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.

Andrew Jackson has more.

Erin Weir is an economist with the United Steelworkers union and a CCPA research associate.

UPDATE (March 10): Quoted in The Toronto Star, Hamilton Spectator and Waterloo Region Record, and Jim Stanford has even more

One comment

  1. The public ultimately loses out when we try to summarise performance by relying on one, two or a small handful of stats – namely, the unemployment rate, GDP growth, the deficit to GDP ratio. Underemployment, employment ratios, etc. are all necessary to look at – and when we do…. the past 30 years have not been kind – but the past few have generally seen an increase in intensity of an already rolling long term crisis. Attention now needs to look at the underlying fundamentals that are creating this tragedy – rather than blaming it falsely on the housing crisis or one aspect of the financial sector.

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