Is Kenney really worried about losing thousands of construction jobs?

I’m sure by now that you’ve heard Alberta’s response to the cancellation of TC Energy’s Keystone XL pipeline project by recently inaugurated US president Joe Biden.

One thing you might have heard amongst the rhetoric used in their response is how the cancellation of the project would lead to job losses.

For example, the Government of Alberta said on its website that the pipeline would “see roughly 2,000 construction workers hired in Alberta, spurring thousands of additional jobs and increased economic activity in associated trades, retail, and hospitality services along the construction route.”

And the day after Biden killed the project, Kenney sent out this tweet:

There are some who wish we would just give up our fight for pipelines, for oil & gas jobs, and for our broader energy sector.

Alberta will not surrender to those who want to landlock our energy.

We will defend this province's vital economic interests, as we were elected to do. pic.twitter.com/KboHzu4PbA

— Jason Kenney (@jkenney) January 21, 2021

And that made me curious about the UCP’s fight for these oil and gas jobs. How have they been doing? How do oil and gas jobs look after two years of being in office? What about those construction jobs?

I decided to look into the recent job creation performance data for the oil and gas industry in Alberta. I was going to go back just 10 years, but then I hypothesized that the stock market crash during the housing crisis may have skewed the numbers. I figured 20 years should be a large enough view to see general trends in the industry.

It looks like I was right about the housing crisis. That first trough in the graph coincides with the housing crisis.

So, the number of jobs in the oil and gas sector increased for the first 7 years or so, slumped during the housing crisis, recovered then surpassed the 2007 levels, dropped during the 2015–2016 recession, started to recover for a bit, then dropped off again during the UCP’s first year in office, followed (of course) by the decline during the oil crisis and pandemic of last year.

Generally speaking, however, jobs seemed to have increased for much of this 20-year period, going from a low of about 92,000 in 2002 to a high of 170,000 in 2014. Even the significant drop to 125,000 in 2020 was still higher than 2002 employment levels.

However, despite seeing some growth in oil and gas jobs toward the end of the NDP’s term, that was just recovery growth and was nowhere near the levels before the 2015–2016 recession. Clearly, with a loss of nearly 45,000 oil and gas jobs since 2014, the industry has been trending down for the last 6 years, one of the longest periods of job decline in the sector.

Actually, let’s take a wider look at jobs in this sector:

And sure enough, the decline in oil and gas jobs over the last 6 years does seem to be the longest period of decline in the sector since at least the 1980s. Even then, 2020 still saw over 30,000 more oil and gas jobs than there were in 2002 and 56,000 more than in 1987. However, jobs in the oil and gas sector have increased over time, especially between 2000 and 2014. Which isn’t that surprising; after all, oil prices soared for much of that time.

Even after prices plummeted during the housing crisis, recovery levels were still significant, with West Texas Intermediate occasionally trading above $100 a barrel but rarely under $80 between 2011 and 2014.

And if you’re getting more from buyers for the product you produce, you’re motivated to produce more of that product, which leads to hiring more workers so you can increase production.

Compare that to the last 6 years, where monthly oil prices averaged $50.63, and 10 times, the monthly recorded price for WTI dropped below $40 a barrel with 5 of those below $35. Those lower prices correspond to the lower job numbers during the same 6-year period. Even the slight employment bump in 2017 and 2018 mirrors a similar bump in oil prices during the same period.

But did how did oil prices affect jobs in the province in general? Did they affect only oil and gas jobs?

Well, Alberta jobs in general do seem affected somewhat by oil prices. For example, employment decreased during the housing crisis, the 2015–2016 recession, and, of course, during the pandemic last year. But the losses in the overall labour market were far less pronounced than they were in the oil and gas sector specifically.

Take a look at the 2015–2016 recession, for example.

Between 2014 and 2016, the oil and gas sector went from 170,000 jobs to just under 130,000, a loss of a little more than 40,500. That works out to about 23.8%, which means Alberta lost about 1 in 4 oil and gas jobs during that period.

The total labour market, on the other hand, went from 2.237 million in 2014 to 2.196 million in 2016, a loss of 41,100 jobs. That works out to about 1.8% of the total labour market, or 1 in 56 jobs. And the bulk of that loss is from the oil and gas sector. Outside that sector, the province lost only 600 jobs, or 0.03%.

Plus, if we look at the general labour market above, we see that while jobs did increase as oil prices climbed, they were increasing for years before that climb. In fact, the trajectory for the general labour market seemed unaffected by oil prices, certainly not in any significant way.

Which makes sense considering that over the last 24 years, the oil and gas sector accounted for only 4.7–7.9% of the total job market, with an average of just 6.2% and a median of only 5.9%. And when you lose jobs in a sector that makes up less than 8% of your total labour market, the other 92% isn’t going to be affected a whole lot.

Alright, let’s zoom back in to just the last 20 years, but this time, let’s add in all the non-oil-and-gas jobs.

We already discussed how oil and gas jobs were affected by the 3 economic downturns over the last decade: the housing crisis, the recession, and the pandemic. But if we look at the above graph, we see that jobs in the other industries overall were barely affected, at least up until 2020. The housing crisis saw a 0.8% drop in non-oil-and-gas jobs and the 2015–2016 recession saw a 1.4% drop.

And when the oil and gas sector saw sharp increases in jobs, the rest of the labour market saw continued steady increases.

What about if we compare oil and gas to some of the larger sectors, rather than to the entire labour market?

These sectors are listed in order of most jobs as of 2020.

Even though these are only the 10 sectors that employed the largest number of workers, over the last 2 decades, they’ve comprised 94–95% of all jobs in Alberta, so what happens to these sectors is pretty representative the general labour market.

Of those, the top 5 accounted for 55–60% of the overall labour market since 2001.

Some of these sectors, in addition to oil and gas, seem to have been affected by the housing crisis and the recession; although the effects weren’t universally consistent.

For example, the retail sector, “professional, scientific and technical services”, and manufacturing each saw drops during both economic downturns. The construction sector saw a drop during the housing crisis, but they actually saw a jump during the 2015–2016 recession. In fact, in 2014, it was the top employing sector in the province.

The hospitality sector, as well as the transportation and warehousing sector, saw the opposite effect: more jobs during the housing crisis and fewer during the recession.

The public administration sector and the health care and social assistance sector saw virtually no effects from the housing crisis, and the latter was unaffected by the recession.

Finally, the educational services sector saw jobs go down during the crisis, climb slightly, then slow drop every year for 5 years straight, before increasing during the recession and every year until 2019.

So, what does this all this mean? And how is it related to the claim that cancelling pipelines will lead to the loss of jobs in Alberta.

First, oil and gas jobs have been dropping for the last 6 years, and despite claims that these losses have been because of lack of capacity, job levels in this sector mirror oil prices too closely to say that anything else impacts job levels more significantly, even oil exporting capacity.

Here’s Canada’s trade data for crude oil since 2006:

For over a decade, Canada has increased crude oil exports to the United States virtually every year. In fact, we’ve gone from exporting 1.325 million barrels a day in 2008 to 3.12 million in 2019. Over the last 11 years, Alberta has increased US crude exports by 135%, the vast majority of which is through pipelines. And that was while Enbridge’s Line 3 was operating at half capacity because of degradation. That has since been replaced.

Second, regarding Kenney’s comments of 2,000 construction jobs being lost, jobs in this sector have been dropping for 5 years. In 2020, Alberta had 40,000 fewer construction jobs than it did in 2015, and that’s with the jobs “created” by the Keystone XL project. The cancelling of this project is not the cause of Alberta losing nearly 1 in 6 construction jobs since 2015.

Finally, not only has the number of construction jobs dropped absolutely, but given that the number of jobs overall have increased, that means construction jobs make up an smaller proportion of total jobs: 14.2% of total jobs in 2015, compared to 12.3% in 2020. And again, that’s with the 2,000 jobs that Kenney claimed last year that the pipeline would create.

If Kenney is worried about construction jobs, he’s focused on the wrong thing. Losing 2,000 jobs isn’t really the problem when you’ve already lost 40,000 from what was once your highest employing industry. Even if Kenney managed to resurrect Keystone XL he’d still be left holding 40,000 unfilled construction jobs.

And he’s had plenty of time to prepare for it.

Less than 6 months before Kenney announced his bid to become leader of the Alberta PC party, BuildForce Canada forecasted the loss of over 31,000 construction jobs between 2016 and 2020, with nearly 1 in 5 of those working in the sector in 2015 seeking retirement by the end of that period. BridgeForce also blamed low oil prices and the completion of major projects as contributing factors for the job losses, driving down oil and gas construction jobs by 28%. Even if oil prices had recovered—as the predicted they would—the sector still would’ve been short over 25,000 jobs.

I can’t tell you if Kenney knew about the BridgeForce report when he ran to be the PC leader, or to be the UCP leader, or to be premier. But with all the campaign advisers and strategy and policy staffers he’s had since running, then becoming leader of the opposition, and subsequently becoming the premier, he’s had years for someone to bring it to his attention and then to come up with concrete solutions.

The blame certainly can’t lay entirely with him. Much of that loss came during the NDP’s term (a brief 2,200-job increase in 2018 notwithstanding). And if 3.5 years was plenty of time for the NDP to come up with a sufficient plan to stop and reverse that decline, then 5 years should be more than enough for Kenney to come up with a comprehensive plan.

You’d think that someone who had as their campaign slogan “Jobs. Economy. Pipeline.” two years ago would most definitely have a plan to bring back tens of thousands of construction workers.

Oh, and Jason Kenney? 70% of Alberta’s oil is shipped out of Canada. It isn’t landlocked. Not by a long shot.