Tax Cuts, Dead Money, and Lackluster Jobs Growth
Over the past year, the Canadian labour force has grown by 185,000 people, but we have only added 176,600 jobs. Â The population grew by 1.2%, but employment only grew by 1%. Â The unemployment rate has not budged, at 7.3%, a far cry from the pre-recession rate of 6%.
For youth, the picture is worse, with 72,000 fewer youth employed this August compared to last year.
With lackluster private sector jobs growth, and cuts in the public sector at both federal and provincial levels, the situation seems unlikely to improve any time soon.
Corporate tax cuts have not had their desired stimulative effect, with even Governor Mark Carney pointing out the failure of the private sector to productively invest – choosing instead to hoard piles of ‘dead money’.
TheÂ OECD predictsÂ only modest economic growth for the Canadian economy in the 3rd and 4th quarters of this year, and the Bank of Canada will likely continue to hold rates where they are. Â Canadian households have record levels of debt, and almost half of Canadians are living paycheck to paycheck.
So what is the way out of this economic funk?
A substantial youth employment strategy, and public sector investment on projects that improve private sector labour productivity.
Urban transit, and quality affordable childcare.
Working with employers and educators to ensure there are enough spaces to provide youth with the skills required to innovate and compete.
These are the things that our government should be working on implementing, rather than Â misguided austerity programs & corporate tax cuts.
From today’s lfs report the one scary figure (amongst many) that popped out at me was the decline in construction jobs. Looking at the past few months, there has been a noticeable decline in construction jobs. I thought it may be related to housing bubble stuff, (and it may be) but building permits were also released and if permits can be a gauge, then the trend has been a slowdown in non-residential construction.
However I am not sure about the leads and lags between those two.
Since the spring, seasonally adjusted construction jobs are worryingly trending down.
Again, thank goodness consumers are buying cars in both the USA and Canada, that is about the only value adding industry showing any strength- more consumer debt though is undoubtedly fueling it, as I reported on this blog a couple months back , car loans, especially sub prime car loans in the States are in record territory.
The picture you paint is somewhat gloomy but here in BC, the Liberals are all over the media saying BC created 70 thousand jobs in the past 12 months surpassing all Provinces including Alberta. Can this be right ?
Guy in Victoria
Guy in Victoria – the picture is certainly rosier out west. BC has created 70,000 full-time jobs since last August, but lost almost 20,000 part-time jobs.
Year over year employment growth was 2.3% in BC, 2.1% in Alberta, and 3.6% in SK.
In absolute increase in the numbers of jobs, BC wins, with 51,700 and Alberta is close behind with 43,300 more jobs than in August 2011.
Angela (and Guy):
Loving all your work on youth, Angela. I am actually make this a big part of our work at Federation in NL. Talking about what kind of jobs we want, what kind of society we want for the next generation.
Interesting that BC created jobs at the same time that the minimum wage was finally increased. I actually think we need a new study on how last round of min wage increases in Canada have 1. helped women big time – especially in private sector, 2. have prevented inequality from being even worse, 3. have helped provincial economies etc. Interesting to see some of the work/research from the US around how higher min wages needed as economic stimulus.
The victories on min wage in every province (won mostly by the labour movement) must be celebrated. They have made a huge difference and I think in times when there is so much bad news, we need to highlight a few victories – and own those victories.
Sol, and keep up the excellent work!