Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Report on Business

Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

Entry archive:

Economy Lab has moved

Only Globe Unlimited members will now have access to a wide range of insightful commentary
and analysis on the economy and markets previously offered on this page.


Globe Unlimited subscribers will be able to read these columns,
written by some of Canada’s most deeply respected economists,
such as Christopher Ragan, Sheryl King, Andrew Jackson, and Clement Gignac,
as part of our ROB INSIGHT section.


All of our readers will still be able to browse the Economy Lab archives and read our
broader coverage of economic data and news by accessing their 10 free articles a month.


Learn more about Globe Unlimited and how to subscribe.

Economy Lab

Opposition’s employment math doesn’t add up Add to ...

The Opposition filed a motion in the House of Commons yesterday, and while it didn’t contain much in the way of substance, this particular passage caught my eye:



(a) take immediate action to promote job creation and address the persistently high unemployment rate among Canadian workers, particularly high among young Canadians



There are at least three things wrong with this description of the state of the labour market.



The first is the use of the word “persistently”. As I explained here, what happens in the labour market during an expansion is that jobs are created at a rate that is slightly greater than the number of jobs lost plus the net change in the labour force. Unemployment rates do not drop rapidly during an expansion; they are slowly eroded. And that’s exactly what has been happening over the past two years.



The second is the use of the word “high”. A glance at the history of Canadian unemployment rates (see the accompanying graph) makes it clear that current levels are significantly less than the average rates observed over the past 35 years. Unemployment rates of 7.3 per cent would have been the stuff of dreams two years into previous recoveries.



The third is the reference to youth unemployment rates. Unemployment rates among youth generally average 3.5 percentage points above that of the labour force as a whole, and that’s what we’re seeing now.



Policy recommendations about employment should be based on a realistic assessment of current labour market conditions. And when you put things in historical perspective, current conditions are at least as good as one might expect after two years of recovery.



Follow Economy Lab on twitter

Follow on Twitter: @stephenfgordon

 

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories