Manitoba’s Low Jobless Rate No Cause for Celebration

Commentary, Hymie Rubenstein, Uncategorized, Workplace

Jobless rate now lowest in Canada, reads the headline on a March 13, 2004 Winnipeg Free Press business story. The 4.8 percent provincial unemployment rate reported by Statistics Canada for February 2004 prompted Manitoba Industry Minister Scott Smith to crow, “No matter how you cut it, how you slice it, that’s positive.”

Mr. Smith is correct. The unemployment level – the proportion of the actual labour force that is not able to find a job – is such a malleable and incomplete index of overall economic health that you can cut, slice, and dice it in a variety of positively creative ways. This is because comparative jobless rates form only a very small part of overall economic performance. If this were not so, it would be hard to account for the fact that a perennially wealthy province like Alberta now has a higher rate of unemployment (5.2 percent) than a habitually have-not province like Manitoba.

To get a more complete picture of economic activity and actual worker well-being, what has to be considered are such additional variables as:

  • the relative size of the working-age population (conventionally defined as those between 15 and 64);
  • the labour force participation rate (the percentage of working-age people who are part of the labour force, meaning they are either gainfully employed or looking for work);
  • sustained job creation;
  • worker productivity; and
  • the earnings of employed individuals.

     

    These other factors also need to be considered because a near-zero unemployment rate can easily be reported while economic conditions are poor. It can reflect a relatively small working-age population, which translates into a relatively high number of non-productive people who still need to be supported. It can reflect low labour-force participation levels, which means there are a lot of potentially productive people not looking for work. It can happen during periods of low job creation, low worker output and paltry worker earnings. What this means is that a province can be blessed with a very low unemployment rate while cursed by economic stagnation.

    This is precisely the situation in Manitoba. Compared to Alberta, for example, we have proportionately more unproductive young people under the age of 15 and over the age of 64. Our higher level of dependent populations – about 9 percent – translates into a comparatively higher drain on scarce provincial resources. It is also a reflection of a slow-growth economy, which has long forced our most productive and best educated young and early middle-aged adults to seek employment and business opportunities elsewhere.

    Conversely, Manitoba has Canada’s largest on-reserve aboriginal population, a demographic segment with sky-high levels of unemployment which is not even counted by Statistics Canada as being part of the labour force. Manitoba also has a large off-reserve population, a disproportionate number of whose members are not in the labour force owing to a lack of basic skills or training or because of chronic dependence on government entitlements. Again, high unemployment and welfare dependency in both sectors adversely affects the economic wellbeing of the province.

    A lack of marketable skills or a reliance on state benefactions also affect how many working-age people are part of the labour force. Manitoba’s overall labour force participation rate is 68.9 percent; Alberta’s is 73.7 percent. This also reflects a more depressed overall employment situation in Manitoba. Discouraged job seekers, or those unwilling to work for the low wages the Province is noted for, simply drop out of the labour force. That translates into less overall wealth creation. Indeed, there would likely be a much lower labour force participation rate save for the safety valve of out-migration, much of it to Alberta.

    Manitoba also lags well behind Alberta in sustained job creation. Employment growth in Manitoba between 1998 and 2002 averaged only 1.5 percent per year. This was nearly half the 2.8 percent average annual increase in jobs in Alberta over the same period. Manitoba has a very slowly expanding population and a stagnant employment situation; Alberta is a rapidly growing province whose vibrant economy creates thousands of new jobs every year.

    Both worker productivity and employment earnings are also lower here than in Alberta. First, productivity, measured in term of average gross domestic product (GDP) per worker, in Manitoba between 1998 and 2002 was $61,283; the comparable figure for Alberta was $91,565. Second, the average weekly earnings in Manitoba in the fourth quarter of 2003 were $627; the corresponding figure for Alberta was $725. Third, the minimum wage as a proportion of per-capita GDP in Manitoba between 1997 and 2001 was 42.9 percent; the comparable figure for Alberta was 27.2 percent. All three statistics are symptomatic of a much higher level of wealth creation and personal financial well-being in Alberta than in Manitoba and underscore the fact that thousands of Manitobans have migrated to Alberta in the past 30 years in search of both stable employment and a higher level of living.

    All of these factors need to be carefully considered and analyzed in describing and explaining the (un)employment situation in Manitoba. Using unemployment rates as a proxy for overall economic well-being is as theoretically simplistic as it is politically self-serving. It makes no economic sense for the Minister of Industry to brag about low jobless levels when performance in so many other areas leaves so much to be desired.