Northern Economist 2.0

Wednesday, 15 July 2020

Ontario Employment in a Post-Covid World


As the lock downs end and Ontario embarks through various stages of reopening, the expectation is that unemployment will decline.  Between January 2020 and June 2020. Total employment in Ontario fell from 7,453,900 to 6,883,100 jobs -  a drop of 7.7 percent.  The labour force – those willing, able and looking for work over the same period shrank slightly by 0.3 percent while the unemployment rate more than doubled from 5.2 to 12.3 percent.  The participation rate – the share of population aged 15 years and over – declined slightly from 64.2 to 63.7 percent while the employment rate fell sharply from 60.8 to 55.9 percent. 

The employment rate is perhaps the best measure of engagement with the labour market as it is the share of the adult population that has a job.  The unemployment rate, on the other hand, is affected by not just the number of unemployed but also the size of the labour force.  One can have the number of unemployed stay the same but the unemployment rate fall if the labour force shrinks.

While the fall in the unemployment rate is perceived as a key indicator of economic recovery from COVID-19, if people who lost their jobs never come back into the labour force, then the recovery picture may look better than it is.  What is more interesting is whether the employment rate rebounds.  As the accompanying figure shows, for most CMAs in Ontario, there does not appear to be a strong bounce back in the employment rate.  Most analysts think the economy essentially bottomed out in April/May and June should see the start of recovery. 

As the accompanying Figure 1 shows, the June employment rate is up from May in Kingston, Peterborough, St. Catharines-Niagara, Brantford, London, Windsor and Barrie.  It has either stayed the same or declined further in Ottawa, Oshawa, Toronto, Hamilton, Kitchener-Cambridge-Waterloo, Guelph, Greater Sudbury and Thunder Bay.  At first glance, It does seem that the closer you are to the GTA, the more likely the depressed employment rate in June persists with Ottawa in its own bubble.  The GTA and Ottawa are the most urbanized areas and the pandemic has been especially hard on high population density areas.  However, if that is the case, one should also expect to see a bounce back in the areas furthest from the GTA area – namely, low density Thunder Bay and Sudbury – which is not the case.

 


 

When you looked at the ranked percent change in the employment rate (Figure 2), Thunder Bay and Sudbury look more like areas adjacent to the GTA core rather than southern Ontario areas outside the GTA core.  Another case of northern exceptionalism I guess.  One suspects that either Thunder Bay and Sudbury are more closely tied to the GTA economy than one might think or some other factor may be inhibiting or delaying their employment rebound.