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By Charles Lammam
and Hugh MacIntyre
The Fraser Institute
Go west, young man. Not long ago that was sound advice for a young person struggling to find opportunities in Eastern and Central Canada. While it may still hold true for parts of Western Canada, it’s no longer the case for Alberta, once the pillar of western opportunity.
A strong labour market is critical for the prosperity of workers. It matches workers looking for the right job opportunity with employers looking for workers with the right skills.
In a high-performing labour market, opportunities abound with rapid job growth, low unemployment and high productivity. Until recently, Alberta was full of opportunities for those willing and able to work. Times have changed.
To properly judge the strength of Alberta’s labour market performance, we must go beyond the headlines about how many jobs were created last month or whether unemployment has ticked up or down. A more comprehensive measure is needed that goes beyond the latest news.
In a recent study we measure the labour market performance in Canada’s 10 provinces and the 50 U.S. states from 2014 to 2016. The study creates an overall index score (from 0 to 100) for each jurisdiction based on five indicators including job-creation, unemployment and worker productivity (measured by the average value of goods and services each worker generated with his or her labour). Higher scoring jurisdictions ranked better.
Alberta’s overall score on labour market performance (52.9 out of 100) is in the bottom half of North American jurisdictions, ranking 31st out of 60. Alberta’s neighbours – Saskatchewan (15th) and British Columbia (17th) – ranked higher.
Simply put, Alberta is no longer Canada’s prime locale for those looking for opportunity.
One of the major sore spots for the province is its relatively high average unemployment rate (5.4 per cent ranking 30th). But where Alberta’s labour market really suffers is in terms of job creation.
Specifically, over the past three years, Alberta’s average annual total job growth was a meagre 0.6 per cent, which ranks 40th among 60 provinces and states.
Even this unimpressive total job growth record masks the true depth of Alberta’s problem. The weak total job growth is largely driven by increases in government-sector employment. The private sector, on the other hand, has lost jobs. The three-year average change in private-sector employment is actually a decrease of 0.3 per cent, ranking Alberta 55th on this indicator.
Of course, Alberta’s economy has been hit hard by a drop in energy prices. But so have other energy-rich jurisdictions that have relatively better performing labour markets.
Texas, for example, ranks 12th among North American jurisdictions on overall labour market performance (scoring 62.9 out of 100). In fact, Texas has gained – not lost – private-sector employment, with an average growth rate of 1.9 per cent over the three-year period examined.
And Saskatchewan, another energy producing province, has the highest performing labour market in Canada.
As energy prices have fallen, the Alberta government hasn’t done the labour market any favours. Policy choices such as higher tax rates, rapid debt accumulation, higher minimum wages, and more stringent labour and environmental regulations have discouraged productive economic activity at time when the province desperately needs to attract investment, businesses, entrepreneurs and skilled workers.
Of course, governments can’t control what happens with commodity prices. But given the state of the provincial labour market, Albertans should hope for a new direction in policy. This is something that governments can control, and it would benefit Albertan workers and their families.
Charles Lammam and Hugh MacIntyre are co-authors of the Fraser Institute study Measuring Labour Markets in Canada and the United States, 2017 Edition, available at www.fraserinstitute.org.
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