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A fundamental economic shift is “hyper-concentrating” new knowledge-economy jobs in Toronto’s downtown as traditional manufacturing employment evaporates across much of southern Ontario, a new report warns, and the trend has major ramifications for public transit and land-use planning.

The study, released days after General Motors announced the shutdown of its assembly plant in Oshawa, Ont., says the lopsided job growth is a permanent change, not a cyclical pattern. It warns Toronto’s transit system will be placed under further strain. The report also argues smaller communities outside the city should seek to attract the jobs of the future, rather than cling to dying industries.

The report, funded by the Ontario government and produced by the Neptis Foundation urban-planning think tank, uses data based on the locations of jobs across what policymakers refer to as the Greater Golden Horseshoe (GGH), the region that surrounds Toronto and runs from Niagara to Peterborough.

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Overall, the number of jobs in the region has grown. But from 2006 to 2016, Toronto’s downtown gained 67,000 of what the study calls “core” jobs, or jobs that bring income into the region and drive growth, as opposed to jobs such as those in retail that largely serve local residents. Many of those downtown jobs are “knowledge-based,” in industries such as finance or technology or “higher-order business services” such as accounting or law, which tend to cluster together.

Change in employment in the Greater Golden Horseshoe, by “archetype,” 2006 vs. 2016
NOTE: The report by the Pamela Blais and the Neptis Foundation defines the term “archetype” as a group of similar industries that tend to locate in the same place.

Meanwhile, the GGH region as a whole shed 130,000 traditional manufacturing jobs from 2006 to 2016, a figure that does not capture last week’s news of the more than 2,500 jobs slated for elimination when GM shutters its sprawling Oshawa plant east of Toronto.

“It’s happening in a way that is both high growth, and highly disruptive at the same time,” study author Pamela Blais, a planner with a doctorate in urban economic geography from the London School of Economics, said in an interview. “It’s not this kind of gentle evolution towards the knowledge economy that’s we’ve seen previously. This is a definite shift.”

The GM news appears tailor-made to illustrate that shift. While closing the Oshawa plant, the company has pointed to its new investment in Markham – one of a handful of suburban centres for knowledge jobs identified in the report – where GM plans to hire 700 engineers to work on its designs for driverless cars. GM has also announced plans for an “urban innovation lab” on the east side of central Toronto.

But Dr. Blais’s numbers show downtown Toronto is even far outpacing other, more suburban areas where new knowledge-intensive “core” jobs had been growing in the past, such as Markham, Vaughan and the area around Pearson International Airport, which her report refers to as employment “megazones.” Core job growth was also weaker in Toronto’s own inner suburbs.

For Toronto, the blessing of all these new jobs may also be a curse, as the city struggles to expand its public-transit system to keep up. Dr. Blais’s report suggests the Toronto region should look to plan for a “second downtown,” which would need good transit to attract knowledge-intensive jobs and complement Toronto’s now-bustling centre.

Toronto’s chief planner, Gregg Lintern, says while creating a second downtown might make sense for the region, his department’s recent TOcore plan for the downtown aims to accommodate as many as 300,000 new jobs downtown by 2041. The idea is to spread some of those new jobs to the east – where the site of a former Unilever soap factory is set to become a transit-linked hub home to 50,000 jobs – and to the west.

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But new transit lines are crucial to make it work, he says: “The geography is certainly there. You need to continue to build the infrastructure.”

Given the pace of change found in her report, Dr. Blais warns that projections for jobs across the rest of the Greater Golden Horseshoe are likely to be way off. Places such as Oshawa, she says, still need to attract some new knowledge jobs, even though they tend to cluster near transit links rather than in office parks surrounded by parking lots.

The study also contains other bad news for places outside Toronto’s downtown. A higher proportion of jobs in those regions now are vulnerable to disruption from both international trade and from automation. And vulnerability to automation is not something limited to manufacturing: “Back office” or clerical work is also in decline.

Richard Florida, head of the Martin Prosperity Institute at the Rotman School of Management at the University of Toronto, said the numbers demonstrate the clustering of knowledge jobs means places outside Toronto’s downtown core, such as Oshawa, will inevitably become “more of a bedroom community than an economic generator.”

However, the explosive growth in Toronto’s downtown is also at risk, he argues, as decades of underinvestment in public transit make it increasingly difficult for the city to keep pace: “We believe somehow that we can keep cutting our taxes and not raising our taxes. … We believe that we can sort of do this on the cheap. But we can’t. Being a big city, it costs money.”

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