Today, TD Economics released a very interesting paper on the Canadian labour market in 2007. I was pleased to see it highlight many of the same general trends that Andrew and I emphasized: the sharp decline in manufacturing jobs, the increase in part-time work, the rise of self-employment, and wages barely outpacing inflation in Alberta.
Parts of the TD paper seemed quite familiar. For example, page 4 contains this discussion of manufacturing job losses:
. . . it is true that job losses have been heavy in low-paying sub-sectors (like clothing, textiles and furniture), there have also been major losses in sub-sectors like auto parts, fabricated metal products and computer and electronic equipment that typically pay more than the average. The majority (55%) of the manufacturing jobs lost since 2002 have been unionized jobs, even though the unionization rate in manufacturing is just under one third. Straight hourly pay of unionized manufacturing workers is 3% higher than non-union manufacturing workers, and most studies have found that unionized jobs are higher productivity jobs, justifying higher wages. In short, we are losing many of the high-quality, high-productivity jobs in manufacturing, not just the jobs in low-productivity industries.
It is true that job losses have been heavy in sectors like clothing, textiles and furniture which pay relatively low wages, but there have also been major job losses in sectors like auto parts and fabricated metal products which typically pay more than the average. Tellingly, the majority (55%) of the manufacturing jobs lost since 2002 have been unionized jobs, even though the unionization rate in manufacturing is just under one-third. Straight hourly pay of unionized manufacturing workers is 3% higher than non-union manufacturing workers (and the union premium is much greater if we compare union and non-union production workers.) Most economists have found that unionized jobs are higher productivity jobs, justifying higher wages. In short, we are losing many of the best jobs in manufacturing, not just the low productivity jobs . . .
The next paragraph in today’s TD paper (page 4) estimates the aggregate loss of earnings resulting from reduced manufacturing employment:
Statistics Canada also recently concluded that Canadian workers displaced by firm closures and mass layoffs experience significant losses in long-term annual earnings, in the range of 25%, in new jobs. This implies a loss exceeding $10,000 for a typical manufacturing worker. The disappearance of 198,400 manufacturing jobs since 2002, thus, implies a total loss of about $2 billion in annual Canadian earnings . . .
Statistics Canada recently concluded that Canadian workers displaced by firm closures and mass layoffs who find other jobs suffer an average decline in annual earnings of 25% or more, implying a loss exceeding $10,000 for a typical manufacturing worker. The disappearance of 288,300 manufacturing jobs implies a total loss of about $3 billion in annual Canadian earnings.
I suppose that imitation is the highest form of flattery.
EVENING UPDATE (April 16): TD has revised its report.
MORNING UPDATE (April 16): The following Canadian Press story was printed in about 15 newspapers this morning.
Canada is losing high-quality jobs, bank report warns
The Hamilton Spectator
Wednesday, April 16, 2008
Byline: Julian Beltrame
Source: The Canadian Press
Canada is losing tens of thousands of its best and most productive workers in the manufacturing slump caused by stiff foreign competition, the high dollar and the U.S. recession, says a new bank report.
The Toronto-Dominion Bank estimates Canada lost 130,000 factory jobs in 2007 and will likely lose more this year as conditions worsen for manufacturers, particularly in Ontario and Quebec.
“In short, we are losing many of the high-quality, high-productivity jobs in manufacturing, not just the jobs in low-productivity industries,” writes Beata Caranci, the bank’s director of forecasting.
Prime Minister Stephen Harper and Finance Minister Jim Flaherty have often noted that Canada’s strong job market has been able to replace those lost manufacturing jobs by strength in other areas of the economy.
But TD’s report disputes the notion that these jobs are of the lower-end variety that would be lost to cheap-labour economies like China and India in any case, or that laid-off workers find comparable jobs elsewhere.
While many have found new jobs in the growing services sector, TD’s report says on average the displaced workers wind up making about 25 per cent, or about $10,000 a year, less than what they were earning before.
The report found that 55 per cent of the 212,000 jobs lost in the sector in the past five years have been unionized, which tend to be higher paying and more productive.
. . .