Towards an adult conversation about Canadian labour markets

Have you ever heard the urban legend about how such and such generation of Canadians are lazier than the past generation?  Or the One about how this generation just does not want to work and why we need to make sure EI under-insures job loss to guard against loafers taking advantage of the system?  I have.  In fact I heard that story for all of my adolescent and adult life despite the fact that I took any job that was on offer since the age of 13.  I thought myself to be a rather industrious exception to the layabout tendencies of my generation.  But like most self perceptions and ruling policy narratives it turns out it is, scientifically speaking, unadulterated bullshit.  By which I mean that that the facts neither fit my self stylized superiority  complex nor the policy meme about the need to restructure labour market institutions to deal with the pragmatics of a generation beset by a pampered recalcitrance towards work.  Again, scientifically speaking, by which I mean the facts do not fit the narrative, it is total bullshit.
Here is what the data says .  In the graph below I have plotted two metrics of the propensity to work.  The first is simply the total amount of employment divided by the total population aged 15-64.  The second is total employment divided by total population.  Notice the two series more or less track each other.  Also notice they both trend upwards.  Significance? Let us take the first metric, in 1960 around 58 percent of all Canadians between 15 and 64 were employed in paid labour markets by 2008 around 74 percent were employed.  What does that mean? It means that generationally speaking more of us work than ever before in the history of Canada in paid labour markets.  And this holds true for the second metric (line below the first plot).

Having been disabused of the usual suspects what then accounts for the increasing levels of employment insecurity since the sixties.  In short the answer is the supply of labour and the demand for labour.  Simply put supply has been increasingly outstripping demand.  Don’t believe me then look at the data.  In the graph below I have simply subtracted the growth in employment from the growth in the population between 15 and 64 years of age.  A negative reading means population growth is higher than employment growth.  Take a look at the trend line.

Canadians are supplying far more labour for hire than they ever have.  What has changed is that the economy is simply not absorbing the labour supply available.  So two questions arise.  Why are Canadians supplying so much paid labour and why can’t aggregate demand match aggregate supply?  Answers to those question will have to wait for another post but those are the serious questions.

Note: All data are from the OECD.  Click on graphs for enlarged and clear images