Noah D. Arney

Tag: unemployment

  • Youth Unemployment Issues

    A reminder that I love StatsCan data (yes, I’m a nerd). Well I was looking at unemployment and labour market participation over the last decades (1990-2022) averaged yearly and broken out by 15-64 and 15-24 groups in both Canada as a whole and just BC. I was hoping to see if BC was an outlier anywhere and we really aren’t. But I found something else very interesting.

    Three types of data tell us what’s going on: 1) unemployment rate (how many people in the workforce aren’t employed) 2) participation rate (how many people are in the workforce who could be) and 3) the difference between youth and all unemployment and participation.

    This gives us info like knowing that generally high unemployment aligns well with low labour market participation because people will self-select out of the labour market when it’s bad. We also see the shift over the 90s as more people under 24 are in post-secondary showing a substantial decline in their labour market participation but not a massive raise in unemployment (because they’re not unemployed, they’re in university. This info also tells us that the unemployment rate changing for youth but not for the whole labour market is an impact that only hits youth.

    So what happened during those 32 years? Well 1997-2004 was a bad time to be a youth looking for work. Youth labour market participation was going back up after the dip in the early 90s but the jobs weren’t there. Overall unemployment was fine, but if you were under 24 you were having a hard time. Then the strangeness that led me to writing this, 2005.

    Suddenly youth unemployment across the country drops. It’s a small blip in Canada, but in BC it’s massive. Youth unemployment in BC goes from a high of 15% in 2002 to a slow drop to 13.5% in 2004, that’s normal. But in 2005 it’s 10% and by 2007 it’s at its lowest in the entire data set at 7.7%. It’s so sudden and impactful, and localized to only BC it must have some cause, but I don’t know what it is, and I was in that age range at the time. I remember a lot of help wanted signs, and I remember that for the first time in my adult life I could easily get a summer job or part time job.

    This should have been fantastic, but the 2008 financial crash and oil price crash ended it. Unemployment for youth shoots right back up to 13% by 2009. The 2009 issue is clear, but what caused the drop in the first place? It was noticeable that youth in BC rejoined the labour market because of it. And it is very clearly a youth phenomenon because the dip for the all ages unemployment is minor.

    Moving forward from that time though after the recovery from the financial crash the youth unemployment rate starts going down again, slowly this time, hitting 7.7 again in 2018, and then looking to stabilize in 2019 at 9%. I say stabilize because after the shock to the system from COVID it’s back to the 8-9% that seems to be a “normal” youth unemployment rate.

    So what did I learn from the data? Youth participation lags youth unemployment slightly, but more perceptibly than all ages. Perhaps that means that youth are more likely to leave the workforce for school and other reasons if they can’t find work? Also, something happened at the end of 2004 or early 2005 to change youth employment in BC and it was impactful until the 2008 crash.

    Finally I learned that the changes in the economy impact youth first and most. In every increase to total unemployment youth are impacted months before the general unemployment rate. The gap grows every time there’s a crisis and it always takes several months after the general unemployment goes down for the gap to begin shrinking.

  • Changing Employee Cohorts and Retention

    Originally two twitter threads: thread 1 thread 2.

    It took everyone a bit of time to notice this year, but the labour market shortage is basically being driven by mass retirements over the last two years, just not where you think (is the cultural moment for a Madisynn MCU reference past? Probably). Employment stats time. All of this is some back of the napkin calculations from Stats Can’s info on people accessing retirement benefits and leaving or entering the workforce.

    We know people have been pushing retirements a bit later, and recent stats back this up. In the last 9 years, as this has been happening there’s been an average of about 100K new retirees under 65 in Canada. It took a dive during the pandemic of 8% and 10%. So more people retiring a year or two or five later than they used to. As with every other economic shock, the pandemic made more people avoid early retirement a little. So fewer people retiring under 65.

    What you might not know though is that the number of people retiring at 65 went up during the pandemic, up 5.4% for men and 6.6% for women. Interesting, yes? So during the pandemic fewer people retired early, but more retired at the standard age.

    But we also have stats for those who stayed in the workforce well past standard retirement age. For those still working at 70 or above the retirement numbers during the pandemic jumped over 300% for men and over 900% for women. It’s not quite as drastic for the 66-69 group, but it’s still significantly increased. So all those people who delayed retirement before the pandemic decided this was the right time to retire.

    The question everyone was asking as this labour market tightening happened was: where are the workers? Well the people who were working well past retirement age have now retired. And that might not seem like a lot, but it’s about an extra 100 thousand people (over 65) leaving the workforce over the last last two years than was expected, and that’s not counting the over 5,000 people in the 20-65 age group who died in Canada from COVID.

    So the Baby Boomers are retiring, as was foretold. We expected this. But, even more impactful, the incoming age cohorts are shrinking, the current group of teens is 20% smaller than the current group of new professionals. The preparing for retirement cohort is the same size as the new professionals cohort, so the labour shortage isn’t going to go away any time soon, because the group of replacement workers coming up isn’t big enough to make an impact.

    What does this mean for retention then? Employers need to adapt, because young people have something they haven’t had since before 2006: options.

    What was a shortage in manufacturing, construction, and retail in 2018 has now hit health care and professional roles, and it will just keep going. I’ve been thinking a lot about this with the discussion regarding work-from-home, return-to-work, quiet quitting / work to rule, skills gaps, and the labour shortage.

    If you want your employees to go above and beyond you need to offer one of these things:

    1. intrinsic rewards: motivates staff to want to do more, like work that is impactful or fulfilling or helps them grow and develop in the ways they want to.
    2. extrinsic rewards: pay for the extra time and effort either through overtime, bonuses, or other tangible rewards.
    3. career development: people will do more for you if their positions are secure or if they have a path to promotion.

    Once upon a time these three were considered standard in a professional role, but over time as the number of professional roles have grown, they’ve decreased. That probably was because of labour oversupply. Retirement age got later and more people finished university so the total # of people wanting professional jobs went up much faster than the number of jobs. But that started shifting about 4 years ago, and rapidly in the last year.

    The retirement bump that was promised in 2000 didn’t materialize until right before the 2008 recession, so the cohort ready to move into those jobs didn’t get them as they were cut. But the seeds of the labour shortage were there. 2012 saw an outlier level retirement group. After that things cooled off for a few years, then in 2015 they started picking up steam again, and by 2018 statisticians could see that there was going to be a labour shortage. COVID19 layoffs obscured it for a while, but now that those layoffs are over we can see the result.

    The labour shortage that was expected in 2000 didn’t happen, the one in ’06 was offset by the recession in ’08, and the delayed cohort of young people was more than enough to cover what should have been a shock to the system in ’12. But demographics keep marching on.

    We’ve expected it 22 years, and now it’s here, and that’s a very good thing for young people (if inflation and housing prices don’t destroy the gains). Employers, look at those 3 things, if you don’t offer them, then your employees will get snatched up by an employer who does.

  • Trades Shortages and Unemployment Rates

    The BC government has announced $75 million in funding for trades training programs for the next year. This is because:

    “Our goal with the Skills for Jobs Blueprint has been to ensure British Columbians are first in line for jobs in our growing, diverse economy,” said Premier Christy Clark. “And as we move closer to realizing the generational opportunity of LNG, thousands more of those jobs are just around the corner.” (source)

    Which makes you think there’s a major skills shortage in BC. Except there isn’t. Not for trades anyway.
    (more…)