Statistics Canada: Employment is up. Oh, but the jobs suck

Last Friday, Statistics Canada released it’s monthly employment figures. This is the monthly event that forces stock traders and staff out of bed early. According to StatsCan, employment increased by 88,900 between December and January, at the same time drawing people into the labour force (the reason the unemployment rate actually rose to 6.2%). So what did traders do after they heard the good news? They sold, leading to the biggest loss in 5 weeks.

It seems that the market saw this news for what it is: bad jobs that will not be associated with higher economic growth. Employment growth in the service sector represented the bulk of the increase, adding 67,700 jobs over the one month period. A Globe and Mail article shed more light on the issue, citing a CIBC report showing job quality for January near an all time low. These jobs are primarily part time and unstable, pay little, and have little to no benefits. Oddly enough, the following comment was attributed to the economist responsible for the CIBC report:

Many people are entering the work force not because they have to, but because they want to, he said. They tend to take services-oriented jobs that pay less and produce less. That, in turn, means they’re not contributing as much to GDP growth.

The argument that there is a whole bunch of people out there who have decided to jump into the labour market to earn some extra cash is absurd. Although the StatsCan report does not give a socio-economic breakdown, there are a number of facts in the StatsCan report to back up this criticism. Adult men saw a 5% increase in full time employment and a whopping 35% one month increase in part time jobs – hardly the group (stereotypically) seen as taking a job at the local mall to kill some time. I suspect that this part time increase was most significant in Ontario, where layoffs are battering the once mighty manufacturing sector, but this data isn’t yet available.

Secondly, off-reserve aboriginal people experienced gains in employment in western Canada. Again, it’s hard to imagine one of the poorest groups of people in Canada choosing low productive work for a little extra cash on the side. Apparently nothing overcomes discrimination and racism in hiring decisions like an oil boom.

The monthly jobs report tends to stir a lot of media attention, but is for the most part meaningless. A more useful report would look at real wage growth in terms of full-time equivalent jobs by sector, region, and income group.


One thought on “Statistics Canada: Employment is up. Oh, but the jobs suck

  1. Lonely Economist,

    While I agree with the pith and substance of your analysis I will pick one quip. Baystreet sold on the news because all things considered it meant a tighter labour market and hence the possibility that wage pressure could increase. When you look at the data the profit boom in Canada has been paid for by squeazing labours’ share of output. I will have a post on labour share of output in the next couple of days. But the point is that if Bay Street was selling on considerations of effective demand (on the part of workers) then the sell-off would have begun long-ago.

    Indeed the perversity of the supply-side macroeconomic logic is that labours’ gains are viewed as capitals’loss. Consider that the BOC watches labour like a hawk and inflation/price stability has almost become synonomous with wage “moderation”

    I am affraid in this one small respect you are guilty of clinging to an old economy way of thinking. I have seen the future brother and its murder.

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