The Covid-19 pandemic has come with a huge cost in terms of
employment loss with the retail, food and accommodation, and travel sectors
exceptionally hard hit. The employment
impact in Ontario has been substantial also with total employment falling about
13 percent from February 2020 to June of 2020.
The rebound since June has been insufficient to make up all the
employment losses and as of September total employment in Ontario was still
about 6 percent lower than February 2020.
The impact has also varied
across major cities in Ontario with Kitchener-Waterloo, Thunder Bay and
Peterborough and Hamilton hit the hardest whereas Guelph, Brantford, Oshawa and
London experienced softer blows.
The composition of employment seems to be a factor and this
post drills down a bit into the employment composition by broad industry sector
– goods and services. The goods sector consists of employment in agriculture,
resources, utilities and oil and gas, construction and manufacturing.
Everything else ranging from wholesale and retail trade and transport, finance
and real estate, health and education to food and accommodation and public
administration are the services.
Figure 1 plots the composition of employment across these
two industry sectors for three cities in Ontario: Hamilton, Thunder Bay and
Guelph. What is quite interesting is despite their industrial, agricultural and
resource extraction histories, Hamilton, Guelph, and Thunder Bay, are now all remarkably
service intensive - part of the trend everywhere in high income economies. Hamilton’s goods
production sector accounts for 21 percent of employment whereas Thunder Bay is
the lowest of the three cities at 17 percent.
However, Guelph on the other hand still has a relatively large share of
employment in goods production at 27 percent.
Figures 2 and 3 plot the percentage change in employment for
total, goods, and service sector employment for the three cities for two
periods: the onset of the pandemic between January 2020 to May 2020 and the
period of employment recovery as the first wave was brought under control from
May 2020 to September 2020. The data is
non-seasonally adjusted three-month average monthly employment data from
Statistics Canada.
From January to May, all three cities saw a drop in monthly
employment, but Guelph was hit half as hard with a drop of about 6 percent
compared to more than twice that for both Hamilton and Thunder Bay. What is also interesting is the employment
hit was harder in Guelph for the goods sector with a 25 percent employment drop
compared to 17 percent for Thunder Bay and 13 percent for Hamilton. However, service employment dropped about 13
percent in both Hamilton and Thunder Bay during the first wave of the pandemic,
but Guelph’s was essentially stable.
As for the recovery period from the first wave from May to
September, all three cities saw employment grow: 4 percent for Hamilton, 9
percent for Thunder Bay and 8 percent for Guelph. The performance across sectors is more
interesting. Employment in Guelph’s goods
sector rebounded robustly growing 57 percent compared to only 21 percent in
Hamilton and 26 percent in Thunder Bay.
Construction was the major source of the rebound in all three cities but
manufacturing reinforced the rebound in Guelph whereas in Thunder Bay
manufacturing employment continued to decline even from May to September. Services did not recover as well as goods
production in all three cities with Guelph actually seeing some service sector
employment losses from May to September.
For whatever reason, the service sector job losses in Guelph were
delayed compared to the other two cities.
What explains this?
Good question but one cannot help but wonder if the CERB played a
role. On average, foods sector jobs are higher
paying than service sector ones though where the service jobs are is important-
for example, retail and food and accommodation versus health and
education. The CERB kicks in during the
pandemic and millions took advantage of it over the summer and into the early
fall. The CERB and its income support may
have provided more of a disincentive to return. Having a large goods production
sector relative to service sector did not insulate against employment loss in
the first wave of the pandemic but may have slowed the rebound in the presence
of the CERB.
