Unemployment Hits Twelve-Year High

Preliminary reports on this morning’s Labour Force Survey emphasize that the unemployment rate reached its highest level since 2003. However, the situation is far worse in absolute terms.

The number of officially unemployed Canadians rose by 106,000 in February, pushing the total over 1.4 million. In other words, the ranks of Canada’s unemployed swelled to their highest level since February 1997.

North American Race to the Bottom

A common theme in Canadian economic commentary is that things are worse in the US. While American employment has been contracting for longer than Canadian employment, Canada now appears to be losing jobs at a faster pace than the US.

There are about nine times as many employed workers in the US as in Canada. February’s loss of 83,000 Canadian jobs is proportionate to a monthly loss of almost 750,000 American jobs. January’s loss of 129,000 Canadian jobs is equivalent to more than 1.1 million American jobs.

Manufacturing: A Dead-Cat Bounce?

Despite the overall loss of employment, manufacturing regained 25,000 jobs in February. This statistical rebound restores only one in four of the manufacturing jobs lost in January. It does not take account of major manufacturing layoffs that have been announced but not yet executed.

In total, Canadian manufacturing employment dropped by 456,000 between November 2002 and February 2009. The only ray of hope for manufacturing is that the Canadian dollar’s decline provides a cost advantage for locating facilities in Canada.

Carnage Spreads to Other High-Wage Industries

The most recent available Survey of Employment, Payrolls and Hours (December 2008) indicates an average hourly wage of $20.34 for all hourly-paid employees in Canada.

Construction, which paid an average wage of $25.74, eliminated 43,000 jobs in February. This continuing downward trend heightens the urgency of public infrastructure spending.

The even larger contraction of service-sector employment was also concentrated in relatively high-wage industries. Professional, scientific and technical services, which paid $21.98 per hour, lost 31,000 jobs. Healthcare and social assistance, which paid $25.54 per hour, shrank by 15,000. Educational services, which pay more than $21 per hour (although complete wage data is not available), also shrank by 15,000.

Reflecting these declines in health, welfare and education, total public-sector employment contracted significantly in February.

4 comments

  • Erin wrote:

    “The number of officially unemployed Canadians rose by 106,000 in February, pushing the total over 1.4 million. In other words, the ranks of Canada’s unemployed swelled to their highest level since February 1997.”

    I am sympathetic to the idea that we should emphasize the volume or actual number of people unemployed. I do, however, think one should at least indicate that in some sense each recession is likely to produce a greater volume of unemployment given the increasing size of the labour force through time.

    And the numbers are bad this month. Notice that the size of the labour force increased muting the increase in the rate of unemployment.

    Also as you and the globe article (which quotes you) mention the regional aspects of unemployment are quite grim.

  • Is it possible to look at hours instead of number of people employed or total “jobs” available? Statistics Canada acknowledges that most of the jobs lost are full time, while those gained are primarily part time. In fact, for February, all of the jobs lost were full-time (111,000) and all the gains were part time. This means that the number of net jobs lost underestimates the decline in employment as measured in hours of work being done (and also in earnings for workers who now have their hours cut but are still counted as employed in that one job).

  • Iglika,

    It should be possible to come up with an estimate given that there are average hours series which could be totaled and the divided by the corresponding number of employed.

  • Indeed, the Survey of Employment, Payrolls and Hours (linked in my post above) provides the number of employees and average hours for each industry and province as well as for the country as a whole.

    One limitation is that this survey excludes the self-employed. Another is that average hours provide no indication of how work time is distributed. Other Statistics Canada studies show that some employees work extremely long weeks while other employees get very few paid hours.

    The building-trade unions often count “man years” of employment because there is no presumption that construction workers will be continuously employed at one job. With the increase in other non-standard work, it would be interesting to examine the whole economy that way.

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