Mr. Carney can’t push on a string. And he knows it.
His now famous comment labelling the stockpiles of retained earnings held by Canadian firms as “dead money”, while perhaps being the most memorable quote of 2012, must also have been made out of a certain frustration that even this superstar central banker faces limits in his powers to push, encourage, and otherwise jumpstart business investment.
The Governor of the Bank of Canada knows that the flip side of dead money is insecurity in the jobs market.
The labour market has fared better in Canada than in many other rich countries, it has fared better than it has in past recessions, but it has not fared as well as it could.
This is the major message from a recently released report by the Parliamentary Budget Office, which offers a valuable description of the Canadian jobs market because it puts developments in context: comparing them to underlying trends, comparing them to previous recessions, and comparing them to developments in other countries.
There has been virtually no growth in employment among young Canadians over the course of the last three years. Employment plummeted in late 2008 for those younger than 25, and has gone nowhere but sideways since . This is in sharp contrast for older groups: their employment levels recapturing all the recessionary losses by 2010.
Read the employment levels for 15 to 24 year olds in thousands off of the left scale, and that for those 25 and older off of the right scale. Between September 2008 and August 2009 employment among the young fell by a quarter of a million, and has been virtually stagnant since.
In a recent column in the Globe and Mail, Tom Flanagan bemoans the fact that the premium structure of Employment Insurance is not lined up with expected benefits. As a result, provinces to the west of the Ottawa River have long paid a good deal more into the program than they receive in benefits.
The solution: a constitutional amendment allowing Quebec to run its own EI program.
Quebec and Alberta interests certainly line up on this issue: one wrestles more control over federal powers, the other sees smaller government and lower taxes.
But let’s be clear, devolution of EI responsibilities—which constitutionally rests with the Federal Government—is about this sort of politics, not at all about the underlying economics of social insurance.
There are a host of legislative changes that the Federal government can introduce to make EI more efficient without even whispering the C-word.
The Survey of Labour and Income Dynamics died this morning.
The notice was given quietly by Statistics Canada: “This is the last release of longitudinal data from the Survey of Labour and Income Dynamics. Effective with next year’s release of 2011 data, only cross-sectional estimates will be available.”
A short, simple, and slightly obtuse, statement of a profound change for the user community and Canadians in general.
When I recently described the loss of a similar survey to a co-author over the telephone, she paused and said with sadness, “Ahhh…,” as if a friend had died.
There is no doubt that Statistics Canada also recognizes the value of this survey, and others like it. But there are important challenges in managing the information derived from so-called “longitudinal surveys”, and Canadians might be wondering whether or not they are being sold short.
At 8.1% the unemployment rate in the United States is about one percentage point above the 7.2% currently reported for Canada, but this gap would be almost two percentage points if the Canadian rate was measured in the same way as the American.
This revealing picture from the recent Canadian federal government Budget paints a more accurate portrait by using unemployment rates defined in a similar way across the two countries.