Canada’s Lost Year

UPDATE (November 7): Quoted by The Toronto Star and Canadian Press

Today’s release of negative job numbers for October undoes much of the surprisingly strong reported improvement in September. The national unemployment rate is again closer to 9% than to 8%.

Canada-US Comparison

The US unemployment rate cracking 10% will undoubtedly garner much Canadian attention. While the absolute level of unemployment has long been higher south of the border, the October numbers were far worse north of the border.

American non-farm payroll employment fell by 190,000. The Labour Force Survey figure on employees (which also excludes the self-employed) was down by 71,000.

Compared to the US, Canada has fewer than one-ninth as many employees. But employers eliminated more than one-third as many jobs here in October.

Canadian Monthly Data

Most industries cut back employment. The largest exception was transportation and warehousing.

Other pockets of employment growth were construction, education and healthcare, which supports the notion that government stimulus is currently the only job creator. However, a declining number of public-sector employees contradicts this hypothesis.

Regionally, Quebec and the maritime provinces (but not Newfoundland) all experienced employment growth. The western provinces all suffered notable employment losses. Whereas the unemployment rate rose by only 0.2% nationally, it rose by 0.4% in Alberta, 0.5% in Manitoba, 0.7% in Saskatchewan and 0.9% in British Columbia.

Thus, October accelerated the convergence among provincial unemployment rates. For example, this rate is now only 1% lower in Alberta than in Quebec and New Brunswick.

Canadian Annual Data

Canada’s labour market peaked in October 2008 before being hit by the financial meltdown. Today’s release of job numbers for October 2009 provides a full year of employment data on the economic crisis.

Statistics Canada emphasizes that total employment is down by 400,000 since October 2008, which is shocking enough. But other measures paint an even worse picture.

A sectoral breakdown implies a disproportionately large loss of relatively good jobs. More than half of the employment decline, 218,000, was in manufacturing. Construction and other goods-producing industries eliminated a further 112,000 jobs. The entire service sector shrank by 70,000.

Male-dominated industries have been hardest hit in what some have dubbed a he-cession. Over the past year, employment actually increased by 2,000 among Canadian women over 25. Conversely, it decreased by 177,000 among men over 25 and by 225,000 among workers under 25.

Unemployment is up by 436,000, reflecting not only the decrease in employment, but also 36,000 more people in the labour force. This labour-force growth was less than one-tenth of population growth (389,000), suggesting that many potential workers were pushed out of the workforce altogether or were unable to enter it.

Self-employment surged by 104,000 over the past year. Unless the economic crisis coincided with a spontaneous outburst of entrepreneurship, the implication is that many workers turned to self-employment because paid positions were unavailable.

Since the Labour Force Survey counts this reported increase in self-employment toward total employment, the decrease in paid employment was much larger than the decrease in total employment. Indeed, since October 2008, Canadian employers have eliminated more than half a million paid positions (503,500, to be precise).

Not surprisingly, private-sector employers were responsible for the lion’s share of this reduction: 449,000. Perhaps more surprisingly, public-sector employers cut a further 55,000 jobs.

October 2008 may be a poor base of comparison for public employment because it includes workers employed temporarily to administer the last federal election. But one would have hoped that, given a year, government stimulus programs could have outweighed temporary election hiring.

5 comments

  • Also participation rates fell a further 0.1%. Combine this with the last release on GDP and the last in first out line is confirmed as more brittle than the day it was baked.

  • I think if anything, this month’s numbers are basically a reassurance of what many have been feeling over the past 3-4 months- the recessionary winds are still blowing and we need to stop feeling so giddy about recovery-a s much as we think we have made gains- guess what- there is no rescue plane over head- it is still us in the ocean by ourselves clinging onto our life jackets- and yes its getting colder and yes those are shark fins circling on the horizon. We still need rescuing

    A couple months of hiccups in the survey instrument is all I see the previous 2 months being. Down is still the direction and the most dangerous thing out there right now facing the economy- is this sense of urgency for the public sector to start cutting back to somehow focus on deficits rather than stimulus. Very dangerous, but how did we get into this false sense of optimism.

    I am perplexed how so quickly these sentiments turn. I for one, as an economist, feel so strongly at this very moment, the whole definition of what constitutes an official recession- two consecutive quarters of negative growth, has got to be abandoned. Why oh why is such stupidity used as a benchmark!

    How can any sane measure that makes such claims and has such deep power to deeply claw its way into the public space be constructed with such bias.

    It is like a weapon we have to defend ourselves that actually kills us. If we have governments start cutting because they believe the recession is over in some cordially delusion manner, than how can we but fall back into another recessionary dip.

    It is all quite absurd. Use another measure please- GDP is so biased it is killing us. Damn it- economists are stubbornly and stupidly clinging onto such conservatism!

    If there is one thing we should know about the economy, it has at its heart change! GDP is caught up in a era of mass production modernity that no longer exists in the way it once did and if anything when within this space of actually existing modernity the apparent clarity of these old measurement vehicles are killing us with they destructively keep blinding us with their silence.

    Statcan itself is caught up in an era that no longer exists- we are suffering from a cultural numeracy that died two decades ago- a huge cultural purge is needed. Yes this all comes from this months LFS numbers, I have heard that hammer hit the nail before on this topic, but never this loud and never have I seen the spike go so far into the coffin with this one monthly swing of that measurement hammer. We need to start seriously thinking about how we measure such grandiose constructs as recession.

    paul

  • Paul,

    Sometime in the early eighties reform liberals quit thinking that “capitalism” was merely a means to an end–i.e., the expansion in potential human creative capacity–and threw in with their classical brothers in arms–the end being: more is better than less–and thus it was that Capitalism became the means and the end.

    In the beginning their was the word and the word was g-d.

    Welcome to ideological hegemony.

    Profits are rebounding (recovery), investment will eventually pick-up to a positive job creation clip and then unemployment will start declining. A recession for workers is the necessary counterpart to a recovery for capitalism. And since we know that more is always better than less (except employment at certain points in time), that capitalism is the means, it, is thus, also the end.

    That is the moral of story. Now stop moralizing and enjoy the profit recovery/ worker recession :),

  • Gee thanks Travis I feel so much better now!

    Just pissed I guess that despite a few tory riding spending splurges, and now a whole bunch of discourse in the public sector focusing on cuts, that the delicate flower of our economic recovery is but a small seed right now.

    I just brought my 2 hibiscus plants “china rose” in for the winter, now there is a plant for any economy, always blooming with so many flowers, that is, if you take care of them.

    I wonder what that china rose would look like if I let Harper and his market’s invisible hands discourse take care of them. I wish K. Polanyi was still alive, I am sure he would have a whole field of Hibiscus, blooming so pleasurely, I bet that field would look magically colourful.

  • We citizens in BC, see, there are no jobs, they are going down the tubes. And stimulating the economy, will only result in failure, when those jobs are gone, the stimulating funds are used up, we are worse off than ever. Every government service in BC, has been slashed so badly, Campbell, shipped some of our mills to China, so those jobs will never come back. BC’s natural resources are being sold as fast as Campbell can manage. Campbell, has, so destroyed BC, there is no way to recover, when your resources are sold out. That is why, BC, isn’t showing even a seed of recovering, and we are the worst hit province in Canada. And then, nitwit Campbell is laying the HST on to people in a dying province. Campbell should have a freeze on his assets, and be made to give back, what he has stolen from the people of BC.

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