While lamenting in an interview last week about regions where Canadians are having trouble finding work, Bank of Canada Governor Stephen Poloz noted that in the country overall, demand for labour is booming. Some regions, in fact, are suffering from shortages of skilled workers. A bit of labour mobility, he suggested, could help smooth the regional lumpiness in the national economy.
“The economy, in aggregate, is doing okay – there’s over 500,000 job vacancies out there. So, if people can find them, if they’re not too far away, then gradually we’re going to iron this out.”
But there’s the rub. It’s clear, as the country adjusts to both historically tight labour markets and a major rotation away from resource-driven jobs, that labour mobility is a very sticky thing. People simply don’t shuffle around the country as quickly and efficiently as goods and capital. It’s an issue both for provinces such as Alberta that find themselves struggling with a surge in unemployment, and other parts of the country that are being held back by acute skills shortages.
Statistics Canada reported this week that the country had 563,000 job vacancies in the third quarter, while the vacancy rate – unfilled positions as a percentage of all filled and unfilled jobs – was 3.3 per cent. While both were down slightly from the second quarter, they nevertheless remain high by historical standards – evidence that healthy demand for workers this year continues to strain against decidedly depleted supplies.
But in Alberta, the story looks very different. The vacancy rate is a much slimmer 2.6 per cent, among the lowest in the country. The province has nearly 25,000 fewer job vacancies than it had at the end of the first quarter of 2015, when the oil shock began to take its toll on the labour market. It has nearly 50,000 more unemployed.
Labour spent many years flowing into Alberta, filling the province’s immense need for workers during an extended oil boom. In the first 15 years of the 21st century, a net 340,000 Canadians moved to Alberta. But now that Alberta jobs have dried up, the labour supply has not been particularly responsive to the new reality. In fact, people keep pouring into Alberta.
In the 12 months to July 1, 2019, nearly 66,000 Canadians relocated to the province – trailing only the 77,000 who moved to Ontario, a province with more than triple Alberta’s population. Granted, 60,000 people also left Alberta for other parts of the country. Nevertheless, the numbers tell us something about the allure of the Alberta economy – even when it’s hurting.
Perhaps the stickiness of wages is a contributing factor. Albertans earn the highest wages in the country, and the job-vacancy data show that despite the province’s depleted number of job openings, the average wage being offered for those job postings is still 10 per cent above the national average.
But for the country as a whole, labour mobility has been slowing for decades. The annual percentage of Canadians relocating from one province to another has fallen from more than 2 per cent in the early 1970s to less than 1 per cent today. That decline makes the country’s labour force less responsive to regional economic shocks.
A 2017 study by Statscan found that 68 per cent of unemployed Canadians said they would not move to another province for a job offer. The numbers didn’t change much regardless of education level. And people who were unemployed for more than 16 weeks were just as reluctant to relocate.
For most, economic and financial concerns had little to do with it. Nearly half of those who said they wouldn’t move cited staying close to family and friends as their primary concern. Another 20 per cent said their spouse or children wouldn’t want to move. (Indeed, spousal concerns may be a key element in the decline in mobility over the past few decades, as the rise of dual-income households has moved the needle in relocation decisions.)
Some of the more commonly cited economic barriers to labour mobility appear to be non-factors. Only 1.2 per cent of the people surveyed said housing costs would keep them from changing provinces. Less than 1 per cent cited problems having their professional credentials recognized in another province.
The federal government has been expending a lot of effort and money to improve statistical data on job vacancies and demand for skills, and to better share that information with the country’s workers and employers, so that available labour and well-suited jobs can find each other. But given the evident high social barriers to migration, it’s hard to see how government policy could substantially speed up labour mobility. When Mr. Poloz muses about the country’s current labour imbalances being “gradually” ironed out, the process may prove very, very gradual indeed.