Thunder Bay City Budget Deliberations 2020: The Plot Thickens

Well, things should be quite interesting this evening at Thunder Bay City Council as they have their final budget deliberation meeting. Councillor Mark Bentz has staked out his position. In remarks reported in the local media, he is of the position that levy hikes are not sustainable given that tax levy increases are more than double the consumer price index over the last decade. In a very stark graph provided in the Chronicle Journal, Councillor Bentz asserts that since 2011, the tax levy has grown by 32 percent while the CPI has gone up 14 percent and the assessment base only 7 percent.  This is of course a pretty classic interpretation  of sustainability in that the tax levy is growing faster than the tax base meaning that the tax burden is essentially deepening on ratepayers.

The key question is what is the solution?   Part of the debate this evening is going to be over the list of items totaling 2 million dollars in cuts that have been produced by administration as part of getting the levy increase down from about 6 million to about 4 million dollars.  Some of the items mentioned include ending residential weekend snowplowing and closing the Conservatory and even reducing library hours.  It is quite interesting that all of these proposals entail direct service reductions to current ratepayers.  Your taxes will still go up, but you will be getting less. So there.

The fundamental problem is that the key expenditure component on the operating budget is wages and salaries.  The total wage and salary bill functions as a combination of both price and quantity – that is the salary per employee multiplied by the number of employees.  These are ultimately the items that also need to be addressed.  It can probably start with a hiring freeze given that despite a flat economy and a population total that has not budged in 20 years, there are more employees on the municipal payroll than there were 20 years ago. 

If one looks at the accompanying graph, one can see that since 1999, the number of employees of the City of Thunder has grown.  The actual number of FTEs (Full time Equivalent positions) rose from approximately 1,568 positions in 1999 to 1,840 in 2009 but by 2019 had declined to 1,715 and are now scheduled to rise to 1,724 in the 2020 budget.  The dip between 2009 and 2019 is the result of the City getting out of some of its homes for the aged obligations in 2016 so the pre-2016 figures includes more staffing for homes for the aged.  The other thing is that these total FTEs actually do not include police which in 2016 were an additional 333 FTEs.  It is possible to estimate an adjustment that removes homes for the aged staff prior to 2016 but adds police and the results show a steady increase and flattening out of employment.  

 

Between 1999 and 2019, employment as measured by these “estimated” adjusted FTE numbers may have grown from 1,642 to 2,040 – an increase of 24 percent.  Given that population in the City of Thunder Bay has been flat over the same period, the per capita numbers of municipal employees has grown substantially.  There may indeed be very good reasons why this has been the case but it needs to be discussed.  At minimum, a hiring freeze is not an unreasonable thing to do while numbers like this are discussed.  More to the point, perhaps Councillor Bentz can actually get the numbers from 2011 to 2020 on employment from administration given that in the end my numbers are only “estimates” as such data is not easily obtainable.  I would be interested in seeing the resulting charts.

Which Federal Party Can Open the Door to Thunder Bay's Employment Growth?

With the federal election into its home stretch and the vote scheduled for tomorrow, voters in Thunder Bay have to decide who to vote for.  Needless to say, it has been a disappointing election given that the major parties – as well as the smaller ones – have presented grandiose expenditure visions that are for the most part fiscally unsustainable.  Moreover, much of the campaign has been not on policy but on opportunistic promises with major efforts expended on digging up dirt on opponents, mixing it with a little self-righteous water and then spattering it about in the hope that it sticks somewhere. 

When it comes  to making a ballot-box decision, the prevailing sentiment on the street seems to be that it is hard to choose from a set of equally unpalatable national parties.  So, the next best approach might be: let us look locally and make the decision, based not on what might be best for the country, but what might be best for Thunder Bay.  Here too, the answer is really quite muddy as ultimately what is best for Thunder Bay is making sure that at least one of the ridings is with whoever ends up as the governing party.  However, even that is a difficult game to play given that we are probably looking at a minority government situation.  And such strategic behaviour is made even more difficult by Thunder Bay's historical genetic aversion to any federal choice but Liberal - except when they seek to punish the Liberals by voting New Democrat.  Thunder Bay has not elected a federal conservative since the 1930s but then oddly wonders why conservative governments do not grant its wishes.

In terms of what is best for Thunder Bay, needless to say a government that promotes economic growth and diversification is always a safe bet but that can often only be judged years after the fact.  The current north side incumbent who is also a member of the present governing party certainly points to the last four years as a period of economic growth for Thunder Bay and northwestern Ontario in part due to the “millions of dollars coming into our area” which she no doubt ascribes to her government and her role as a Minister of the Crown.

Quantitatively assessing growth in Thunder Bay and the region is never easy but a glance at employment numbers is one way of providing an evidence-based attempt on how much growth there has been.  Between 2014 and 2018, total employment in Thunder Bay has indeed grown by 3.6 percent – from 61,500 to 63,700 jobs – which is actually not bad given that Ontario over the same period increased by 5.3 percent.  However, when employment is examined in a longer-term framework using the period from 2001 to 2018 – see Figure 1 – it is still within the traditional employment range of the last two decades.  We basically bounce up and down between 60,000 and 65,000 jobs and never seem to break out of that corridor in any sustained fashion.  Between 2001 and 2018, Thunder Bay’s employment grew 3.4 percent while Ontario grew 22 percent. 

 

What is also interesting as shown in Figure 2 is when employment growth by occupational category over the period 2014 to 2018 is examined. The most employment growth since 2014 has been in occupations related to arts and culture (26.7%), health (22.2%), natural and applied sciences (17.6%), manufacturing (13.3%) and law, social and government services (12%).  However, sales and services, business and finance, and construction have all seen declines.  As for the manufacturing resurgence, given the 550 jobs slated to disappear at Bombardier, manufacturing is poised to continue the decline that has been underway since 2001.

 

So, has Thunder Bay’s employment grown over the last four years?  Yes, but there are important qualifications given the dynamic nature and unique features of any local economy.   Here in Thunder Bay jobs are both created and destroyed but in almost perfect balance over time so as to keep total employment locked within a narrow corridor.  This corridor has remained the same for decades and Thunder Bay remains in an overall total employment stasis despite the efforts of two growth plans - one provincial and the most recent federal.   This is unlike Ontario as a whole where jobs are both created and destroyed but on net over the last 20 years many more jobs have been created than have been destroyed.  In choosing who to vote more tomorrow, voters need to think long and hard on which party they believe can actually open the door to getting us outside our historical corridor of employment stasis.

Ontario Employment Growth Showing Regional Weakness

The July 2019 Labour Force Survey was released by Statistics Canada yesterday and showed total national employment in July was down slightly (by -0.1%) while the unemployment rate moved upwards to 5.7 percent.  What was also interesting was the year over year change in employment as it showed the last twelve months have seen substantial employment growth even if recent growth has slowed a bit.  Seasonally unadjusted employment growth results showed an increase between July 2018 and July 2019 of 2.2% for Canada and 2.3 percent for Ontario.  However, as the accompanying figure shows, when the rates are examined by economic region and ranked there is quite a difference in performance across the province.



The highest growth was for Kingston-Pembroke at 8.9% followed by the Ottawa at 4.2%.  It would appear that eastern Ontario as a whole is doing quite well.  The Kingston area is apparently seeing substantial residential and non-residential construction activity - including hospital and bridge construction - as well as an increase in food manufacturing.  Next was Toronto at 3.4% and then nearby Kitcher-Waterloo-Barrie also at 3.4%.  Lagging behind but still positive are Stratford-Bruce at 0.8% and Hamilton-Niagara at 0.6%.  Thus, eastern and central Ontario edging into the Niagara peninsula have seen employment growth.  The remainder - mainly Southwestern and Northern Ontario have not done well - seeing employment declines.  The largest decline was London at -4.5% followed by Northeast Ontario at -2.6% , Muskoka-Kawarthas at -1.8%, the Northwest at -1.7% and then Windsor-Sarnia at -0.2%. 

With respect to Northern Ontario, employment in the Northeast declined from 257,400 to 250,800 between July 2018 and 2019 while the unemployment rate rose from 6% to 6.8%.  In the Northwest, employment fell from 107,800 to 106,000 while the unemployment rate rose from 4.9% to 5.6%.  If there is an economic slowdown or recession in the offing, it would appear that it may already be underway in parts of Ontario.

Bombardier, Technological Unemployment and OMNI TV - A Busy Week for Northern Economist

It was a busy week for me as there was the release of a report by the Fraser Institute I contributed to as well as the Bombardier story that announced 550 layoffs in Thunder Bay that generated some media activity for me.  The Bombardier story is in many respects not a surprise given that the talk over the last year was that the contracts were ending and in the absence of substantial new contracts, there were gong to be layoffs.  The real question is if these layoffs are temporary until a major new contract comes online as has often been the case in the past or whether there is going to be a permanent downsizing of Bombardier's Canadian rail operations given that they are expanding their US presence as a result of Buy America provisions.  Of course, more Canadian contracts would be a solution but Canada compared to Europe or the US is still not an urban rail transit country as its cities are not as large or as dense and there is a preference for driving.  Moreover, even if new contracts come along, there is going to be more international competition for the contracts and Bombardier needs to up its game in terms of meeting its delivery obligations as well as being more price competitive.

The Fraser Institute released a report this week on the impact of artificial intelligence and technology on employment and my contribution was an essay showing that historically in Canada, technological change - like in many other countries - is accompanied by short term employment disruption but in the long run employment has grown.  This also generated for me an oped in the Full Comment Section of the National Post and several media mentions as well as a number of comments and emails from interested readers assuring me that I was wrong and we are all headed for an apocalypse of mass unemployment notwithstanding the evidence of the last 150 years.  No doubt, the view of many is as in mutual fund returns, past performance is no guarantee of future performance.  Such is life.

The Bomdardier story also generated coverage by the Globe and Mail,  the Financial Post, Radio-Canada and an opportunity for an oped with the Globe and Mail which incidentally also contained a nice plug for Lakehead University and its efforts to recruit international students.  The material for Radio-Canada included a television interview and a quote about how the layoffs represented a blow to the heart of Thunder Bay.  Interestingly enough, the best editorial cartoon I have seen on this point of a blow to the heart was in Corriere Canadese with La Vignetta di Ynot and I have the link right here.  And Corriere Canadese also ran a story on the return of OMNI programming back to cable in Thunder Bay.  I should note that OMNI Senior Manager Charmaine Khan did contact Corriere Canadese and assured them the disruption was temporary and also did eventually email me with an explanation so all is well!

It has been a busy week.  A veritable symphony of media activity from start to finish! Now it is time to enjoy what looks like a glorious summer weather weekend here in Thunder Bay. Have a great weekend.

Regional Employment Update: Ontario Regions and the North

Ontario’s economy has increasingly become a tale of two regions – the GTA and everyone else.  It is worth doing a quick review and update of regional employment numbers (data from Statistics Canada) that provide some additional insight on the past and the most recent distribution of regional employment.  In 2001, employment in Ontario was 5.921 million jobs and over the period 2001 to 2018 it rose by 22 percent to reach 7.242 million jobs.  Figure 1 plots the growth rate of Ontario employment as well as for the five major regions from 2001 to 2018 as well as for the sub-periods of 2001 to 2010 and 2010 to 2018. 

 

In terms of overall growth rates, employment expanded the most in the GTA, which saw an increase between 2001 and 2018 of nearly 32 percent.  Indeed, the GTA’s share of Ontario employment during this period went from 45 percent to 48 percent.  The next largest increase was for the area immediately adjacent to the GTA – central Ontario - comprising of Muskoka and the Kawarthas, Kitchener-Waterloo-Barrie and Hamilton Niagara.  It saw growth of nearly 23 percent in employment and its share of Ontario’s employment remained constant at about 23 percent of the total between 2001 and 2018.

The next highest growth rates were for Eastern Ontario and the Southwest respectively at 17 and 5 percent each.  However, this employment growth was not enough for both of these regions to hold their own in terms of employment shares.  While Eastern Ontario maintained its 13 percent share of total employment between 2001 and 2018, the Southwest saw a decline from 13 to 11 percent.   

 

 

And then there is the north which saw employment drop by 1 percent between 2001 and 2018 from 358,000 to 354,000 and its employment share of the provincial total drop from 6 percent to 5 percent.  Of course, this trend is nothing new, but such an update is another reminder that despite a plethora of studies and government pronouncements over time - including the Northern Ontario Growth plan -  there has not been a reversal of northern Ontario’s economic fortunes.  Figures 2 and 3 break employment over time in the Northeast and the Northwest.  The Northeast reached its peak employment circa 2008 and has since generally trended down.  The Northwest peaked in 2003 and has trended down since though there has been a slight rebound since 2015.

And there you have it - again.

Northern Ontario Economic Forecasts: Conference Board Forecasts Slower Growth for Thunder Bay and Sudbury

The Conference Board of Canada recently put out its Summer 2018 Metropolitan Outlooks for Thunder Bay and Greater Sudbury.  Greater Sudbury’s real GDP growth is expected to be 1.2 percent in 2018 and 1.1 percent in 2019 while its employment growth will be  -0.4 per cent in 2018 and rise 1.1 percent in 2019.  Meanwhile, Sudbury’s unemployment rate will rise from 6.7 per cent in 2017 to 7.0 per cent for 2018, before falling to 6.6 per cent next year.  Thunder Bay’s real GDP is expected to grow 1.2 percent in 2018 and 1 percent in 2019 with employment expected to rise 2.2 percent in 2018 but fall -0.7 percent in 2019.  The unemployment rate is expected to be lower than Sudbury’s at 5.1 percent in 2018 compared to 5.6 percent in 2017 but is expected to be 5.4 percent in 2019.

As the accompanying figures show, Thunder Bay and Sudbury have been growing more slowly and are expected to grow more slowly than Canada or Ontario.  Sudbury’s economy has been described as “unsettled” with a steady string of employment losses over the last few years.  Its primary hope is the current rebound in nickel prices given the employment losses have been hitting its mining sector.  


 



 
Thunder Bay saw a very good employment growth performance in 2017 that basically helped recover from the 3 percent drop in 2015 – its economy currently can be characterized as “moderate expansion.”  What seems to be driving things at the moment in Thunder Bay s a stronger construction sector with numerous small non-residential projects as residential demand is weak.  Indeed, the housing forecast for 2018 is 155 units – the lowest number of starts in 15 years.  As well, there has been some upturn in manufacturing and transportation.  

So, moving forward.  It appears that both Canada and Ontario are expected to see slower rates of economic growth moving towards 2020 with Thunder Bay and Sudbury even lower.  In terms of employment growth, Sudbury’s recent string of low employment growth is expected to end in 2019 if nickel prices continue their rebound while Thunder Bay in 2019 is expected to see negative employment growth again before resuming growth.  Thunder Bay’s economy has been performing marginally better than Sudbury’s recently as it is somewhat more diversified as in 2017 it had a higher economic structure diversity score of 0.78 compared to Sudbury’s 0.71.

Thunder Bay Employment Flat for Forty Years

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 4^th and by December 14^th, 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. 

Left Behind

The good news continues for the Canadian economy as the latest job numbers from Statistics Canada show a net increase in employment of 35,000 jobs in October. Indeed, one has to wonder why the Bank of Canada does not go out and raise interest rates a bit more given that should the economy slowdown it would give them some scope to lower rates to counteract the slowdown.  At the moment we have large deficits at the federal level and low interest rates - really, how much more direct stimulus does the Canadian economy need at this point?  What do we do if the economy goes into recession?

For Ontario, however, the picture is more mixed as employment there was virtually unchanged.  Indeed, over half of the net employment growth in Canada came from Quebec and most of the remainder from Alberta.  Ontario’s employment story got another interesting assessment from a Fraser Institute Report showing that almost all the recent employment growth in Ontario has been concentrated in the Toronto and Ottawa areas.  Many of the CMAs outside of these two regions experienced employment declines.  The figure below taken from the Fraser Institute report shows that quite a few Ontario CMAs - including all of those from northern Ontario saw employment drops.

Needless to say, when it comes to employment Ontario very much seems to have become a two-track economy with the North, East and Southwest portions of the economy not doing as well as the Toronto-Ottawa core.  A notable exception is Windsor which has managed to create employment since 2008 despite the manufacturing downturn.  Some of the cities that have been doing well - Guelph, Oshawa and Kitchener-Waterloo-Cambridge are all part of that area within direct and short range of the GTA.  

Yet, the October numbers suggest Ontario as a whole has slowed down in terms of job creation even in the Toronto-Ottawa core.  This does not bode well for the effects of the minimum wage increase coming in January.  If an employment slump continues, it also introduces a new dynamic into the provincial election coming in June.  If the feeling of being left behind gains momentum even in previously economically  buoyant areas such as the GTA then the prospects for political change will rise.

Economic News Around the North: April 14th Edition

Well, we are heading into the Easter weekend.  Spring is a time of rebirth and who knows, after two decades of slow growth, perhaps the north's economy will finally resurrect itself in the third. On the other hand, Good Friday this year coincides with the anniversary of the sinking of the Titanic. Here are some of the stories that I felt were of economic significance for northern Ontario over the last week or so. 

Gas prices soar in city. TbNewswatch, April 13th, 2017.

Well the price of gas has shot up again, just in time for a long weekend but it is a phenomenon that hit the entire province.  If you want some insight on Canadian gasoline prices in general, there is an old post I did on gas prices on Worthwhile Canadian Initiative that also attracted quite a few comments that provided some interesting points.  The long and short, in my opinion, prices are higher because the companies can get away with charging more.  Price differentials across regions have converged over time and this may signify greater market power on the part of gas companies.

Alexander Henry one step closer to returning home. CBCThunderBay. April 11th, 2017.

There seems to be some support for relocating the former icebreaker Alexander Henry from Kingston to Thunder Bay's waterfront.  In principle, this will be an excellent addition to the waterfront as it can serve as the core exhibit for a transportation museum.  This might mesh in nicely with the plans for a grain museum which is being worked on by Nancy Perozzo's group.  As well, there are plans to relocate the Thunder Bay Art Gallery to the waterfront also.  When one looks at the restaurant development in the Waterfront area combined with the location of Magnus Theatre and the long-term plans to place an Events Centre in the area, one can finally see a substantial entertainment district coming into shape.  The one caveat - customers and money.  I know, presenting caveats and pros and cons does not go over well with local movers and shakers who prefer expressions of cheerful mindless optimism when it comes to economic development in the north but Thunder Bay's tax base is under stress and the city's population base and market size are limited.  Can Thunder Bay become a tourism destination with its central Canadian waterfront marked as "The Mid-Coast?"  Who really knows?

Thunder Bay taxi bylaw causes concern for council, taxi companies.  CBCThunderBay. April 11th, 2017.

Getting a taxi in Thunder Bay is a ordeal.  If you ever needed a taxi in the middle of a weekday afternoon on short notice, forget it as they are all engaged in "school runs". This is another example of how dependent even the private sector in northern Ontario is on public sector spending.  I won't even get into trying to get a taxi at the airport or late on a weekend after an evening out or the price.  Supply constraints have been very profitable for Thunder Bay taxi companies and by taking five years to re-write the taxi bylaws, Thunder Bay City Council has been aiding and abetting a cozy oligopoly.

Other Thunder Bay economic news:

First salty arrives in port. TbNewswatch. April 8th, 2017.

Grain shipments make for busy March at Thunder Bay port. CBCThunderBay. April 5, 2017.

Well, this has all been rather Thunder Bay centric to this point.  In other news:

Sudbury loses 400 jobs in March. SudburyStar.com. April 7th, 2017.

Yet, things are going to get better as the Canada Revenue Agency has announced it is adding 543 full-time jobs to the Sudbury tax centre.

Council sets criteria for location of new events centre. CBCNewsSudbury. April 12th, 2017.

Sudbury appears to be moving forward at a rapid clip with a site selection team in place.  However, four of the five members of the selection team appear to be directly related to Sudbury's municipal government with a consultant from PWC as the fifth.  It would have been useful from an optics point of view to have a more arm's length group of experts.  Apparently the criteria for site selection includes cost, economic impact and parking.  In the end, it is all about weighting the criteria and if parking carries the biggest weight, then one should expect the greenfield site outside of the downtown as the final destination.

Here are some interesting items from North Bay.

Casinos siphoned millions from Sudbury, Brantford and Thunder Bay in 2014-15. Nuggest.ca. April 12th, 2017.

And in another tourism infrastructure related story. ..

North Bay city council votes to keep Dionne house. CBCNewsSudbury. April 5th, 2017.

The only surprise here is that the City of North Bay was actually considering giving the historically significant house to a group that was going to move it to a "pioneer village" project 70 miles south of North Bay.  Why stop there, maybe they should consider moving it to Thunder Bay's waterfront - a nice plot of land between the yet to be completed hotel and the new condos?  

And in the relentless and ongoing efforts to attract new business activity via marketing techniques....

Invest Sault Ste. Marie website launched. SaultOnline. April 6th, 2017.

Sault needs to find gaming 'sweet spot'. SaultStar.com. April 9th, 2017.

And in Timmins, this story about the mining sector.

Gold is the new economic driver for Ontario mining. TimminsPress.com. April 12th, 2017.

There were a number of interesting comments made. I was particularly intrigued by the Red Tape Challenge - an Ontario government consultation program for mining asking for input on what could be done to make the mining industry work better with government.   Dealing with red tape by engaging in yet more consultation seems like a typically Ontario way to address questions of efficiency and regulatory barriers.  However, with respect to gold as a driver, according to the president of the Ontario Mining Association:

“What has changed in Ontario in the last 10 years is that gold is now a larger contributor than nickel and copper. That’s new and it is a combination of the price of the commodities and the number of new discoveries of gold and the new investments around gold,” said Hodgson.

Have a nice long weekend.

How Many Jobs Have Been Created in Thunder Bay?

One of Thunder Bay's Members of Parliament and currently Minister of Employment, Workforce Development and Labour - Patty Hajdu - asserted in a letter to the Chronicle-Journal this morning that "In the last eight months alone, the Canadian economy has created more than a quarter-million full-time jobs. In fact, 1,600 jobs new jobs have been created here in Thunder Bay since we were elected."  Needless to say, this piqued my curiosity and so I went off to Statistics Canada to see what Thunder Bay's total employment numbers have looked like since October of 2015 - the year the Trudeau Liberals  took office.

The results are provided in Figure 1, and are monthly seasonally un-adjusted total employment (three month moving average) for the Thunder Bay CMA.  The numbers show rising monthly employment from October 2015 to August 2016 and a decline since.  In October of 2015, total employment in Thunder Bay was 59,100 jobs and the total employed reached a peak of 61,300 by August of 2016.  This represents an increase of 2,200 jobs.  However, between August of 2016 and March of 2017, employment then declines from 61,300 to 59,300 - a drop of 2,000 jobs.  So, based on these numbers, from October of 2015 to March of 2017 Thunder Bay goes from 59,100 to 59,300 jobs for an increase of 200 jobs.



Of course, while these numbers are three month moving averages, they are not adjusted for seasonality. If we go from October 2015 to October 2016, employment grows from 59,100 to 60,800 for an increase of 1,700 jobs.  If we go from March 2016 to March 2017, we see total employment grow from 59,500 to 59,300 jobs - a decline of 200 jobs.  Based on Figure 1, Thunder Bay may have indeed seen the creation of 1,600 new jobs since the election of the Trudeau Liberal government but it also appears to have lost nearly as many jobs making for little in the addition of net new employment.
 

Evaluating Northern Ontario's Growth Plan-Part II: Employment Generation

This is the second in a series of posts in which I will present evidence in an attempt to evaluate the Growth Plan for Northern Ontario, which was released on March 4, 2011.  The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy and its ultimate goal was to strengthen the economy of the North by:

• Diversifying the region's traditional resource-based industries
• Stimulating new investment and entrepreneurship
• Nurturing new and emerging sectors with high growth potential.

While the provincial government did commit itself to the development of performance measures for ministry specific initiatives that supported the implementation of the plan, I will be using a broader set of indicators of overall economic performance that are supported by the availability of readily accessible public data. In this first post, I will be looking at employment.

The Ring of Fire: Waiting for Ignition

There was an exchange in Ontario’s Legislature yesterday between MPP Norm Miller and Minister of Northern Development & Mines Bill Mauro regarding whether or not the government would “finally take a leadership role that will make the Ring of Fire a reality in Ontario?”  The minister responded that mineral exploration activity in Ontario was climbing and progress was being made and more specifically asserted that: “there are three other mines under construction in the province. But they want to spend their time focusing on one. There’s one not too far from my home community of Thunder Bay called the New Gold project. Speaker, right now it’s under construction and 600 people are working on a construction site. When that mine is open for the next 10, 20 or 30 years of its life, there are going to be 450 people working in that mine.”

My belief is that any full-blown development of the Ring of Fire is many years away given the ongoing negotiations with First Nations, the immense cost of transportation infrastructure to access the Ring of Fire as well as the state of resource and commodity markets.  However, it is worth examining whether there has been some progress in northern Ontario’s resource sector particularly when it comes to employment generation.  Figures 1 and 2 present employment in northern Ontario’s resource extraction sector as measured by Statistics Canada series  v91415810 (Northeast) and v91415829 (Northwest) on employment in Forestry, Fishing, Mining, Quarrying, Oil and Gas presented monthly from 3^rd month 2001 to 1^st month 2017.  

 

The results in Figure 1 show that while there is some substantial fluctuation in resource extraction over time with some large upswings, when a linear trend is fitted to the data the long-term performance is quite flat.  Indeed, average monthly employment was 21,500 in 2001 and 21,867 in 2016 – actually a 1.7 percent increase.   

 

Figure 2 is more interesting because it separates the employment data up into northeast and northwest Ontario.  While the northeast has trended up over time, the northwest has trended down.  Average monthly resource extraction employment in the northeast was 12,470 in 2001 and 17,892 in 2016 – an increase of average monthly employment over time of about 44 percent.  Meanwhile, the northwest has seen average monthly employment in resource extraction fall from 9,030 in 2001 to 3,975 in 2016 – a decline of 56 percent. 

This is a remarkable difference in performance and likely represents the long-term impact of the forest sector crisis on the northwest – which was much more forestry intensive than the northeast – as well as the relative success of mining in the northeast relative to the northwest.  While the northwest is seeing mining activity, it has not yet been on a sufficiently large enough scale to be the employment generator it is touted to be.  I suppose we are still waiting for the Ring of Fire to be ignited.

Thunder Bay's Employment Surge

Data from Statistics Canada on Thunder Bay's unemployment rate, employment and labour force suggest that its economy is experiencing a rebound after quite a few years of slow performance.  The most recent unemployment rate in Thunder Bay for May 2012 came in at 5.7 percent, which is well below the national and Ontario unemployment rates.  Of course, one of the reasons our unemployment rate is so low is that the labour force has not been growing as fast as employment but the last twelve months suggest that employment has actually begun to grow faster than the labour force.

Figure 1 shows unemployment rates (seasonally adjusted) for Canada, Ontario, Thunder Bay and Greater Sudbury for the 2009 to 2012 period on the left and total employment (seasonally adjusted)  for Thunder Bay over the same period on the right.  As can be seen, the period from June 2011 to January 2012 saw robust increases in employment followed by a decline since.  Overall, employment levels in Thunder Bay are the highest that they have been in the last three years.

Figure 1

The second figure shows annualized growth rates (May to May) for 2010, 2011 and 2012.  Thunder Bay's labour force actually shrank in both 2010 and 2011 but it grew substantially in 2012 - along with employment.  Employment in 2012 grew by 5.3 percent while the labour force grew by 3.8 percent.  As a result,  the unemployment rate dropped below 7 percent in 2011 and in 2012 has fallen below 6 percent.  However, the total level of employment in May 2012 is 61,500 - which is still down from the high of 67,400 reached in March 2003 but up from a low of 57,400 as recently as June 2011.

Thunder Bay's economy appears to have begun to recover from the forest sector collapse but still has ground to go.  Moreover, its employment still seems to be subject to somewhat erratic fluctuations.  While June 2011 to January 2012 saw a period of sustained increases, employment has declined since then.  Thunder Bay is still very much an economy in transition.

Figure 2