It’s a well-known truism about economic indicators that one month does not a trend make. That’s encouraging news for Canada’s job market. If the loss of 46,000 jobs in December were to mark a trend, the country would be in serious trouble.
Alberta – the economic powerhouse of the country – also shed nearly 12,000 jobs last month. But trends are built over several months, and December’s loss comes on the heels of five consecutive months of gains in Alberta.
Even counting the big drop last month, the province saw a net gain of nearly 71,000 jobs in 2013. And over the past three years, Alberta has added more than 200,000 jobs – about one-third of all the jobs created in Canada. The employment trend in the rest of the county may be questionable, but in Alberta the trend remains undeniably positive.
Peeling back a layer or two of data, however, reveals an even more interesting trend in Alberta’s labour market. Over the past three years, job creation in the province has been primarily of two types: High paying and low paying. In the language of economists, there’s been a “bimodal distribution” of job creation across the pay scale.
Unsurprisingly, the sector that has seen the most new jobs is oil and gas, which added nearly 32,000 positions since the beginning of 2011. Jobs in this sector are also the highest paying in the country, with average weekly earnings of $2,064. But the sector with the second-highest number of new jobs in Alberta is accommodation and food (up 26,000). In stark contrast to their energy sector counterparts, workers in this sector receive the lowest average weekly earnings ($417).
In fact, three of the highest-paying job categories in Alberta – oil and gas, construction and professional, scientific and technical – accounted for 36 per cent of all new jobs since 2011. And the three lowest-paying categories – accommodation and food, retail and wholesale trade, and health care and social assistance – accounted for 32 per cent. All other sectors combined contributed less than a third of all new jobs.
In other words, Alberta has enjoyed tremendous growth in employment, but most of the new jobs are either very high paying or very low paying. If you work on an oil rig or pour coffee, there are plenty of opportunities. But for average wage earners, Alberta’s job creation hasn’t been significantly better than it has been in the rest of the country.
This curious trend in Alberta’s job market has implications for the thousands of interprovincial migrants who have moved to the province over the past three years. Unfortunately, timely data isn’t available, but it is a safe assumption that many migrants come in family units with more than one income earner. If the family unit relocates to Alberta for a good-paying job opportunity for one family member, the other(s) may not instantly find appropriate work.
Notable sectors with close to the average weekly earnings in Alberta include public administration, educational services, FIRE (finance, insurance and real estate) and culture, recreation and sport – none of which added significant numbers of new jobs over the past three years. The lack of growth in public administration is easily explained by fiscal constraints at all three levels of government. But the measly employment gain in the others is explained by Alberta’s lack of economic diversity.
A diverse economy has been the holy grail for Alberta policy makers for decades. Yet it remains unclear what the government can (or should) do to remedy the situation. Attempts to artificially diversify the economy in the 1970s and 1980s were disappointments, and the across-the-board reduction in taxes in the 1990s failed to attract new industries (although the existing ones benefited tremendously).
Still, failed attempts in the past shouldn’t discourage governments today. Rather than pouring scarce tax dollars into industrial schemes or luring businesses with low taxes, the province’s path toward a diverse employment base is to ensure Albertans have the tools they need to create their own success: Education, infrastructure, and creative arts and culture. Build these, and the rest will follow.
Todd Hirsch is the Calgary-based chief economist of ATB Financial and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.