There has been much discussion about the different pace of recovery between Canada and the United States after the recent recession. The U.S. has witnessed weak economic growth and a stagnant labour market while the Canadian economy has performed much better.
Canada’s relatively strong performance during this recovery, at least as measured by employment growth, differs from previous recessions. At the state and provincial level the divergence has been even more pronounced.
I recently looked at employment growth for the three-year period after the last five recessions across Canada and the U.S. at the provincial and state level to see which regions have witnessed the strongest recoveries.
The research has turned up a troubling trend of slower job growth in the aftermath of each successive recession.
The mountain and western states came out of the 1975 recession with the fastest employment growth. Nevada led the way with an annual average employment growth rate of 10 per cent for each of the three years following the recession. Wyoming was second with an average annual growth rate of 8.7 per cent. Arizona, Idaho, Washington State, Oregon, New Mexico, Colorado, Utah and Montana were all at the top of the list. Only New Hampshire made the top 10 fastest growing states by employment during those years.
The median state annual average employment growth rate was an impressive 4.8 per cent.
Alberta led the way in Canada with a very strong 6.5 per cent average annual employment growth for the three years after the 1975 recession. British Columbia also witnessed strong growth followed by Ontario and Saskatchewan. Across Canada the median provincial employment growth rate was 2.8 per cent.
The recovery after the 1981-1982 recession saw much slower employment growth in the subsequent three years with a median state average annual employment growth rate of 2.9 per cent. In Canada, the median provincial employment growth rate was only 1.8 per cent per year.
Roles became reversed. Most of the mountain and western states saw below-median employment growth while southern states including Florida, Georgia, Virginia, North Carolina and South Carolina were in the top quartile performers.
In Canada, the top performers after the 1975 recession - British Columbia, Newfoundland and Labrador and Alberta - became the worst performers after the 1982 recession. Ontario led Canada with a strong average annual employment growth rate of 2.9 per cent during the three years after the 1982 recession.
The recovery after the 1991 recession was even weaker from an employment perspective. In the United States, the median state employment growth rate was down to 2.3 per cent per year and in Canada it had dropped to only 0.1 per cent.
At the state level, the western and mountain states were once again on top with Nevada, Utah, Idaho, Colorado and Arizona as the top five states for employment growth. California was near the bottom along with most of New England and the northeastern seaboard states witnessing outright declines or very weak growth.
In Canada, B.C. and Alberta were back on top along with Prince Edward Island. Newfoundland and Labrador featured the worst employment decline along with Nova Scotia.
In the first three recessions (1975, 1982 and 1991), U.S. employment growth during the recovery phase was much stronger than in Canada. However, starting with the 2001 recession, recoveries in Canada (as measured by employment growth) have been better than in the U.S. Technically, Canada did not fall into recession during 2001 but there was a serious downturn.
The average annual employment growth rate for the median state in the three years following 2001 was 0.0 per cent. In Canada it was +1.8 per cent. Nevada, Arizona, Montana, New Mexico, Wyoming and Idaho were all in the top 10 states for employment growth (although at a much more modest pace than previous recessions). The rust belt states got hammered – Ohio, Illinois and Michigan.
In Canada, the Alberta, Quebec and Ontario were the top provincial performers for employment growth.
The 2008 recession has continued the trend of a strengthening Canada and a weakening U.S. The median provincial employment growth rate across Canada has been 0.7 per cent since 2008. In the United States the median state has seen a 1.4 per cent decline in employment each year since 2008.
The rust belt states are again at the bottom while the best performing states include North Dakota, Alaska, Texas and South Dakota. In Canada, Prince Edward Island, Newfoundland and Labrador and Manitoba have led the way for employment growth.
Over all, employment growth in the years following recessions in the U.S. and Canada has been getting progressively worse since 1975. However, Canada has not performed as badly as the U.S. in the last two recessions. The 2008 recession was the first time that employment didn’t recover at all in the three years following the recession. All but three states witnessed reductions in total employment in the three years after the 2008 recession.
In Canada, New Brunswick has the dubious distinction of being the only province to have shed employment since 2008.
To view the details on each U.S. state and Canadian province, click here.
David Campbell is the President of Jupia Consultants Inc., an economic development consulting firm based in Moncton, New Brunswick. He is a Research Fellow with the Canadian Institute for Research on Public Policy and Public Administration at the Université de Moncton. David is also a columnist and authors a blog on economic issues in Atlantic Canada which can be found atwww.davidwcampbell.com.