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Economy Out of Alberta: The shakeup in Canada’s labour force

SIGNS OF CHANGE: CANADA'S NEW ECONOMIC REALITY

OUT OF ALBERTA

For years, workers from coast to coast flocked to Alberta to cash in on the province's oil boom. Now, with crude prices languishing, labourers are on their way out. As Canadians embrace a new willingness to move for work, Kelly Cryderman and Brent Jang report on a trend that is reshaping the geography of Canada's labour force.

This is part of an occasional series on Canada's economy and its shift away from resources.

Lee Cronin saw the end of his time in Alberta coming. In 2015, he made a base wage of $42 an hour on the rigs, but the lucrative overtime pay he collected as a derrickhand started to dry up as the lower oil price became more entrenched.

After spending the better part of seven years flying from his home in British Columbia to his jobs in the oil patch, Mr. Cronin, 42, saw his hours dwindle and the frequency of his flights significantly decrease.

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The pickup truck he kept at the airport park-and-ride in Edmonton was suddenly doing little more than racking up parking fees. After one particularly long spell away from Alberta, he recalls paying more than $800. Then, in January, the work came to a halt altogether.

"It's feast or famine out there. I knew that," Mr. Cronin said during a break from his new job in B.C. "We were making very good money. Then things slowed right down to a snail's pace."

Mr. Cronin has left Alberta for work in Surrey, B.C.

Mr. Cronin has left Alberta for work in Surrey, B.C.

Darryl Dyck for The Globe and Mail

Now Mr. Cronin works at the Teal-Jones lumber mill in the Vancouver suburb of Surrey, along with others who have left Alberta's oil bust. But he makes less than half of the base wage he earned on the rigs.

He and his co-workers are part of a small but growing contingent who are leaving Alberta for other, more economically robust provinces. The low price of crude and the resulting loss of tens of thousands of oil-patch jobs has now set off a new wave of interprovincial migration that is reshaping the configuration of Canada's labour force.

"We're right at the turning point now," as Canadians uproot in search of work wherever they can find it, said BMO Nesbitt Burns senior economist Robert Kavcic.

"You tend to see changes like this happen about six months to a year after you see big shifts in the labour market," such as the extensive job cuts in Alberta, he said.

The current migration from Alberta is part of a broader trend of Canadians becoming increasingly mobile in the search for work, according to the Bank of Canada.

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"Labour is being more efficiently reallocated to the regions of the country that have the tightest labour markets and away from those with excess labour supply," said the central bank's recent report, Canadian Labour Market Dispersion: Mind the (Shrinking) Gap.

The excess labour supply is currently concentrated in Alberta, where long-time residents are contemplating packing up and moving out – sometimes back to hometowns they haven't lived in for decades. Fly-in/fly-out workers from B.C., Saskatchewan and Atlantic Canada who once earned big Alberta paycheques are setting aside their nomadic lifestyle to find what are often more modest-paying jobs closer to home. Some are just waiting until their children finish school or they sell their home before heading to strong labour markets in British Columbia and Ontario.

While the province once attracted migrants from across the country, and immigrants from around the world, economic heft has – at least for the time being – shifted elsewhere.

"It's just a complete turnaround from what we've been used to over the past decade or so," Mr. Kavcic said.

Alberta today is a province humbled by low global commodity prices – particularly for oil, which began its price slide in mid-2014. The Conference Board of Canada says the price slump means the province will remain in recession this year, with its economy contracting by 2 per cent in 2016. The wildfires that hit the Fort McMurray region in May could add to the economic woes of the province. Longer term, concerns about the ability to build new pipelines, having access to international crude and natural gas markets beyond the United States, and the restraint that could be placed on the energy industry in an increasingly low-carbon world, also weigh on the province.

People have voted with their feet. Alberta's long-standing status as a net gainer of people from other provinces officially ended late last year.

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According to Statistics Canada, Alberta had a net loss of 977 people to all the other provinces in late 2015, and another 1,788 in the first three months of this year. This is the first time the province has been a net loser in recent memory, save for several months during the global financial crisis in 2009 – and that was really just a blip in the long-term trend of people moving to Alberta. When it comes to significant numbers, Alberta hasn't lost people to other parts of the country since the early 1990s, a time when energy prices just started to rise out of the deep hole of the previous decade. Alberta was a net loser of tens of thousands of people between 1983 and 1988.


Booms, busts and migration

Alberta's migration patterns are inextricably linked to the oil industry's fortunes. During boom times, thousands of Canadians pile into the province in search of jobs, but the population rush often slows or reverses after crude prices drop. Typically, shifts in migration lag changes in the jobs market.

Alberta’s net interprovincial migration

In persons

2014

Oil prices

begin their latest

decline.

1980

Crude prices

begin a slow

decline.

50,000

40,000

30,000

Net inflow

20,000

10,000

0

1973

The Arab oil

embargo

drives up oil

prices, spurs

non-OPEC

exploration.

2008

Oil rises above $140 by June, later plunging below $50. Prices are rising again within months.

-10,000

-20,000

Late 1985

Oil plunges, hitting $10 (U.S.) a barrel in early 1986 – part of a nearly two-decade downturn.

Net outflow

-30,000

-40,000

1962

1968

1974

1980

1986

1992

1998

2004

2010

Note: Q1 data for 2016.

Alberta’s net interprovincial migration

In persons

Summer 2014

Oil prices begin their latest

decline, hitting multiyear lows

in January, 2016.

50,000

1980

The National Energy Program is introduced to seek some control of the oil industry around the same time as world crude prices begin a slow decline.

40,000

30,000

Net inflow

20,000

10,000

0

1973

The Arab oil embargo drives up world oil prices, spurs non-OPEC exploration.

2008

Oil rises above $140 by June, later plunging below $50 amid the global economic downturn. Prices are on the rise again within months.

-10,000

Late 1985

Oil plunges, hitting $10 (U.S.) a barrel in early 1986 – a downturn that lasts nearly two decades.

-20,000

Net outflow

-30,000

-40,000

1962

1968

1974

1980

1986

1992

1998

2004

2010

Note: Q1 data for 2016.

Alberta’s net interprovincial migration

In persons

Summer 2014

Oil prices begin

their latest

decline.

1980

The National Energy Program is introduced to seek some control of the oil industry around the same time as world crude prices begin a slow decline.

50,000

40,000

30,000

Net inflow

20,000

10,000

0

1973

The Arab oil

embargo drives up

world oil prices,

spurs non-OPEC

exploration.

2008

Oil rises above $140 by June, later plunging below $50 amid the global economic downturn. Prices are on the rise again within months.

-10,000

Late 1985

Oil plunges, hitting $10 (U.S.) a barrel in early 1986 – a downturn that lasts nearly two decades.

-20,000

Net outflow

-30,000

-40,000

1962

1968

1974

1980

1986

1992

1998

2004

2010

Note: Q1 data for 2016.

Alberta’s net interprovincial migration

In persons

Summer 2014

Oil prices begin their latest

decline, hitting multiyear lows

in January, 2016.

50,000

1980

The National Energy Program is introduced to seek some control of the oil industry around the same time as world crude prices begin a slow decline.

40,000

30,000

Net inflow

20,000

10,000

0

1973

The Arab oil embargo drives up world oil prices, spurs non-OPEC exploration.

2008

Oil rises above $140 by June, later plunging below $50 amid the global economic downturn. Prices are on the rise again within months.

-10,000

Late 1985

Oil plunges, hitting $10 (U.S.) a barrel in early 1986 – a downturn that lasts nearly two decades.

-20,000

Net outflow

-30,000

-40,000

1962

1968

1974

1980

1986

1992

1998

2004

2010

Note: Q1 data for 2016.

THE GLOBE AND MAIL SOURCE: STATSCAN

But now that the province has seen two years of lower energy prices, the question is whether this is the thin edge of a wedge, and the beginning of a larger movement of people to other provinces.

British Columbia, with jobs in forestry, construction, transportation and real estate, is becoming a destination of choice, and employment statistics show why. B.C.'s unemployment rate is 5.9 per cent, the lowest provincially. In June, the number of people employed grew by 70,000, or a 3-per-cent increase, the fastest growth among the provinces.

More B.C. residents moved to Alberta than the other way around from 2011 to 2013, but the trend began reversing in the third quarter of 2014 as the B.C. economy stayed steady. Last year, as Alberta's economy slumped, British Columbia saw a net gain of about 5,400 people from its next-door neighbour.

In many Alberta communities with strong ties to the resource sector, there are significant numbers of relative newcomers – drawn to the province for work during the boom years. For those without strong ties to the province, the end of their employment could mean there's nothing to keep them in Alberta. "People will head back to where they came from," said University of Western Ontario sociologist Michael Haan, who studies migration.

"It's not just about oil. Because some of the biggest movements in and out of Alberta were not necessarily oil workers – they were people who were working in construction," Prof. Haan said.

Work of all sorts has dried up. In Statistics Canada's Wood Buffalo-Cold Lake region, which includes Fort McMurray and oil sands production, the unemployment rate for all of 2015 was 7.9 per cent, compared with 4.7 per cent in 2014. Alberta as a whole has continued to see its unemployment rate creep up, going to 7.9 per cent in June from the 5.8 per cent registered one year earlier.

Layoffs have become a weekly norm. The provincial government, which requires Alberta-based companies to report plans to lay off 50 or more employees at once, says the number of group termination notices was 27 in 2013, 35 in 2014, and hit 116 in 2015. So far in 2016, there have been 50 notices. May was an especially brutal month, with 2,460 Alberta workers laid off in just nine group terminations.

For Alberta's energy sector, and those industries reliant on it, there might be some light at the end of the tunnel. The Conference Board says the slow recovery in oil prices should ease the number of layoffs and cuts to capital budgets in the oil and gas sectors in the coming months. The wildfire that burned a tenth of Fort McMurray and temporarily shuttered oil sands operations in the region could add to the march out of Alberta as some people choose not to go back to the region. However, the rebuilding effort will likely boost the number of jobs available in the province, and help with the modest economic recovery predicted for 2017, if commodity prices stabilize or rise.

But interprovincial migration numbers reported by Statistics Canada likely understate the magnitude of the shift taking place.

During the boom years, Alberta's work force included a sizable "shadow population" of people living in camps or in other temporary accommodation while working long hours in energy sector jobs. Like Mr. Cronin, after days or weeks of work, they would fly back home for a break at their primary residences in other provinces.

Mr. Cronin is among many

Mr. Cronin was among many “interprovincial employees” affected by the oil crash.

Darryl Dyck for The Globe and Mail

Frequent flights, including charters, between Atlantic Canada and Fort McMurray – the fly-in/fly-out capital of Canada – made a mobile work force possible. But now those trips have plummeted. For instance, Fort McMurray's international airport reported a 62-per-cent decrease in charter flights between March 2015 and February 2016.

"People were doing the three weeks on, one week off. Well, they're just not going out any more," says New Brunswick Premier Brian Gallant, whose province's unemployment rate has gone up to about 10 per cent in recent months – a trend he attributes in part to some of his province's residents losing their Alberta-based jobs.

This year has also seen reports about a seemingly inexplicable jump in Kelowna, B.C.'s unemployment rate, while building permits, housing starts and other economic indicators are up. The Okanagan Lake city's unemployment rate sat at 7.5 per cent in June but earlier in the year had topped Edmonton and Calgary.

Kelowna's mayor and others say the uptick in unemployment is due at least in part to the downturn in Alberta, and the potentially thousands of B.C. southern interior residents who lost their commuter jobs in the oil patch.

Statistics Canada says the number of "interprovincial employees" working in Canada (those who live in one province but work in another) at any given time is directly linked to the price of oil. In 2011, the most recent year that numbers are available, Statistics Canada reported that about three per cent of Canada's paid work force were interprovincial employees, with more than a quarter of those at work in Alberta.

Alberta's unemployed now includes another restless group: Those who have lost their jobs and want to leave but have to wait. Some don't want to leave the home they know, some can't sell their house for a price they like and some wanted to see their children finish the school year.

For most of the seven years that Grande Prairie, Alta. was her home, Crystal-Dawn Dolen, 34, had never had trouble finding work. She worked as a pit boss at a casino and then was a sales rep for a company that provides car breathalyzers. But in January she was laid off. A few months later, still unable to find steady work, she and her 13-year-old son packed up and moved to her brother's home in Edmonton.

Crystal-Dawn Dolen, 34, is planning to leave Alberta for B.C.

Crystal-Dawn Dolen, 34, is hoping to find stable work outside Alberta.

Kelly Cryderman/The Globe and Mail

There, Ms. Dolen has found a part-time retail job. But the situation isn't permanent. With her son done the school year in Alberta, she is preparing to move next month to the Langley area in British Columbia – to stay with a friend until they get settled.

She knows housing costs are significantly higher in the Lower Mainland, but she believes with B.C.'s strong economy she will be able to find some kind of customer service-oriented job.

"Working and not getting laid off – and being stable – that's what I'm looking for."

Just a couple of decades ago, the country saw big differences between employment rates in different provinces. These differences between regions and jurisdictions were more pronounced here than they were in other countries, such as the United States.

But according to a March report from the Bank of Canada, differences between provincial labour markets have levelled. And the central bank said it's not about stronger employment growth in previously weak regions of the country; it's because regional population growth has increasingly taken place in response to labour market conditions.

"Despite the impacts of commodity price booms from 2003 to 2008 and 2010 to 2014, the 2008 Great Recession, and the recent sharp decline in commodity prices on the Canadian economy, Canada's provincial labour markets are less dissimilar today than at any point in at least the past 35 years," said the report by Bank of Canada economists David Amirault and Naveen Rai.

In London, Ont., Prof. Haan notes that while most people prefer to remain in the province of their birth, there are a number of factors that make moving away, or travelling regularly for work in another province, more palatable today.

Flights are significantly less expensive, when adjusted for inflation, than they were in past decades. Technology allows people to easily research job postings on the other side of the country, as well as keep in touch with family members and friends living far away. These considerations are especially relevant for younger workers, whose roots might not be as deep as those of older workers, he said.

While that labour mobility once saw Alberta gaining people at the expense of other provinces, economic forces are now pushing people toward Ontario and B.C. – the provinces that will lead Canada's economic growth this year.

Ian Pohanke, 31, graduated from high school in Surrey in 2003 before he moved to Alberta and worked his way up and ran his own welding business based in Calgary.

"Never been so rich, never been so broke," he said. "I had this dream of chasing the oil money in Alberta. I have some older cousins and family that live up in northern Alberta, and heard their stories."

Mr. Pohanke has moved back into his parents' Surrey home, returning to his old bedroom that had been converted into a guest room. Seven of his B.C. friends also flocked to Alberta after high school. Mr. Pohanke is the last to return. "I made it the longest and everyone else is back," he said. He's now a mill worker along with Mr. Cronin.

Asked whether they would return to Alberta, Mr. Cronin and Mr. Pohanke joked that they couldn't really say, given that their boss was within earshot.

Logan Jones at the Teal-Jones lumber mill. Darryl Dyck for The Globe and Mail

Logan Jones, 26, also a former energy-sector worker, is now the general manager of a small unit at Teal-Jones that is producing shingle-siding panels from western red cedar, hoping to find a niche in the U.S. market by making a higher-quality product.

Mr. Jones, who graduated from high school in B.C.'s Fraser Valley, spent 18 months at rigs in Alberta and B.C. The former roughneck moved back to his home province in April, 2014 – before the energy industry downturn.

Praising the work ethic of Mr. Cronin and Mr. Pohanke, Mr. Jones said their time in Alberta helped shape his two employees.

"You learn how to work hard, and in the cold."

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