“Employment is up by one million since the recession ended.”
A statement like this may indeed be a big talking point when Statistics Canada releases the results of its monthly Labour Force Survey on Friday.
While a million more people at work sounds like a lot, the Canadian population has also increased by roughly the same amount with the result that the fraction of Canadians working has been pretty well unchanged for the last five years, and has yet to return to rates before the recession.
A million is a big number, but it’s not enough to signal a complete recovery from the recession.
If the past is any guide, the Statistics Canada press release will lead with a picture that looks something like this.
This gives the impression of very strong growth, with all the jobs lost during the recession recovered by 2011 and many more added since.
A picture of this sort must be what Canada’s Minister of Finance had in mind when he recently wrote: “Since July 2009 employment has increased by over one million — the strongest job growth in the G-7. Canada’s economic growth has been the strongest among G-7 countries — significantly above pre-recession levels.”
And it would appear this impressive employment growth is good reason to shift public policy priorities from job creation to balancing government budgets, and even striving for surpluses.
But if these same numbers are expressed as a fraction of the (working age) population, then the same picture looks like this.
From this perspective employment growth has not been particularly robust, barely keeping up with population growth and with no suggestion of bouncing back. Employment growth during the last five years has been roughly equivalent to the number of immigrants that have entered the country over the same period.
Indeed, the recent economic recovery is no more notable than the recovery from the last recession in the early to mid 1990s, and weaker than that from the recession of the early 1980s.
Since there is little sign that current rates of employment and unemployment are generating general increases in wage and price inflation, then it would seem that a full recovery from the great recession has yet to be made.
Even if the employment level is easier to communicate and has more resonance because it draws our attention to the lives of actual people, on its own it doesn’t tell macro-economists if the economy has reached its full potential: it offers no indication of whether it is time to turn the corner from promoting job growth to putting a break on it by running surpluses.
“Employment in Canada is up by a million,” … but that is hardly enough.