Following massive job losses in March and April, the number of people working in the province has been rebounding for five months now, punctuated by a healthy 55,000 jump in September. True, employment is still nearly 100,000 below the level in February. But at one point almost 400,000 workers had been furloughed. To see more than three-quarters of them back on the job puts B.C. on a better-than-expected recovery path.
Some historic context is helpful. A loss of 100,000 jobs represents a 3.7% decline from February. During the 2008-09 recession, employment in B.C. fell by 72,000, a 3.2% contraction. In that previous recession, young people were disproportionately impacted. The same is true today. The number of people aged 15 to 24 with jobs is currently down 11% from February. This decline is more than three times that among the core working-age cohort (aged 25 to 54). Meanwhile, for workers over age 55 employment has fully recovered. In the previous 2008-09 recession, the magnitudes of the job losses across age cohorts were broadly similar to what we have seen in 2020.
But that is where the similarities end. In this lockdown-induced recession, the employment losses are concentrated in a handful of industries. Indeed, just five industries account for 80,000 of the 100,000 jobs lost since February. They include accommodation services, food services, and cultural and entertainment activities. Add in the jobs lost in the retail sector as well as in a narrow slice of the transportation sector (air transportation and sightseeing), and these six/seven industries essentially account for all of the job losses recorded between February and September.
Damage in the other 10 or so high-level industries is marginal. Natural resource extraction and processing, manufacturing and agriculture have all seen employment creep higher since February. There are also more people working in the professional, scientific and technical services sector, boosted by the growing demand for computer and remote-communication services and by the fact that many employees in this part of the economy can work remotely.
In comparison, the job losses were more evenly distributed in the 2008-09 recession and were skewed towards different industries. The same grouping of industries that has been hit particularly hard by COVID-19 was the least impacted in 2008-09. Industries that have been moderately affected in the COVID-19 crisis experienced the biggest job losses in the earlier recession. And the industries that have seen employment increase since February were harder hit in 2008-09, together posting a 3% employment decline.
In this recession, differing job-loss dynamics have led to divergent regional patterns. The industries hurt the most by the pandemic play a more prominent role in the Metro Vancouver economy than in the rest of the province.
Employment in our region is down 10% since February. Other medium-sized metros (Greater Victoria, Kelowna and Abbotsford-Mission) have also seen employment fall, but by half of that amount. And collectively, employment outside of B.C.’s four census metropolitan areas is 2.6% higher than in early 2020.
In 2008-09, the regional picture was the exact opposite. Smaller, resource-dependent communities suffered the most, in aggregate experiencing a 7% drop in employment. The medium-sized metro regions faced job losses of more than 5%. But in Metro Vancouver, employment dipped just 1% in the 2008-09 downturn and then recovered very quickly.
What does all this mean for B.C.’s economic outlook? First, natural resources, related manufacturing and large capital construction projects are providing a welcome lift and shoring up some regional job markets. Second, the labour market carnage from COVID-19 is skewed toward Metro Vancouver, a region that is likely to lag behind during the recovery. On a positive note, Metro’s labour market is the deepest and most dynamic in the province. Thus the unemployed have a better chance of securing new work in this region. On the less positive side, it is also clear that B.C.’s remaining job losses are mainly in industries that are still operating well below capacity. These jobs will be much harder to regain, underscoring that returning to full employment will require some retraining and reallocation of workers to other industries.
Jock Finlayson is the Business Council of British Columbia’s Executive Vice President and Chief Policy Officer; Ken Peacock is the Council’s Chief Economist.
As published in Business in Vancouver.