Labour Force Exodus

Statistics Canada reported this morning that 38,000 people gave up looking for work in February. The official unemployment rate fell because these Canadians were no longer counted as being unemployed. However, this huge withdrawal from the labour force is a sign of weakness in the job market.

Nationally, 25,000 of the 38,000 who dropped out were younger than 25. The labour forces of Ontario and Alberta shrank by 41,000 and 7,000 respectively. Meanwhile, BC’s labour force expanded by 10,000 and there was little change in other provinces.

In February, 15,000 fewer Canadians were paid by an employer but 12,000 more reported being self-employed. While total “employment” declined only slightly as a result, the loss of paid positions is further evidence of a weak job market.

Average hourly wages continued to rise by 2% annually, less than the rate of inflation. In other words, even workers who have jobs are not keeping pace with the cost of living.

This labour force exodus comes as federal and provincial governments are finalizing their budgets. The priority should be to create jobs through public investment and ensure adequate benefits for workers unemployed through no fault of their own. The risk is that budget cutbacks will push Canada back into recession by eliminating public-sector jobs and reducing expenditures that help support private-sector jobs.

UPDATE (March 10): Quoted in The Toronto Star, Hamilton Spectator and Waterloo Region Record

10 comments

  • Most of the youth leaving the labour force were in BC (9,000) and Alberta (14,400). In Ontario, though, three-quarters of the contraction in the labour market was the result of 31,000 fewer participant aged 25-54.

  • Thanks for the age breakdown by province. I have removed one ambiguous sentence from the above post.

  • As is my annoying habit, I will once again suggest that the average pay may well be misleading; median pay probably rose even less than the average due to the continuing rise of salaries at the top.

  • That’s interesting, because I noticed that median pay actually rose less than average pay, so I looked into the provincial breakdown – only in NL, ON, and AB did median pay grow faster than average pay.

  • Unless we convince them otherwise all three levels of Government seem poised to massively slash our public spending due to concerns re : credit rating…

    This is exactly what happened during the Great Depression…and it creating a downward spiral

    We need a massive increase in Public spending…

  • “Average hourly wages continued to rise by 2% annually, less than the rate of inflation. In other words, even workers who have jobs are not keeping pace with the cost of living.”

    Fine piece of writing. I know Erin remembers my diatribes on Inflation. Can’t help but wonder if its brushed off. Erin been noting of above remark for a year so, unlike the past which was focused on deflation.

    What are the effects of the cost of living today? on all unemployed, the youth unemployed, the black youth unemployment, and other minorities of race or class? This question would includes students paying off debt greater then 10 grand?

  • The problem is anemic wage growth not modest inflation.

  • This high unemployment is deliberate to create downward wage pressure and to increase labour productivity….

    For the benefit of the resource extraction industry..

  • The problem is anemic wage growth not modest inflation.

    The reason NDP has a shot to beat Harper is because of the fact wages are not matching prices. The fact it is taking longer to buy goods and services.

    The fact wage growth is anemic, the ammount of youth unemployed, the ammount of part timers spending less then they used should keep a lid on prices from ever hurting the unemployed, or old, youth. Fact it is not.

    Under a NDP Regime if anemic wage growth continued, with modest inflation, and modest unemployment you will loose support. Fact.

    Ignore the modest inflation at you’re own peril.

  • Richard Leblanc

    When the real estate bubble pops and Carney is forced to raise interest rates your facts are going to be meaningless. Current over evaluation stands between 20 and 40%. Personal debt level is 1.5 trillion. On less of course you think were the only nation in the world that will be able to avoid a sharp drop in real estate prices.

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