Employment Insurance and Toronto

Erin has blogged before on variable EI coverage of the unemployed at the city level  http://www.progressive-economics.ca/2009/09/28/employment-insurance-benefits-by-city/ and I have been aware for some time that  coverage is relatively low in the giant Toronto CMA.

Nonetheless, I was taken aback to find out that, in the most recent month for which we have EI and Labour Force Survey data (February, 2010), Toronto accounted for almost one in five (18.0%) of  all unemployed workers in Canada, but for just over one in ten (11.4%) of all EI beneficaries.

To put this in actual numbers -  in Toronto in February, there were 279,000 unemployed workers, of whom just over one in three (35.4%) were receiving regular EI benefits. Put another way, there were a stunning 180,210 unemployed workers in the Toronto CMA not collecting  EI.

In Toronto, as noted, 35.4% of the unemployed were receiving EI. In all of Canada minus Toronto, I calculate that 60.4% of the unemployed were collecting EI. That happened even though the unemployment rate in Toronto in February (based on a three month moving average) was slightly higher than the national average (8.8% compared to 8.5%.)

Some Ontario cities look a bit like Toronto in terms of having a very low proportion of unemployed workers in receipt of EI, but the proportion of unemployed who were beneficiaries was still 46.0% for Ontario excluding the Toronto CMA.

(EI data by CMA and province are not seasonally adjusted, so in this post I use the not seasonally adjusted  labour force data obtained from  CANSIM.. Note that the CMA goes well beyond the City of Toronto to include most of the Greater Toronto Area including the large municipalities of Brampton and Mississauga.)

Why is  Toronto so different? Why does it have such a low level fo EI coverage even though the hurdle of the variable entrance requirement (hours worked to qualify for benefits and determine the duration of benefits) is now actually set lower than the average?

The short answer is that I don’t know, and that this issue should be thoroughly investigated for the next EI Monitoring and Assessment Report.

But three major, inter-related, hypotheses spring to mind.

First, the Toronto CMA likely has a significantly higher proportion of  precariously employed workers than the country as a whole. Most part-timers do not qualify for EI, and the hours requirements also exclude the many workers who combine hours of employment with self-employment as well as those working on short-term contracts. We do know from excellent research by the United Way that the City of Toronto – a big part of the CMA – has a very low level of median income compared to the provincial and national average, and also has well above average rates of poverty. Low income issues are rapidly spreading into the wider metropolitan area. http://www.unitedwaytoronto.com/downloads/whatWeDo/reports/LosingGround-execSummary.pdf

Second, the proportion of recent immigrants is much higher in Greater Toronto than for Canada as a whole. Research has shown that receipt of EI is below average for recent immigrants, partly because it takes 910 hours of work in a year to get into the system in the first place, and partly becasue recent immigrants face enormous difficulties getting into full-time, permanent jobs.

Third, to a degree that is under-appreciated by many, Toronto (especially areas outside the City itself)  took a huge hit before and in the early part of the recession because of  the auto and wider manufacturing jobs crisis. Likely many unemployed workers have now long exhausted their benefits.

(I don’t think it is a big factor but a slightly more nuanced picture might emerge if we had seasonally adjusted monthly EI data by CMA.)