Friday, July 9, 2010

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

1 comment:

  1. Housing plays a large part of the Cdn figures. They are most likely a bit over the top, and will be tempered next report, but doubtless, it seems in many respects, the Cdn labour market has almost reclaimed all the jobs lost (in numbers, not types) in the Recession. Part of the health being shown in the rebound is in the fact that Can's 'recession' was the shortest and shallowest on record. Only Oz showed better out of developed nations (Oz didn't have a recession at all).

    Contrary to all the talk (and a point I've been making for sometime now) of "when the US sneezes Can catches pneumonia is no longer the case. Canada does catch a cold, but is no longer bed-ridden.

    Part of that me be 'economists' bandying figures long out of date as to the dependence of Cdn esports on the US market. I still hear "75%" stated. It is no longer anywhere near that. It is now in the high 60s, still dominant, but not enough to tip the apple cart.

    That, plus a much healthier fiscal situation has a muliplier effect for the *Domestic* Economy, and that along with exports (mostly commodities, but not all) to developing nations keeps the engine hjumming along.

    The one key factor that Americans have no-one else to blame, though, is Housing. That is one of the enduring elements of Canda being able to coast, and the US crash over.

    The US Senate is also one of your worst enemies. I like the Senate as an instrument of effective government, but in the last generation or so, the US Senate has done more harm than good.

    Until things change there, no Executive can affect change, and the House is locked-out for buasiness.

    All Western Govt's seem to be facing some form of gridlock (perhaps Switz, a unique model, is relatively immune), but the US Senate offers the most promising of reform in the West, and then falls on the sword of vested interest every time of late.

    Dodd had some brilliant work splattered with feces and flushed down the toilet, only to emerge as a waste-water Bill by the time it was finsihed.

    Why even bother?

    Canada does well in spite of her present Gov't, due to the structural reforms enecated by the Paul Martin and Cretien Liberals. Canada's present success owes much to them.