If you’ve been following Alberta economic news, you’ve probably heard by now that business owners are complaining about being unable to recruit workers because everyone would rather stay at home receiving federal pandemic benefits instead of get a job.
I was curious about the numbers, so I thought I’d take a look at the jobs numbers for February 2020—the month before the pandemic shut things down—and September 2021, the most recent employment data. You can find the job numbers yourself here.
First, in February 2020, there were 2.25 million people employed in the labour force. In September 2021, that number was 2.29 million, an increase of 40,000.
“Oh, but that’s probably because there are more people living here,” you might ask.
So, let’s look at unemployment then.
In February 2020, the unemployment rate was 7.6%. In September 2021, it was 7.5%. So, unemployment last month was relatively the same—albeit slightly better—as it was right before government restrictions came in and drove up unemployment.
In other words, relative to the size of the labour force, there aren’t more people staying at home collecting federal benefits instead of working at a job. Technically, there are fewer people not working now than there were before the pandemic.
So where did this myth come from then?
Well, the key is looking at employment numbers by economic sector.
Most sectors have seen a drop in their unemployment rate, compared to right before the pandemic. The 6 sectors with the largest drop in unemployment are as follows:
| Feb 2020 | Sep 2021 | Change | |
|---|---|---|---|
| Construction | 10.0% | 2.8% | -7.2 |
| Information, culture & recreation | 9.0% | 4.2% | -4.8 |
| Business, building & support services | 9.6% | 4.9% | -4.7 |
| Manufacturing | 6.2% | 1.6% | -4.6 |
| Other services (except public administration) | 5.5% | 3.1% | -2.4 |
| Forestry, fishing, mining, quarrying, oil, gas | 4.8% | 3.1% | -1.7 |
The construction industry has seen a massive drop in unemployment over the last year and a half, going from the highest unemployment rate in the province at 10% to the 4th lowest. That was a decrease of 7.2 percentage points, by far the largest of all the sectors.
The next three sectors—information, culture, and recreation; business, building, and support services; and manufacturing—were virtually tied in the amounts their unemployment decreased by.
And the next 2—other services, as well as oil and gas (which is lumped in with forestry, fishing, mining, and quarrying)—had drops of 2.4 points and 1.7 points.
But there have been 4 industries where unemployment has increased since last February.
| Feb 2020 | Sep 2021 | change | |
|---|---|---|---|
| Educational services | 1.5% | 4.2% | +2.7 |
| Accommodation & food services | 4.7% | 7.3% | +2.6 |
| Public administration | 2.3% | 2.6% | +0.3 |
| Finance, insurance, real estate, rental, leasing | 2.4% | 2.6% | +0.2 |
Accommodation and food services is virtually tied with educational services for having the largest increases to unemployment: 2.6 points and 2.7 points, respectively. The other two sectors had only marginal increases.
Educational services includes schools, colleges, universities, and training centres, both privately owned and publicly owned. It seems unlikely that these establishments are the ones complaining about lack of people wanting to work.
So, what about accommodation and food services? This sector includes hotel, motels, restaurants, bars, and so on.
And there are a couple of reasons why they are experiencing the highest unemployment rate in Alberta, even while almost every other sector has seen an improvement in unemployment.
First of all, this sector pays workers less than other sectors. The average wage in Alberta last year was $32.73 an hour. In the accommodation and food services, it was $18.13 an hour, the lowest wage rate of all the sectors. That’s 44.6% lower than the provincial average.
Second, this sector has the highest proportion of part-time positions in the province. Last month, 44.97% of the jobs in the accommodation and food services were part-time. The next lowest was information, culture and recreation at 37.07%, and the provincial average was only 18.97%.
Finally, this sector has some of the most restrictions related to the pandemic. Workers have to ensure patrons are double vaccinated for COVID-19 and are wearing masks, and that’s on top of all the other things expected of them to ensure they get good tips (if they get tips at all).
Remember, overall, there are more people working in Alberta right now compared to just before the pandemic. If people were staying home and receiving federal benefits instead of working, we should see high unemployment in several industries.
But we don’t. It’s high in only one sector: accommodation and food services.
So, why is unemployment so high in this sector when it’s below 5% in all the others and even below 4% in all but four of the others?
Well, maybe it’s because people are tired of working for low wages in a part-time job with a lot of stress.
But if the 18,900 people who were working in accommodation and food services in February 2019 and no longer are, aren’t sitting at home collecting federal benefits instead, then where are they?
Well, maybe they’re among the 21,700 new workers in the finance, insurance, real estate, rental, and leasing sector, where the wage is $35.04 an hour and 85% of the jobs are full-time.
Or among the 17,500 new construction workers, who were paid $34.86 an hour last year. Full-time jobs make up nearly 96% of the total jobs in this sector.
Or among the 13,200 new employees in the transportation and warehousing sector. Workers in this sector averaged about $32.70 an hour last year and part-time jobs accounted for only about 12% of total jobs.
Maybe it’s not so much that people would rather collect less than minimum wage in taxable federal benefits. Maybe it’s that people would rather work in an industry that pays more and is more likely to give them a full-time job.
