My recent Fraser Institute Blog post on employment growth in Canada at the provincial and CMA level since 2007 appears to have attracted a fair amount of interest if only based on the hits via my Linkedin page. The article was posted on the Fraser Blog on December 4th and by December 14th, it had garnered 1,515 views. The interest has been quite pronounced from Linkedin profiles in Ontario and of course particularly from the Thunder Bay area. As a follow-up, I decided to look at employment levels in Thunder Bay and Greater Sudbury from a longer-term perspective using data from Statistics Canada.
Now Statistics Canada has annual province level unemployment rates and employment data available on its site from 1976. Its annual CMA level data only appears to go back to 1987. So, in order to generate CMA employment levels and unemployment rates for Thunder Bay and Greater Sudbury prior to 1987, what I did (acting on the suggestion of my Lakehead colleague Rob Petrunia) was run regressions of CMA level employment and unemployment rates for both cities on the Ontario data along with a time trend variable. The assumption is that employment levels and unemployment rates in the two cities should reflect what is going on in the province as a whole. The regression results were then used to estimate fitted values for Thunder Bay for the period 1976 to 1987 and for Sudbury from 1976 to 1990 (Sudbury data starts in 1990).
The results are intriguing. Figure 1 plots the unemployment rates in the two cities from 1976 to 2016 and there seems to be some good news here. While unemployment rates in both cities fluctuate a great deal over time, they have generally trended downwards since the late 1970s. The average unemployment rate in Thunder Bay between 1976 and 1985 was 9.7 percent while in Sudbury it was 11 percent. Over the period 2010 to 2016, Thunder Bay’s unemployment rate was 6.1 percent while over the same period in Sudbury it was 7.5 percent.
However, the good news seems to end when employment levels are examined in Figure 2 – at least for Thunder Bay. Sudbury has seen its employment grow over time while Thunder Bay has essentially remained flat. In 1976, estimated total employment (full and part time) in Thunder Bay was 61,224 and in Sudbury it was 60,475. By 2016, Thunder Bay’s employment was 60,100 while in Sudbury it was 81,700. In other words, over 40 years Thunder Bay has essentially remained flat in terms of its employment level – indeed there has been a slight decline of 2 percent since 1976. As for Sudbury, its employment level has grown by 36 percent since its estimated 1976 value.
A declining unemployment rate when total employment is growing can be seen as good news. A declining unemployment rate when total employment is declining means that your labour force is actually shrinking faster than your employment level. For Sudbury, a lower unemployment rate is good news given that it has been accompanied by rising employment. For Thunder Bay, a declining unemployment rate is a misleading indicator and masks the moribund nature of its economy given that its employment level has been essentially the same for 40 years.