Does rural Atl. Canada have high unemployment? In most areas, I would say absolutely not

I’ve had a couple of interesting conversations in the past week about my position on the Employment Insurance situation in Atlantic Canada.  Ultimately, I don’t think there will be any big change to the program itself – i.e. far fewer people collecting EI each year but can’t we just find a way to once and for all remove the fiction that there is very high ‘unemployment’ in rural Atlantic Canada?  Because when the average person hears the phrase ‘high unemployment’ it denotes a lot of people looking for work, economic hardship, etc.  When was the last time you heard someone say “community x has an unemployment rate of 20% and a booming economy?”

My point is that if you remove the 50%-80% of the unemployed in certain communities that are ‘seasonally’ unemployed, the real ‘unemployed’ drops dramatically and if you go even further and define the unemployed as those who are not working but would be willing to take just about any job on offer (which was how I saw it when I was unemployed in 1991 and worked as a short order cook wearing my cap and gown from receiving a recent MBA) the number of unemployment drops to virtually zero.

So, my contention is that in a number of communities across Atlantic Canada (and elsewhere such as Quebec) the ‘real’ unemployment rate – i.e. if you want workers in lower wage/hard employment sectors – is virtually zero.

Why does it matter?  It matters because instead of requiring employers to do LMIA statements or pushing back on efforts to attract immigrants to these communities we should even be pushing harder. If an employer runs a job advertisement for a short period of time offering occupational average wages and can’t get interest, in most cases, that should be enough.

Here’s the problem.  The following is Statistics Canada’s definition of unemployment:

Unemployed persons are those who, during reference week:

· were on temporary layoff during the reference week with an expectation of recall and were available for work, or

· were without work, had looked for work in the past four weeks, and were available for work, or

· had a new job to start within four weeks from reference week, and were available for work.

Note that in the above definition there are two groups for which job search is not required: persons on temporary layoff and persons with a job to start at a definite date in the future. Persons on layoff are included among the unemployed on the grounds that their willingness to supply labour services is apparent in their expectation of returning to work.

Now consider a specific example: The following is a typical situation in a community with a high use of seasonal employment.  At peak usage of the program, the workforce situation would look something like this:

Adult population (15+): 5,000

In the labour force: 3,600

Participation rate: 72%

Employed: 2,400

Employment rate: 67%

Unemployed: 1,000

Unemployment rate: 28%

Now, assume that 80 0 of the 1,000 were not actually unemployed in my strict definition that they are available and looking for work. Let’s pull them out of the labour force.  This to me more adequately reflects the reality on the ground in the community, if you are using ‘unemployment’ as a measure of how many people are actively looking for work.

Adult population (15+): 5,000

In the labour force: 2,600

Participation rate: 52%

Employed: 2,400

Employment rate: 92%

Actual unemployed: 200

Unemployment rate: 8%

In larger places like Toronto or Calgary, this little fudge “persons on layoff are included among the unemployed on the grounds that their willingness to supply labour services is apparent in their expectation of returning to work” only makes up a small share of the workforce – and is likely the reason why economists say the unemployment rate in Canada will always be approximately two percentage points higher than the United States.  But in small rural communities the unemployment situation is distorted massively.

Now, the problem with my ‘fix’ to how we report unemployment is simple.  The federal government links the number of weeks/hours you need to work to be eligible to collect EI to the unemployment rate.  The higher the unemployment rate the less you need to work each year to qualify.  So, if you removed the seasonally unemployed from the ranks of the unemployed (i.e. limited it to those actually looking for work), you would reduce the unemployment rate dramatically and force up the number of weeks needed to work – leading to political unrest, and a host of other problems in the most impacted communities.

In conclusion, don’t position me in the ranks calling for a radical solution – that eliminates the seasonal use of the EI program. But I am calling for a reform to the system that reflects the reality on the ground today. We shouldn’t be allowing people to make Christmas wreaths for 12 weeks and then go on EI the rest of the year. Those folks should be encouraged to retrain and take on the growing number of available year-round jobs.

But in the short term, maybe we need to grandfather certain groups, or put in place a long transition period or whatever.

At the very least, we should not pretend there is very high unemployment across most of rural Atlantic Canada right now. If you can prove it to me, I am willing to listen. But as long as there are vacant jobs as gas station attendants, coffee shop workers, assembly line workers at $14/hour, loggers, agricultural workers, trucker, home support workers, etc., you will have a hard time convincing me.