On September 7, Statistics Canada released its monthly labour report. Soon after, the media was flooded with the same headline: Ontario loses 80,000 jobs in August. Politicians then rose to action, sparking a quickfire blame game across Queen’s Park. But did Ontario’s economy really come to a sudden slowdown? While the data seems alarming, it does not give a clear enough picture. To make sense of all of this noise, we need more than just a single number.
For starters, many experts are still mystified by the data, providing only a host of speculations. In a Global News article, U of T Economics Professor Angelo Melino attributed the drop to a change in the sample size of the survey.
On the other hand, U of T History Professor Christo Aivalis admitted that the cause of job losses is “unclear,” telling CBC that it is “difficult to say why (job losses) would be happening.” However, Aivalis was not quick, as some may be, to lay blame on the minimum wage hike at the beginning of this year.
According to him, job growth was already slow before the wage hike took effect. His stance is supported by low unemployment, which some experts like Royal Bank of Canada economist Josh Nye also see as a sign that the wage hike is not an economic foe.
Although the cause of this job loss may be unknown, the labour report does provide insight into the most impacted sectors. Major shrinkages occurred in two sectors: from July to August, 71,500 jobs were lost in the services sector and 8,600 jobs were lost in the goods-producing sector on a month-to-month basis. While the seasonality of summer workers may attribute to volatility, experts have yet to identify it as the main culprit of unemployment. Evidently, there is more to these numbers than meets the eye.
While the labour report appears to have indisputable data, it can tell two different stories. Under the lens of politics, it is a sign of a government’s weakness in developing Ontario’s economy. However, through the eyes of an economist, the data is still far from a cautionary tale. Before turning to either side, a thorough examination of the data is required.
In July, Ontario added 60,600 jobs. Coupled with the 80,100 job losses in August, the data points to a “reasonable” level of growth. Melino noted that an average of three months from June to August levels out the month-to-month volatility. It is also important to consider long-term trends in the data. While Ontario’s unemployment rate was recently touted as the lowest in 18 years, it should not be the only figure to rely on.
From August 2017 to August 2018, there was a 10.4 per cent increase in the number of unemployed people aged 15–24, an unfortunate warning sign for students and young workers. In addition, the number of unemployed Ontarians increased by 4.5 per cent. Although some sectors have experienced massive growth, the majority have only seen changes between 0.6 and 3.3 per cent. Full-time employment has increased by three per cent, while part-time employment has fallen 6.7 per cent. Overall, the total number of employed Ontarians has increased by 1.1 per cent.
On a month-to-month basis from July to August, there was a decrease in the participation rate of the workforce from 64.8 to 64.2 per cent. This participation rate is the percentage of people from our total population who are 15 and older and capable of working. Furthermore, there was a slight decrease in the employment rate, which fell from 61.3 to 60.6 per cent. Full-time employment has experienced no changes since July.
It is easy to see how the jobs report could spur such a strong reaction. A huge influx of conflicting data is not easy to digest. From a year-to-year perspective, the sharp August job losses have little effect on the long-term trends in full-time and overall employment numbers. Evidently, part-time employment bore the brunt of the steep losses.
This is not to say that the losses should be ignored. While the monthly measurements do not foreshadow the future, they provide a good snapshot of changes in our economy. A shrinking labour force is certainly not going to fuel growth in the long-term. Adding a lower employment rate and no increase in full-time employment does not make the picture any better. Although monthly measures may reflect some volatility, there are some warning signs hinting at a slowing labour market.
Instead of playing the blame game, Queen’s Park should be focused on breaking down the data. No party could provide a proper explanation as to where and why the job losses occurred. Politicizing the issue by passing the responsibility around does not help our economy.
With a shrinking labour force, young workers are key to Ontario’s economic success. Instead of parading a single number around, all the data must be analyzed. Only through a holistic lens will the picture of Ontario’s economy become clear. While the August jobs report is not a sign of complete economic destruction, it is certainly something worth paying attention to.
Andrea Tambunan is a second-year Math and Statistics student at University College.
