Recovery in B.C. job market is not as strong as it appears

November 16, 2021
Ken Peacock

Small employment gain in October

The number of people working in B.C. advanced by 10,000 in October, a modest gain consistent with the pattern over the past six months. A positive element in October’s Labour Force Survey is the rotation towards full-time employment. The number of full-time positions rose by an impressive 38,000. But the hefty gain was mostly offset by a 28,000 drop in part-time positions, resulting in a ho-hum overall monthly increase.

Hiring in the public sector continued at a robust pace, with the addition of 68,000 employees in October. There was no change in the number of private sector employees and a steep drop in the number of self-employed persons during the month.

Figure 1

B.C. employment has more than recovered, but monthly gains have slowed

A closer look at the employment recovery

Since the outset of the pandemic economists have tracked job losses and the degree to which employment has recovered relative to February 2020 levels (February was the month prior to the closing of consumer facing businesses and international travel). Massive job losses occurred in March-April 2020, and it made sense to monitor the recovery relative to conditions just before the shock. On this basis, B.C.’s has had the strongest jobs recovery of any province.

But as the evident in the above figure, the total number of jobs in B.C. was falling in the months leading up to the pandemic. That is, B.C. went into the shutdown with employment trending lower, while it was rising in the other provinces. Starting from an already lower level of pre-COVID employment has made regaining (and surpassing) the pre-pandemic February 2020 level easier for B.C.

The recovery in employment and B.C.’s relative performance look quite different when examined over a three-year period rather than just from February 2020. Between January 2019 and October 2021 (34 months), total employment in B.C. is up 1.6%, somewhat weaker than the increase since the start of the pandemic. In contrast, over the same period, employment in Ontario is up by a much stronger 3.4% when viewed over the longer period. Quebec’s job growth is also stronger (1.2%) when benchmarked to the start of 2019 rather than February 2020.

When viewed over a slightly longer time horizon, with employment benchmarked to early 2019 rather than early 2020, B.C.’s employment situation is not one of strong overperformance. Instead, it basically lines up with the Canada-wide growth rate.

Figure 2

Over the past three years (34 months) B.C. Employent is up 1.6%

Figure 3

When viewed over past three years B.C.'s Jobs Recovery is less impressive

Statistics Canada identified B.C. as the first province where employment “recovered” and the agency continues to point to the province’s comparatively strong job growth in its monthly Labour Force releases. Economists and BCBC too have profiled B.C.’s employment recovery.

But it turns out the employment recovery is sensitive to the baseline. Viewed from a slightly longer-term perspective, B.C.’s jobs rebound is much more muted than it appears, especially in the private sector. Provincial policy makers, especially those concerned about growing wages and good paying jobs, should take note and be somewhat humbler about B.C.’s job revival since early 2020.

Divergent patterns across the private and public sectors

A notable feature of the employment rebound is the sharp jump in public sector jobs. In the current context, additional jobs in health care are expected. But there has also been a proliferation of hiring in other segments of the public sector – e.g., public administration and education.

The figure below displays the three broad classes of workers Statistics Canada uses to segment the labour market: private sector employees, public sector employees, and the self-employed. It shows employment in each class across provinces, with the Atlantic provinces aggregated to make the figure more legible. Employment levels are indexed to 100 beginning in January 2019 to help identify differing growth patterns.

The first panel shows B.C. lagging Ontario and Manitoba and slightly ahead of Quebec in the growth of private sector employees. In B.C., private sector payrolls have risen just 1% since January 2019. Over the same period, Ontario experienced a 3.2% rise in private sector employment and Manitoba posted a 2.4% gain.

The middle panel display changes in the number of public sector employees. Notable is B.C.’s 16% surge, well ahead of Ontario (10%) and Quebec (11%) and in stark contrast to the small gains evident in the other provinces.

The final panel shows the number of self-employed people falling in all provinces. B.C.’s 10.7% decline is one of the steepest in Canada.

Figure 4

Public sector employment up sharply in B.C.

The growth in public sector employment is enough to generate a large number of additional jobs even though the public sector accounts for around 20% of all employment in the province. The change in the number of jobs in each of the classes in absolute terms further underscores the public sector’s over-size role in British Columbia’s employment recovery.

Since January 2019 in B.C.:

  • the number of private sector employees is up 18,000
  • the number of public sector employees is up by 70,000 (about 40% of these additional employees are in public administration, another third in health care and about 20% in education)
  • the number of self-employed workers is down 50,000

The self-employment category is typically quite volatile. But even so, it has fallen sharply and the gain in private sector employees has been meagre. The net result is that the number of people working in the B.C. private sector (private sector employees plus the self-employed) is lower than it was three years ago. Absent unusually expansive hiring in the broad public sector, employment in B.C. would be lower today than it was 34 months ago – suggesting the job market cannot be described as healthy.

Downtrend in (higher-paying) jobs in goods-producing industries

Finally, the downtrend in jobs in the goods producing sector of the B.C. economy is also something that policy makers should be alive to.

When benchmarked to the start of 2019, the number of people working in goods producing industries is down 7%, a significant decline. On the services side, employment is up. But if the healthcare, education, and public administration sectors are excluded, employment in the remaining service industries collectively has been flat.

Figure 5

The number of jobs in the goods-producing industries is down significantly

It is worth pointing out that the average weekly wage across the goods-producing industries was over $1,200 in early 2019. The comparable average in the service-producing industries was just over $900. If government is interested in boosting average real wages and lifting household incomes in the province, it should worry about the downtrend in goods producing jobs. The recent announcement that the government intends to defer logging in 2.6 million hectares of “old growth” forest will result in 10 or more sawmills closing, along with possibly a couple of pulp mills. The resulting loss of thousands of logging and forestry-related manufacturing jobs will certainly help keep the downtrend in the number of people working in the B.C. goods sector in place.

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