Corak in Context

Professor Miles Corak had a post on The Globe and Mail’s Economy Lab yesterday comparing measures of unemployment in Canada and the U.S. I remember learning in Economics 100 that the official Canadian and American unemployment rates are not directly comparable, in part because Statistics Canada includes 15-year-olds whereas the U.S. Bureau of Labor Statistics starts at 16.

Corak helpfully clarifies that the age difference has little effect on unemployment rates. To be officially classified as unemployed, one must be looking for work. The main difference is that Canada considers both “active” and “passive” job-search techniques, while the U.S. counts only the former as unemployed.

Corak’s concluding paragraph begins: “The Canadian unemployment rate would be lower if only those actively looking for a job were used to calculate the unemployment rate . . .” As a conditional statement, that is factually accurate. But it comes just as the Conservatives are proposing to cut off Employment Insurance recipients whose job searches are deemed to be insufficiently active.

A concern brought to my attention by Sam Boshra is that Corak’s wording can all too easily be (mis)interpreted as suggesting that Statistics Canada should adopt the more restrictive American definition of unemployment. Indeed, that is the message conveyed by The Globe’s headline: “A fast way to lower jobless rate: Use U.S. metrics.”

However, Corak has consistently argued that Canada’s official measure (R4) significantly understates unemployment. He is a proponent of the broader R8 measure of unemployment, which includes not only “passive” job-seekers but also discouraged workers, those waiting for jobs and part-timers who cannot get full-time work.

As far as I can tell, the only reason for applying the official U.S. measure to Canada is to produce an apples-to-apples comparison of the two countries. But even worse American unemployment is no excuse to define high Canadian unemployment out of existence.

3 comments

  • duncan cameron

    Thanks for this clarification Erin.

  • Employment measures were created during the post war era- even the R8 measure does not tell us enough.

    We need a measure that bring in with it, the quality of the employment- as a binary measure of employed and unemployed, just does not do justice to the economic justice that is dolled out in today’s precarious work world.

    Truly- the times have changed and with it we are resting on measure of another period that produce these false notions of measured nothingness. It waas bad enough when these measure were relevant, that they had the bias, that is outlined, but to me Corak’s and the globe’s articulation of these measure is so mass production era determinate that they are debates of another era.

    R4-R5, R8 does it matter, none really tell me what I need to know about the labour market. I need a measure of good jobs, jobs that people can actually survive on and be comfortable- this is the cultural space that such measurement artifacts were forged and hammered out. However we have a radically different space that we need to retool the constructs and measure or mismeasure reality.

    The wide prevalence and social acceptance of Precarious work brings with it – a new anvil. We just need to have this heat up enough to reforge the measurement vehicle. I do believe France may now be able to build us the new furnaces needed.

  • http://www.esa.doc.gov/Reports/benefits-manufacturing-jobs

    An excellent report form the US commerce department on why manufacturing jobs are beneficial- with some numbers to back it up.

    It also shows that manufacturing jobs, at least from a traditional perception of what are considered manufacturing jobs, have changed. It suggests that manufacturing jobs are more and more linked with higher education, pay, and benefits. Shows that over 1/3 of all manufacturing workers can also be classified as science, technology, engineering and mathematics (STEM) workers. This is a long way from the days where a worker parked their heads while they worked.

    So when you shut these plants down as, Harper’s high dollar, resource extraction economy has done to Canada, you lose critical assets and knowledge bases in key areas that the future of any developed economy will require to thrive in the future.

    Sad that we kill off our seedlings in such stupidity ideologue blinded lack of vision.

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