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The Progressive Economics Forum

The Travails of Toronto

TD Economics have released an interesting if rather thin report on the Toronto recovery. I say thin because, while there is not a wealth of current data, we do get labour market data for the huge Toronto Census Metropolitan Area. As they show, there has been a huge loss of manufacturing jobs in the region, offset to a degree by recent job gains – unfortunately, often part time – in other sectors.  And there are major grounds for concern that a lot of lower income Toronto residents are facing a pretty tough time now and moving forward.

In August (which I use since we have EI data for that month also) the Toronto CMA had an above average unemployment rate of 9.1% (using the three month moving average.) Strikingly, that translates into the fact that almost exactly one in five unemployed Canadians (300,000 of 1,511,000) lived in the Toronto CMA.

Statscan EI data – which TD did not look at for some reason – show that less than one in three of those Toronto unemployed workers were collecting regular EI benefits in August compared to 45% nationally. Strikingly, Toronto had one in five of the unemployed in Canada, but less than one in seven (13.7%) of Canada’s regular EI beneficiaries in August.  (The EI data are not  seasonally adjusted while the unemployment data are, but I don’t think that makes much of a difference since the same pattern was evident last time I looked in the Winter.)

I keep hoping that someone (HRSDC? the Ontario government? the City of Toronto, the Mowat Centre? – all step forward) will take on as a research project this key question – just why do so few of Toronto’s many unemployed workers qualify for EI?

My hypotheses? Following a huge shakeout of manufacturing jobs even before the recession, unemployed workers  could only find part-time and temporary jobs which failed to requalify them when they they again become unemployed.  Temporary and part-time jobs are particularly prevalent in the “post industrial” Toronto economy. And recent immigrants (who make up a much bigger than average proportion of the Toronto workforce) face a high (was 840 hours, now back to 910 hours) entrance requirement, translating into about 6 months of full-time work.

Good on TD for scratching the surface. But it is time to dig deeper.

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Comments

Comment from duncan cameron
Time: October 23, 2010, 9:46 am

I was discussing Friday’s front page Globe report on the Toronto unemployment situation with my friend Daniel Drache (who skyped me from New Delhi), and he pointed out that Toronto had the U.S. unemployment rate. Andrews numbers show how TO has got a U.S. job market look to it, with a U.S. style U.I. scheme to boot. Could this have anything to do with continental integration?

Comment from Elli D.
Time: October 24, 2010, 2:41 pm

Well, I did like the TD report actually, it was good to read. However, and thank you for pointing it out, many aspects of our economy could have been analyzed deeper. It could have been separated into a number of smaller but more detailed ones. Toronto’s economy is not flawless and it is not and definitely should not be a secret.

Comment from Glen
Time: October 25, 2010, 9:48 am

The low rate of EI recipients in Toronto has more to do with the other factor mentioned in the report. Namely that the employment situation in Toronto has been bleak for so long that people have exhausted their benefits.

“The last two bullets reference the particular struggles of the City of Toronto (the 416 area) relative to the suburban 905 area code warrants some further attention. Notably, the plentiful supply of economic data encompassing the broader Toronto Census Metropolitan Area (CMA) conceals the widening disparity between the City and its neighbouring suburbs. In fact, in the early part of the decade, the City was only one of two major Canadian municipalities (the other being Windsor) to suffer a decline in median income. ”

Toronto has gone from a having negative employment growth, when the world/country/province/region was creating employment, to having below average growth at best. Going from sucking, to sucking less, is not a recipe for success. Looking at June’s recent Toronto economic indicators it shows Toronto three month unemployment rate average (seasonally adjusted) went from 10.2% to 10.6% in the last twelve months. The Toronto CMA (including Toronto) the rate went down, from 9.7% to 9.5%. Keep in mind that the CMA had declining unemployment despite having Toronto’s increasing unemployment included in the figures.

http://www.toronto.ca/business_publi…/2010-june.pdf

Toronto simply cannot continue to have a tax climate that discourages growth in the commercial/industrial assessment base while having one that increases (via negative cost recovery) residential assessment growth. That is the reason Toronto has a structural deficit. Each new household, in order to maintain service levels, requires a net subsidy between $1,200 and $3,800 per year for operating expenses.

Comment from John Stapleton
Time: October 25, 2010, 10:23 am

Toronto is expensive; particularly shelter costs. I suspect that there is higher propensity to leave Toronto for less expensive environs once one becomes unemployed.I am not sure how HRSDC or Statscan counts the source of a claim but a person becoming unemployed in Toronto may represent an EI claim in Cambridge. If you cam to Toronto to work, it may be the time one would choose to return home. Of course Andrew’s point is right on the money. We really don’t know.

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