Crowley’s Red Hot Labour Market
Brian Lee Crowley’s latest column shows he’s a glass-half-full kinda guy. We shouldn’t be worried about unemployment because a) it’s old-fashioned, b) Boomers had it worse (and now they’re getting old) c) we’re doing better than the U.S., and d) it’s really only young people and immigrants that are unemployed.
This is a relief.
So I shouldn’t worry that Statistics Canada Labour Force Survey indicates that real average hourly wages have risen by only twenty cents between 2009 and 2012 (an annualized growth rate of 0.3%). Or, that at the same time, real median hourly wages have actually fallen, indicating that any wage growth is limited to a few at the top end.
Crowley cites vague evidence from internet job advertisements to point out that the number of jobs going unfilled are rising fast.
That’s good news for Canada’s 1.3 million job seekers. They had been discouraged by Statistics Canada data released on April 16th , which showed that January 2013 had the fewest job vacancies recorded in the past two years, and the highest number of unemployed Canadians for each job vacancy (6.5 unemployed Canadians for every job vacancy).
And never mind that businesses have told the Bank of Canada that labour shortage concerns are well below pre-recession levels, nearly half of what they were in 2007 / 2008. They are probably just being stoic in the face of such a red-hot labour market.
Canadians should not be concerned that the vast bulk (over 60%) of new employment since the bottom of the recession has been in temporary employment, and many well-trained Canadians find themselves employed in short-term, low paid jobs. Â Boomers are going to retire (eventually) and then the rest of us will have our pick of sweet, sweet, permanent, full-time, high wage jobs. Really, we will. Unless our employer gets a favourable Labour Market Assessment and can bring in vulnerable workers at lower wages. Nah, that would never happen, it’s just RBC, right?
It’s probably too minor a detail to note that the Canadian labour market is still short over 500,000 jobs, if we consider the increase in the population over the past 5 years. The employment rate (the percentage of the population that is employed) hasn’t budged throughout the recovery. In terms of job creation we’re treading water, but it could be worse; we’re not the U.S.! That should be very comforting to unemployed and underemployed Canadians struggling to make ends meet. Someone else has it worse.
Seriously though, I do agree with Crowley that the unemployment rate is an inadequate indicator of Canada’s labour market health. Times have changed. Canadian workers today work more involuntary part-time, have longer waits between temporary gigs, and often use self-employment to make up the gaps between temporary employment.
A far more accurate measure of unemployment is Statistics Canada’s R8 measure, which takes multiple labour market factors into consideration. Â By this measure, unemployment was actually 11.2% in March 2013. Red hot labour market, indeed.
One thing strikes me as odd in the Crowley article.
“As a result of this tsunami of workers, the Canadian labour force grew more than 200 per cent over the past 50 years. The chief economic challenge was where to put all these workers. We did pretty well, all things considered, in getting them into work, but the numbers were so overwhelming that even in the face of strong employment growth, we still ended up with big unemployment numbers.”
OK, I’m not a fan of markets, but my understanding was that they currently exist. Surely that’s not how it works. An economy is an interdependent thing; if there are more people with needs who are consuming, there will be more jobs available serving those needs and producing for that consumption. Adding more people does not equal adding more unemployment, creating a need to stuff people into jobs somehow. Rather, you reach some new equilibrium surely. If the structure of your economy was set up for 5% unemployment with fewer people, it will all else equal be set up for 5% unemployment with more people. Trade could complicate that picture, but just how depends on the specifics of the trade patterns.
(This is also why I’m generally skeptical of claims that the economic sky has to fall anywhere the population is declining)