Jobs growing, while economy stalling

[geoffrey]

Well, mikedavid will obviously disagree as he believes there are no available jobs in the entire country, but:

http://www.theglobeandmail.com/servlet/sto...Story/Business/

Some of the leading theories of this occurance:

• Unemployment is a lagging indicator. This explanation contends that employers react with a delay to a slowdown in production, and higher unemployment levels are pending.

I disagree. People don't lay off workers right away, but they sure don't go make more jobs when their business is scaling back.

• Labour market hoarding. Employers are reluctant to lay off their workers, despite the slowing economic activity, because unless the downturn is seen as long term, the costs of laying people off, re-hiring new workers, and retraining the is too high, says Dale Orr, chief economist with Global Insight Canada.

“The implication is that labour productivity is very low at this point in the economic cycle,” he said. “Unless there are solid signs of stronger output growth coming soon, there will be layoffs. Simply put, firms can't afford to provide any wage increases when output is growing at 2 per cent pace.”

I think this theory has some merit. Even Alberta's economy is slowing a little, but people are gobbling up every available professional in Calgary still. After experiencing the ridiculous times of 10 months ago when you couldn't find an engineer in the whole city, people are cautious.

• Structural shift. Riffing off the lagging indicator theory, Mr. Tulk wonders it companies are hiring more workers as a stop-gap measure to adjust to major structural changes working their way through Canada's economy. As Canada becomes more focused on commodities, companies react to the change by immediately hiring more people to fill the changing demand. Over the long run, however, companies will invest in machinery and equipment instead, and so the labour force growth will soon slow or go into reverse.

Umm, human hands can't drill an oil well. This guy knows his economics, but doesn't know reality. It's the problem with that profession.

• Supply-driven slowdown. Maybe the slowdown in economic output is partly driven by constraints in supply rather than weakening demand, says David Wolf, chief economist at Merrill Lynch Canada. Companies, especially in the West, can't find enough workers to increase their output. The result is slowing output caused by a shortage of qualified labour. However, if this theory were to be true across the country, wages would be soaring, Mr. Wolf recognizes. But instead, wages are almost flat.

BINGO! Wages aren't flat where jobs are being made. Alberta wages are through the roof!! There aren't enough people to fill the jobs and grow the economy because they are all on welfare in Quebec or the Maritimes. We need to either force these people to move to places where there are labour shortfalls or bring in more immigrants and just let them continue their leeching.

• The job figures are artificially high because of statistical anomalies. December recorded the second highest number ever for self-employment, but private-sector job creation was abysmally low — and consistent with tepid economic growth, argue the economists at National Bank Financial.

Actually, more self-employment I'd say is a sign for greater growth down the road. European economies that show much higher small-business and enterprise then ours have been outpacing us for sometime. Think Ireland.

[August1991]

I started a thread on the impending recession. Well, it hasn't happened and that's what's surprising. The economy isn't really slowing despite the earlier signs, and that's the real conundrum.

As to the labour market, it's a lagging indicator and usually confirms the recession already indicated elsewhere.

My two cents about the emplolyment stats. First, the 1990-2010 labour market is nothing like the 1970-1990 labour market when baby boomers and women changed the participation rate. Second, central banks now aim for price stability not economic growth. The Fed's credibility has removed a tremendous amount of uncertainty. Milton Friedman would argue that almost 100 years after its creation, the US Fed is finally doing what it should have done from the start. So much misery could have been avoided.

Wages aren't flat where jobs are being made. Alberta wages are through the roof!! There aren't enough people to fill the jobs and grow the economy because they are all on welfare in Quebec or the Maritimes. We need to either force these people to move to places where there are labour shortfalls or bring in more immigrants and just let them continue their leeching.

Quebec GDP is larger than Alberta GDP so Quebecers contribute more to Canada than Albertans do.

Anyway, most Albertans (and most Quebecers) seem to see a net benefit in being Canadian.

Actually, more self-employment I'd say is a sign for greater growth down the road. European economies that show much higher small-business and enterprise then ours have been outpacing us for sometime. Think Ireland.

I agree but don't confuse Ireland for Europe or a short run forecast for long term policies.

[geoffrey]

As to the labour market, it's a lagging indicator and usually confirms the recession already indicated elsewhere.

A lagging indicator yes... you'd likely see stable employment during a recession initially. But you'd hardly see major growth. Supply limited growth is very unusual, but I'd say Canada is suffering from it. And it's 100% the responsibility of the welfare system.

Quebec GDP is larger than Alberta GDP so Quebecers contribute more to Canada than Albertans do.

Definitely not as individuals, and that's what we need to look at. There is a major issue when one province (Quebec has unemployment of 8% and another has 3.5% with Calgary in the low 2's. It's even worse when you compare to the Maritimes.

I'm just saying there are major interprovincial barriers when unemployment doesn't balance out nationwide. Something is preventing Newfies or Quebeckers from moving to Alberta. It maybe stigma and irrationality, but I'd more likely say it's an overly generous welfare system.

Anyway, most Albertans (and most Quebecers) seem to see a net benefit in being Canadian.

True. I'm not contesting that.

I agree but don't confuse Ireland for Europe or a short run forecast for long term policies.

It's the direction we need to head in order to stay competitive in a more volatile economy worldwide. Small-business can adapt quickly, and is much more efficent.