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Employment Governance Justice Social security Youth

August 2013 LFS: An alternative view. Employment demographics and a broken social contract

To follow-up last month’s ‘alternative view’ of the LFS report, this month we’ll elaborate on the demographic issue that was touched on in the July 2013 LFS write-up. As noted elsewhere, reading anything into the monthly LFS movements is a fool’s errand. Readers are invited to view last month’s charts for the five-year trends for total employment and rate of unemployment. This month, we’ll take a closer look at employment and rate of unemployment for youth age 15-24 and seniors age 65+.

Chart 1 Real employment by age group
Chart 1 Real employment by age group

Source: CANSIM Table 282-0001 Labour force survey estimates (LFS), by sex and detailed age group, unadjusted for seasonality, monthly (Persons), Statistics Canada

Unemployment

Chart 1 shows real employment (adjusted for population growth) over the past 5 years for two age groups: youth age 15-24 and seniors age 65+. The nominal employment figures, shown as dotted lines, demonstrate a more dramatic divergence between the two age groups’ employment outcomes since 2008.

As noted in last month’s write-up, real employment is practically unchanged since major jobs losses between 2008 and 2009, the beginning of The Great Recession. That trend appears to hold for youth employment, although the magnitude is much greater. While young workers accounted for about 1/6 of total Canadian employment in 2008, they incurred more than half, 240K of 400K, of the real job losses over the past 5 years. By contrast, while seniors accounted for a negligible proportion of employment in 2008, their real employment jumped dramatically, 115K, over the past 5 years. The increase in seniors nominal job gains, 215K, nearly mirrors the loss in youth employment for the 2008-2013 period.

Chart 2 Labour underutilisation rate by age group
Chart 2 Labour underutilisation rate by age group

Source: CANSIM Tables 282-0001, 282-0013 and 282-0018 Labour force survey estimates (LFS), unadjusted for seasonality monthly (persons unless otherwise noted), Statistics Canada

Labour underutilisation

Chart 2 shows the labour market underutlisation rate, or un(der)employment rate, using the Canadian U-6 equivalent over the past 5 years for two age groups: youth age 15-24 and seniors age 65+. The US Bureau of Labour Statistics (BLS) labour underutlisation measure U-6 includes all marginally attached workers and involuntary part-time workers, which Canada’s labour market underutilisation measure R8 does not. The official unemployment rates (R4) for the two age groups are also shown as dotted lines.

The chart speaks for itself. Youth un(der)employment, already high prior to The Great Recession, rose from 16% to 23% between 2008 and 2009, declining slightly since then to 21%. Seniors un(der)employment was low prior to the economic downturn, having increased gradually since from about 3 to 5%.

Comments

A couple of things worth noting re the data shown in the charts, which readers would be right to question:

1. Nominal and population-adjusted employment for youth age 15-24 years trace one another nearly perfectly. This looks suspect. The only explanation we can think of is the sampling for the age group is so poor that Statscan simply pegs th age group’s monthly employment movement to its population trend.

2. The official unemployment rate and labour underutilisation rate for seniors age 65+ years trace one another nearly perfectly. According to Statscan’s published table (CANSIM 282-0218), apparently there’s never been a significant number of those age 65+ who were not in the labour force and wanted work. All those age 65+ not counted in the labour force are assumed retired or otherwise not interested in working, despite the age group’s obviously positive employment trend.

Note to readers:
The data shown in Chart 2 and referenced in the text was seasonally adjusted using X-12 ARIMA from the U.S. Census Bureau.

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