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Crowley's Red Hot Labour Market

April 22, 2013

2-minute read

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.  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.  By this measure, unemployment was actually 11.2% in March 2013. Red hot labour market, indeed.

Angella MacEwen is a Senior Economist at Canadian Labour Congress and a Research Associate at the Canadian Centre for Policy Alternatives

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