The United States is on a hiring binge that has sent its jobless rate to a near five-decade low.
But by one “traditional” metric, Canada’s jobs market is “even stronger,” according to Douglas Porter, chief economist at BMO Nesbitt Burns.
In a research note, Mr. Porter points to each country’s respective employment ratio – the percentage of the adult population that has a job. Canada’s employment rate is 61.5 per cent, roughly a full percentage point higher than in the U.S. That despite, as Mr. Porter points out, the Canadian tally including 15-year-olds – a group that typically doesn’t work.
“True, the gap has steadily been closing for the past seven years, as Canada has been trendless through the recovery period,” Mr. Porter writes. “But this measure sends a very different message than the headline unemployment rates” of 5.9 per cent in Canada and 3.7 per cent in the U.S.
The situation highlights how, as strong as the U.S. labour market appears to be, several metrics suggest it still has room for improvement.
For one, a broader unemployment rate – one that includes those marginally attached the labour force – has dropped considerably since the recession, but still runs higher than at the turn of the century.
The U.S. could also coax some prospective workers off the sidelines. The country’s participation rate – that is, the percentage of people either working or looking for a job – is nearly 82 per cent for those in the prime working ages of 25 to 54. That’s an improvement from a few years back, but lags a high registered in the late 1990s.
It’s also worth considering that U.S. demographics are considerably different than 50 years ago – and when accounting for those changes, the jobless rate suddenly looks less rosy. If today’s U.S. work force resembled that of 1968 in terms of sex, age and education, the unemployment rate would be about two percentage points higher, according to calculations from Ernie Tedeschi, an economist at Evercore ISI and formerly of the U.S. Treasury.