April 9, 2020

First look at COVID-19 jobs numbers: Bad data, worse reality

Statistics Canada just released the first piece of hard data providing a glimpse into the impact of the COVID-19 and oil price crises on the Canadian and Alberta economies.

Until today, economists were left to guess about the impact. We could see the devastation – closed businesses, empty streets, and self-isolating communities – but it was hard to even comprehend the total impact. The only bits of data that were available were leaks about weekly Employment Insurance claims which suggested about 930,000 new EI claims over a two-week period in March.

It turns out that that number was a pretty good indicator of the jobs impact across Canada. Data show that Canada lost just over 1.0 million jobs in March compared to February and that 117,000 positions were lost in Alberta. Canada’s unemployment rate jumped from 5.6% to 7.8% while Alberta’s rose from 7.2% to 8.7%.

As bad as those numbers are, they grossly understate the reality. Labour force numbers are a snapshot in time, based on a mid-month survey of Canadians. Normally, that timing doesn’t really matter because things don’t change much from one week to the next. This time is different. The jobs numbers for March are based on a survey conducted during the week of March 15 to March 21 – precisely the turning point during the COVID-19 crisis. Schools were closing, social distancing efforts were ramping up, people were ordered home from work and businesses were beginning to close or scale back operations.

In other words, the actual impact is far worse than these numbers suggest. Layoffs, furloughs and business closures continued through the rest of the month and into April. Non-essential businesses were shut down entirely.

An indication of just how bad things are: Since March 15, an estimated 4.26 million Canadians have applied for EI or its temporary emergency replacement, the Canada Emergency Response Benefit (CERB), which is four times the stated number of job losses for the month. If we assume that Alberta accounts for a proportionate share of those applications, that means that 490,000 Albertans are at least temporarily without work. That would push the provincial unemployment rate up to 27%.

And it gets worse. Many Albertans are still working, but at significantly reduced hours. At the extreme end, about 325,300 Albertans were technically employed in March but worked zero hours. That number is about double what it was in March of 2019. All told, the total number of hours worked in Alberta from March 15 to 21 fell by 14.7% – a loss of 11.7 million hours of employment in the reference week compared to February’s sample. That amounts to about $321 million in lost earnings in the province. For a single week.

Finally, the impact of the current health and economic crisis is not evenly distributed across industries and demographics. At the industry level, job losses were concentrated in precisely the services-sector industries one would expect: accommodation and food services; wholesale and retail trade; information, culture and recreation; and (non-essential) health care and social assistance. Young Albertans were disproportionately affected, and women were harder-hit than men.

These labour force numbers shed some light on the flurry of recent policy decisions by the federal and provincial governments and point to areas where additional action is needed. In particular, one of the flaws of the CERB program is that it does not provide any support for Canadians who are still working but at significantly reduced hours. The federal government has signaled that it will make changes to CERB to address this issue in the near future but given the lost hours and income to date, any such change needs to be retroactive to at least March 15.

Second, they underscore the need for specific industry-targeted supports. Businesses in retail, culture, and hospitality are disproportionately affected by the crisis. So too are those in the energy sector and transportation and aviation, even though the impact did not show up in the March employment data. These businesses need immediate federal support to stay afloat in the short term and longer-term assistance once the recovery process begins.

Finally, young Albertans and Canadians are paying a disproportionately heavy toll. Federal and provincial governments have taken small steps to help, including deferring student loan payments and interest charges. The federal government also recently announced that it will enhance its Canada Summer Jobs Program, offering businesses a 100% subsidy to hire up to 70,000 young Canadians over the next 11 months. We encourage the federal government to also explore new supports for training and upskilling young Canadians to ensure they have the skills needed to find permanent, meaningful work when the economy recovers.

The silver lining in all this is that government supports are making a difference and helping Albertans and Canadians get through this crisis. As a result of the Canada Emergency Wage Subsidy, companies like WestJet have committed to re-hiring their laid-off employees. Others contemplating layoffs that might otherwise have been unavoidable will reconsider. Even so, we are in store for more bad news on the jobs front over the next few months. How long it will take to recover is still unknown.

By the Numbers: What did the March labour force survey tell us?

  • There were 117,100 jobs lost in Alberta and just over 1.0 million across Canada.
  • Total employment in Alberta fell by about 5.0% compared to February, about the same as the national average.
  • The steepest job losses were in Quebec, where employment fell by 6.0%. The smallest losses were in Newfoundland and Labrador and PEI (a 2.6% decline in each province).
  • Job losses were concentrated in part-time positions. There were 73,600 part-time jobs lost in Alberta in March, a decline of more than 17%. Meanwhile, 43,500 full-time positions were eliminated – about 2.3% of all FT jobs.
  • The official unemployment rate in Alberta jumped from 7.2% to 8.7%. That number was muted by the fact that a large number of Albertans gave up looking for work and were thus not considered to be unemployed.
  • Job losses were concentrated in the services sector. The steepest declines were in accommodation and food services (43,700), wholesale and retail trade (27,500), information, culture and recreation (21,300), and health care and social assistance (20,100)
  • Surprisingly, some industries recorded higher employment in March. Resource industries (8,700), utilities (1,000) and construction (5,300) all added workers.
  • Young Albertans were hit harder than older workers. Youth employment fell by 19% compared to 3.1% for those 25 years of age and over.
  • Women were more affected than men. Female employment was down 6.8% while the number of jobs held by men was 3.5% lower. This is largely the result of the fact that women are disproportionately represented in health care, retail and food service jobs.
  • Within the province, Edmonton was the hardest hit. The city and surrounding area lost an estimated 56,600 jobs (a 4.6% decline), compared to an estimated 49,000 in the Calgary area (3.2%). The Lethbridge-Medicine Hat area saw employment fall by about 3.1% (7,400 jobs), while the impact was much smaller elsewhere in the province.  

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