Ontario Unemployment Hits All-Time High
According to todayâ€™s Labour Force Survey, the national unemployment increase (83,800) was twice the employment decrease (41,800) in May. The explanation is that the labour force expanded by 42,000 as Canadaâ€™s population continued to grow. While some people are entering the labour market and getting jobs, many more are being laid off.
As a result, total unemployment blew past the 1.5-million mark. More Canadian workers were jobless in May 2009 than in any month since May 1994. In other words, unemployment has hit a fifteen-year high.
Most of Mayâ€™s unemployment surge occurred in Ontario (49,500). Significantly, the number of unemployed Ontarians (670,700) surpassed the previous record set in September 1992 (640,400).
Ontario unemployment has reached its highest level ever. And the recession is far from over, at least as far as the labour market is concerned.
Despite hope that the worst may be over in terms of declines in output (real GDP), todayâ€™s unemployment numbers indicate that stronger stimulus programs will be needed to create jobs. Employment Insurance must be enhanced to provide adequate benefits to the unemployed.
Wages Under Pressure
Not surprisingly, wage figures are less grim than employment figures. Employers can lay off workers anytime, but normally only set wage rates periodically. However, the Labour Force Survey already suggests some downward pressure on wages.
Canadaâ€™s average hourly wage slipped to $21.87 in May, its lowest level since December. Ontarioâ€™s average slipped to $22.63, also its lowest since December. While wages are still higher than last year, Statistics Canada notes that this is “the lowest year-over-year increase in two years.”
Mondayâ€™s first-quarter GDP numbers confirmed that a lower level of employment reduced total labour income, and hence the purchasing power of households. However, if less employment is combined with falling wages, the effect on labour income and consumer spending could be devastating.