In this week’s EconMinute, we’re talking about rates of unemployment.
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In our most recent Alberta Snapshot, we reported that the province’s economic recovery has come a long way and most Albertans who lost work at some point over the course of the pandemic are back at work. Even the headline unemployment rate of 8.1%, though high, is starting to look more like its pre-COVID past (7.4% as of January 2020).
But don’t pop the champagne just yet. A large number of Albertans remain un- or under- employed. The true extent of joblessness is better captured by broadening our definition of who we consider to be unemployed. This is why Statistics Canada estimates a number of different measures of unemployment, beyond the traditionally shared metric (what is known to econ nerds as the “R4”).
So, this week, we dig into the different rates of unemployment to provide additional context to the situation in Alberta. One caveat worth noting is this data is not adjusted for seasonality so the official rate below will differ slightly from the seasonally adjusted rate above.
What do the different measures of unemployment tell us about the situation in Alberta?
- One good sign is there are not a lot of Albertans who have given up on their job search. When we broaden the definition of unemployment to include “discouraged workers”—individuals who are not actively looking for a job because they believe none is available—the rate of unemployment increases only slightly (the second column in the chart).
- Similarly, there are also not many individuals waiting on the sidelines (the third column in the chart). This would include people who, for example, have been laid off by their employer but are waiting to be called back, or who are waiting for a reply from prospective employers.
- However, when we include individuals who are working part-time but would prefer a full-time position, we see more of a jump. Including these individuals increases the rate of unemployment from a rate of 7.5% to a rate of 9.1%. Noticeably, this is the largest jump of all the large provinces.
- Capturing all of the aforementioned individuals increases the unemployment rate to 10.0%, the highest of all large provinces. For comparison, our neighbors to the east and west have a rate that is around 7%.
All told, this tell us that more Albertans are struggling than the headline unemployment rate suggests and more so than other Canadians—with consequences on finances, mental health, and well-being. This underscores the importance of not just looking at the headline rate—but also “under the hood” to understand the true extent of joblessness. Over the coming months, one thing that will be important to consider is not just the total number of new jobs created but the proportion of those that are full-time positions.