Relative employment is shifting
Today Statistics Canada released impressive June employment figures from its Labour Force Survey (LFS). In case you missed it, the April gains, +109,000 new jobs, set a record. And the June gains, +93,000, were nearly as spectacular. (Note: the unemployment rate for Canada in the chart to the left is through May, not June)
Canada’s labor market bounced back fully and then some. Spanning May 2008, when job loss became the norm as the global credit crunch started to take hold, to December 2009, 259k jobs were lost. However, this year through June 2010, the labour market added back 308k jobs, which is +50k new jobs during the expansion or roughly +500k in “US”.
I’m afraid that the US labour market is a far different story. To regain employment lost since June 2008, 6.9 MILLION jobs need to be added back to the employment figures of the current population survey.
I digress. Every time I hear the Canadian statistics, I immediately multiply the statistic by 10 to control for the population differential; thus, +109,000 new jobs in Canada would be equivalent to roughly +1,090,000 in the US, all else equal. In translating the job gains into “U.S”, I understand the magnitude with more clarity – not very different form learning a new language by translating the words in your head.
Is +50k Canadian still equivalent (roughly) to +500k US? The short answer is pretty much – the 2009 US/CAN relative population was just over 9; but in thinking about relative population figures, I stumbled upon a rather remarkable relative employment figure between the US and Canada. The Canadian employment picture has become much much brighter than that in the US over the last decade.
The chart illustrates US employment relative to that in Canada, Germany, and Japan (Germany and Japan are there for comparison). As you can see, employment in the US relative to our neighbor to the North has dropped markedly. There is a secular downward trend in US employment relative to that in Canada.
And it’s not just a population issue. On a population-adjusted basis, the employment figures in Germany, Canada, and Japan are trending upward relative to that in the US – and for Canada, this is a secular trend rather than a cyclical phenomenon.
The US employment picture is fading compared to other developed nations. And remember, Japan and Germany saw near-zero annual population growth spanning the years 2000-2009.
Rebecca Wilder
The data for Germany & Japan in the 3rd plot does not make sense. The relative ratios are in the vicinity of 10 – 11 if we use the RHS. Should we be using the LHS for both Germany & Japan as well?
I fixed the chart. Thanks!
It is worth noting that the total number of hours worked DECREASED in June, even as employment soared. That means that fewer hours are being divided up into more jobs. Perhaps the U.S. should learn from Canada’s Work Less Party! 😉
Do you have data comparing productivity growth in Canada?
Also, how has Canadian manufacturing growth compared to the US–i.e., is outsouring a smaller problem in Canada?
Factory jobs have fallen in Canada since mid-2004. The decline accelerated in early 2009, but since then the trend was flat through last 2009, recently turning down again. Factories even lost 14k jobs in June, while the economy as a whole added 93k.
This is one analysis of the 2009 Canadian budget.
“
Among the elements of the latest budget are:
Tax cuts for lower and middle-income earners worth C$20bn C$12bn in infrastructure spending including roads, bridges and clean energy programmes over two years C$1.9bn in tax measures for businesses Targeted loans and worker training programmes”
From here: http://news.bbc.co.uk/2/hi/7855311.stm
Seems structurally similar to our stimulus with some differences in amounts. The US business portion of our stimulus appears to be: $54 billion to help small businesses through a variety of tax incentives and write-offs. or ~6.9% and Canada’s ~4.75% over 10 years.
From here: http://useconomy.about.com/od/usfederalbudget/a/Economomic_Stimulus_Package_in_Detail.htm
Soon they will have to build border fences. They can hire Americans to do it.
From the 2010 OECD Employment Outlook — How Does Canada Compare
http://www.oecd.org/dataoecd/14/8/45603588.pdf
“Analysis presented in the 2010 OECD Employment Outlook shows that more than 80% of the reduction in labour input during the recession was achieved through declining average hours per worker rather than layoffs, resulting in a reduction in output per worker but also an increase in hourly labour productivity. Like in many other OECD countries, hours reductions were most important in the early months of the recession. Over time, job losses have played a more prominent role in labour adjustment.”
“The Canadian government responded quickly by implementing a package of policy measures to ease the effects of the recession on the labour market. These included support for labour demand through an extension of the Work Sharing scheme, additional job search and re-employment services and an extension to the duration of Employment Insurance for job losers. While the recovery is clearly underway, it will be important to maintain adequate funding for labour market programmes in the months ahead.
“As in many other OECD countries, Work Sharing has undoubtedly contributed to save jobs during the recession. However, despite an extension of the maximum duration of Work Sharing in Canada and a slight easing of eligibility requirements, the take-up rate (estimated at 0.3% of all employees on average during 2009) was amongst the lowest in the OECD.”
Oddly enough, after documenting the success of work time reduction in moderating unemployment, the OECD actively pimps for the phasing out of short time working schemes during the recovery. This might be understandable if the objective was to phase out the short term, remedial policies and phase in a permanent, universal reduction of working time. But no. The OECD just wants more undefined “adjustment,” which in its vagueness implies imposing insecurity on workers to “encourage” them to “adjust.”
Maybe Canada has a hidden advantage. Being 12th or 13th in the world in military spending according to which year you see, at 1.12% of GDP and less than 8% of their federal budget which has little else in terms of corporate welfare or discretionary control of the producing sector.
That was about 21.8B US dollars. The US the year I checked was 1st 623B in 2008 number 1 more than the sum of the next 50 countries’ spending combined.
Just thinking, and no health industrial complex either.
I am thinking Prince Edward Island.
They may need to build a fence.
Sorry, broken record!
ilsm says maybe Canada has a hidden advantage…”The US the year I checked was 1st 623B in 2008 number 1 more than the sum of the next 50 countries’ [military] spending combined.”
Not so hidden, and evidently an advantage most of the rest of the world has.
And remember that “productivity” measured in the US means quantity produced divided by number of US workers — in theory, a company’s US productivity could be infinite if they had no US workers at all.
I don’t know how Canadian productivity is measured, but if it is different, than trying to catch up with the US would be a tail-chasing activity.
Noni
on holidays, with little net access
ilsm,
Canada relies totally on the US for its territorial integrity and any ability to defend its international interests. It also has the incredible advantage of having a friendly partner on its only border. Think if Belgium eliminated its military. Would anyone care?
Isolationism is not the answer….
Islam will change
Rebecca/Noni or anyone,
How does this job sharing work? If you have two jobs making $90K a year then you share them through 3 people does that mean each person now gets paid $60K and they each work 27 hours/week?
Not to be blunt but I would not want to take a hit like the above just to let someone else have a job. Would anyone here want to?
But the real question is just how this works….
Islam will change
I, for one, welcome our new Canadian overlords.
(Beats getting invaded by Mexican hoards).
Canada does not rely on the US for its territorial integrity. Use some sense. Who can invade Canada?
Only one country in the world. The US. No one else can. The only people the US protects us from are Americans. We don’t leach on your military, to the contrary we spend more on our military than we need in order to be your ally (and the wrong stuff, too, we don’t need an expeditionary force if we just want to protect territorial waters, which is our only real concern.)
sandwichman;
Thanks for the info
Canada has significant advantages over how the US pretends to govern itself. You do not need a super majority for the PM to enact a program. And Canadians can carry on a civil discourse unlike the screamers that inhabit the southland.
Canadian June job statistics indicate that the private sector is increasing hiring picking up from the government which supported the economy with a $62 billion stimulus. The private sector has created 246,000 new jobs over past four months.
All this from a country which has significatly higher marginal tax rates then the US.