDP is they have some naïve belief the damage done by Tories and their right-wing ilk can somehow be undone. This is sort of like hoping once you’ve cut down a rainforest, it will quickly grow back by next week.

Let us tally up the permanent damage the federal Tories have done in the near-decade they have been in power (And this does not include the litany of undemocratic practices Harper has introduced):

• The de-industrialization of Canada. Our manufacturing sector has been decimated on Harper’s watch. Manufacturing’s share of economy has plunged from 16% to 12% over the past decade, with massive job losses. In Ontario alone, more than 200,000 manufacturing jobs have disappeared since Harper came to power. Meanwhile, the Tories have favoured the development of the oil sands, with its attendant permanent environmental damage.

• The selling off of our corporations and resources. Canada has witnessed most of its corporate crown jewels pawned off to foreign buyers, including the assets of the bankrupt Nortel (which Harper refused to save), almost the entire steel industry, most notably Stelco (which was later closed), and great swaths of the mining industry, such as Noranda and Falconbridge and Alcan. Critical oil sands companies and assets have also been sold to foreign multinationals.

• The destruction of our high-technology sector. This is highlighted in this excerpt from a 2012 article in the Globe and Mail: “High-tech companies now account for a razor-thin 1.6 per cent of Canada’s benchmark stock index, the TSX composite (excluding SXC, which is now counted as a health care stock). That’s down from a staggering 41 per cent in July, 2000, near the peak of the tech bubble, when Nortel Networks Corp. accounted for more than one-third of the index. That steep decline isn’t just due to Nortel’s demise: High-tech names have been vanishing from the radar in Canada at an alarming rate. Last year, 45 Canadian tech firms were snapped up by foreign buyers, up from 32 the year before and less than 15 per year in the mid-2000s…” Meanwhile, Blackberry is a shadow of its once dominant self. If it goes bust, Canada will no longer have a single world-renowned high tech firm left.

• The destruction of cultural institutions. The CBC is a clear example of this, as the Tories have cut its budget and refused to come to its rescue as it has lost advertising dollars, leading to layoffs and demise of many of its once cherished programming.

The NDP is not to blame for the Tories’ agenda directly, of course. And let’s be clear: the Liberals are a corporatist right-of-centre party too. But the fact remains that all three of our mainstream parties are pro-corporate parties. The issue is what wing of capital do they represent? The Tories represent the foreign multinational and most reactionary element of the capitalist class. Keeping them out of power no matter what should be paramount.

And yet federal NDP leader Tom Mulcair is once again attacking Justin Trudeau in the run up to next year’s election. The Tories must be rubbing their hands in glee. Mulcair has raised questions about whether Trudeau is in the House of Commons enough – the basis of the 2011 attack levelled by Jack Layton against Michael Ignatieff that had such a devastating effect. A devastating effect not only to the Liberals but to Canada as a functioning nation-state.

More on Demographics, Demand, and Canada’s Falling Employment Rate

My post last week on the continuing decline in the employment rate in Canada (to below 61.5% in April, barely higher than the low point reached in the 2008-09 recession) has sparked some continuing discussion about the role of demographic change in explaining that decline (as opposed to a shortage of labour demand).

Is the decline in the employment rate due to weak labour market conditions, or is it due to the ageing of the workforce (as a result of which a larger share of the working age population consists of people in older age categories which normally have lower labour force participation and employment incidence)?

The answer, obviously, is “Both.”  The ageing of the Canadian workforce is a decades-old trend, it did not start in February 2008 (when the overall employment rate peaked at 63.8%).  Until then, the ageing of the workforce did not prevent the overall labour market from enjoying higher employment rates over time.  The downturn in the business cycle did start in 2008.  So it’s reasonable to conclude that this turn likely reflects cyclical (not structural) factors.

We can try to sort out the two forces at play by disaggregating the employment rate numbers by age category.  My methodology in analyzing the overall decline in the employment rate was to compare today’s rate to the pre-recession peak, and then estimate how much more employment would be required to get back to that pre-recession employment rate.  I interpreted that as a broad measure of the amount of new employment required to truly repair the damage from the recession.  That approach is certainly more reasonable than the argument made by the federal government that since absolute employment today is higher than it was before the recession, all the damage done by the recession has been repaired; this argument ignores 6 years of population growth which added over 2 million Canadians to the working age population.

Now let’s replicate my analysis, but disaggregating the employment rate data into broad age categories.  Young workers (15-24) have experienced the worst decline in employment incidence.  So-called “core” workers (25-54) have experienced a more modest decline.  Older workers (55 and over) have experienced a higher employment rate.  Whether this is good or bad depends on how many of these older workers are choosing to work longer for positive reasons, and how many have been compelled to stay in their jobs by reduced or less secure pension incomes.

Decline in Employment Rate

The first part of this table shows that for the two under-55 categories, a total of 441,000 additional jobs would be required to rebuild the two under-55 employment rates back to their respective February 2008 levels.  That represents two-thirds of the total 665,000 missing jobs I had estimated on the basis of the analysis of the aggregate 15+ employment rate.  (Because of the shift-share phenomena discussed above, the total “missing” jobs does not equal the sum of the age category “missing” jobs.)  In other words, two-thirds of the deterioration in the overall employment rate since 2008 can be ascribed to the deterioration of employment incidence among under-55 workers — and hence can’t be directly attributed to demographic change.  Perhaps the rest of the 665,000 jobs could be attributed to demographic ageing, offset somewhat by the rising employment incidence among the 55+ category.

Another approach, that would more closely replicate the spirit of my aggregate analysis, would be to separately locate the peak employment rate experienced within each age category, rather than using the peak employment rate for the aggregate 15+ labour force (which was February 2008).  After all, if we’re going to disaggregate current employment performance by age group, we may well wish to also disaggregate the parallel task of measuring the extent to which current employment falls below peak (or potential) employment incidence.  This exercise is summarized in the lower part of the table.

The peak employment rate for the “core” 25-54 age group was attained in February 2008, so there is no difference for that group.  The peak employment rate for young workers was attained back in 1989 (the employment rate for young workers in 2008 was still almost 4 percentage points below that peak, reflecting both higher youth unemployment in 2008 than 1989 and lower labour force participation, presumably due mostly to higher participation in post-secondary education — although PSE enrollment itself partly reflects weak employment opportunities).  The peak employment rate for the over-55 group was attained in August last year; even in this group the employment rate has declined in recent months.

Comparing the actual employment rate to the historical peak rate within each category, leads to a combined estimate of “missing” jobs of 622,000 positions — almost all of which were borne by the two under-55 age groupings (since older workers are experiencing close-to-peak employment rates).  That’s not hugely different from the 665,000 missing-job estimate I derived on the basis of the overall population.  The takeaway from this analysis: Even adjusting for the ageing of Canada’s workforce, the economy would need a total of 622,000 more jobs to bring up the employment rate (for each age category of worker) to its potential  (based on peak attained employment rates).

I certainly accept that demographic change is part of the story of Canada’s falling employment rate.  That being said, however, I think the following take-away conclusions are valid:

  • The decline in the employment rate is due more to weak employment demand than to demographic change.
  • The decline in the employment rate is clearly visible in young and core workers.
  • Employment in Canada among workers under 55 is hundreds of thousands positions (from 441,000 to 618,000, depending on your choice of benchmark) below what it would be if previous peak balances between workers and jobs were re-attained today.
  • And since the pre-recession benchmark was not itself a position of full employment, the true problem of underutilization of labour in Canada is even greater.

Labour force participation among under-55 workers has also declined significantly (this is not reported in the table), and so far in 2014 has averaged its lowest levels in both age groups (15-24 and 25-54) since 2002.  Overall labour force participation (among all people 15+) is at its lowest level since 2001.  So the decline in labour force participation (like the decline in the employment rate) is mostly due to factors other than demographics (presumably, weak labour demand).

The phenomenon of rising participation and employment among older workers is an important one that needs lots more analysis.  Indeed, it is trickling over into the decline in employment rates among the youth and core age groups.  In a demand-constrained labour market, younger workers always bear a disproportionate share of the burden of un- and underemployment (reflecting last-hired first-fired effects, etc.).  Therefore, while much of the decline in employment incidence among under-55 workers reflects weak overall labour demand, some of it also reflects a redistribution of employment from younger to older workers.  This is a perverse result for many economic and social reasons, and should lead us to question policies (like postponing the retirement age to 67, and other restrictions on early retirement) which are helping push up employment rates among older workers.