There was a strange debate at the Ontario Legislature on Monday. It was a disagreement not over policies or a scandal, but over the state of the labour market in Ontario.
Ontario PC leader Tim Hudak said: “Premier, in review of your first year in office, I noticed that Ontario didn’t create a single new job, that we lost as many jobs in the province as we gained. … [we’re] on the wrong track. We’re losing jobs—39,000 jobs in December alone.”
And Premier Wynne responded: “… he’s got his information wrong. There have been 93,000 net new jobs created in this province just in the last year.”
So who’s right? Is Ontario’s labour market recovering like Wynne says, or is it shrinking like Hudak says? And why are there conflicting numbers?
As best as I can tell, Kathleen Wynne was citing the change in annualized nominal employment from 2012 to 2013, which increased by 95,700 jobs[i].
It’s not immediately clear which statistics Tim Hudak was referring to. He might be referencing the change in seasonally adjusted nominal employment from November to December, which decreased by 30,300 jobs.
However, neither of the statistics they cite – the raw number of jobs – adjusts for change in population size. As Jim Stanford, pointed out in a recent CCPA report, this is a major methodological problem and an important piece of data that must be brought into any robust labour market analysis. For this reason, employment rates are a better indicator of labour market health.
Over the past year, Ontario’s working age population grew by about 130,000 people and the labour force (the number of people either working or looking for work) grew by 83,600 people. Using the annualized figures, Ontario did add 95,700 jobs, but this barely exceeded the labour force growth. The net change in employment is actually 12,100. That’s why the annualized employment rate only nudged up 0.1 percentage points.
So, who’s correct on Ontario’s labour market? Is the province doing well as Wynne suggests, or is it failing as Hudak says?
The answer is somewhere in between. Ontario’s labour market isn’t rapidly growing, but it isn’t shrinking either. Instead, Ontario is stagnant and barely improving. The number of jobs created is barely enough to keep up with population growth, let alone replace the jobs lost during the recession.
The employment rate is still 2 percentage points below the pre-recession levels[ii] from 2007. The improvement in 2013 represents about one-twentieth of what is needed for “recovery”.
Frankly, Ontario is stuck in a rut and we need more than finger pointing to get us out. A true backing away from austerity would be a good start.
Kayle Hatt was the Canadian Centre for Policy Alternatives’ 2013 Andrew Jackson Progressive Economics Intern. He is now an independent researcher focused on labour markets, macroeconomics and fiscal policy.