Today’s Jobs Report: Less than Meets the Eye

After many months in which tens of thousands of jobs disappeared, the revelation that “only” 7,400 fewer Canadians were working in June may seem like good news. But this relatively small decline in total employment masks more ominous trends.

Self-Employment

In June, employers eliminated 44,600 paid positions in Canada, but 37,200 more Canadians declared themselves to be self-employed. This development is reminiscent of April’s do-it-yourself recovery.

The number of self-employed Canadians hit another all-time high in June. It would be extremely difficult to explain this surge in terms of spontaneous, voluntary decisions to work for oneself. Clearly, a grim labour market is forcing many Canadians to eke out a living through self-employment.

Part-Time Work

During the same period, full-time employment fell by 47,500 and part-time employment rose by 40,100. This substitution of part-time jobs for full-time jobs is an important dimension of the labour-market decline. It leaves ample room for businesses to have existing employees work more hours if and when they decide to ramp-up production.

As a result, an initial recovery in economic output is unlikely to entail much new hiring. Unemployment is likely to keep rising, or at least remain high, even after the recession officially ends. Policymakers debating the possibility of more government stimulus should consider not only predictions about when output may recover, but also the pressing need to create jobs even after this recovery begins.

Unemployment

Since Canada’s labour force continues to grow, the increase in unemployment far exceeded the decrease in employment. Nearly 1.6 million Canadians are now officially unemployed, the largest number since April 1994.

In addition to reinforcing the importance of job-creation as a policy goal, this development highlights the urgency of enhancing Employment Insurance to improve the accessibility, level and duration of benefits.

UPDATE (July 12): Quoted by The Toronto Star

3 comments

  • How does one find the R8 unemployment rate?

  • The R8 is published with Cansim, not sure if it is in the official monthly release.

    Something I would like to do is pull all the self- employment data and have a look at the last 10 years and see just how much of an anomaly we have going here.

    I find this whole self employment bubble a really really strange. I have a feeling it is some kind of abstracted notion of the interview process. i.e. a state of denial for the respondent. I really wish statcan would look into this rather than letting it just lay out their like a fish out of water.

    It is an outlier- at least I gonna try and confirm whether it is. I’ll post the results here when I get it finished.

    pt

  • I had a look at the monthly, seasonally adjusted numbers for self- employed. Not sure why the media forgot to mention the following.

    In April we gained over 30,000 self employed, in May we lost over 31,000 self employed and then in June we gained back another 30,000. This of course are net flows. The large variation from month to month for this measure are not unusual, at least survey wise.

    If you look at trends, there is a small increase happening over the past 6 months. However nothing dramatic. Seemingly just the same old upward incline on the incidence of self employment as defined and measured by the LFS.

    Prior to the early 80’s, self employment was at around 12% of employment. It consistently rose to around 15 percent by the mid 90’s and then in the dot.com bubble it shot up to 17.3%. Since the burst of the dot.com it has slowly fallen to around 14%. Then in 2002 it turned the corner and has slowly been on the rise. In the past 6 months we have risen by 0.5 %,
    following the increase in June it has for the first time since the late 90’s eclispsed the 16% mark of total employment. Historically speaking my conclusion would be there is a small increase in the past 6 months. If we would not have witnessed the 30K drop in May then I may have suggested something different. However, given the variance in teh LFS, we need to witness at least 2-3 months of consecutive dramatic change.

    This did not happen. Unless, May was an outlier.

    Next month should provide for more evidence of whether we have an increasing trend.

    paul

    email me if you would like the numbers and a graph

    mostlyacog1@yahoo.ca

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