Job loss in year one

June 10, 2002

May BC Employment - Turning Point?

Statistics Canada has released the Labour Force Survey data for May. It shows that BC has 24,600 fewer jobs in May 2002 than it did in May 2001. BC is the only province in the country to have fewer jobs than it did a year ago. During the same period that Canada gained almost 250,000 jobs, BC lost almost 25,000. How do you like the New Era so far? Note that the big job loses occurred before September 11 and before the failure of softwood negotiations.

The May employment numbers suggest that after just 3 months of growth jobs could be going for another downturn as they did for the first 8 months of the New Era.

The graph below compares both the seasonally adjusted and seasonally unadjusted data for British Columbia between January 2001 and May 2002 (Source: Statistics Canada, Labour Force Survey).

BC employment, Jan 01 to May 02

Commenting on the May numbers Statistics Canada said:

"Although employment in British Columbia fell 11,000 in May, it remains up 29,000 (+1.5%) from the start of the year. The drop in employment in May was concentrated in manufacturing and accommodation, and was enough to cause the unemployment rate to jump 0.8 percentage points to 9.5%. Wood product manufacturing fell slightly and only accounted for a small part of overall decline in that industry." (emphasis added)

How can what's down be up or visa versa? The answer is found in statistically adjusting the data for seasonal fluctuations. When Statistics Canada says that employment in BC fell by 11,000 in May it is referring to seasonally adjusted data. The raw (unadjusted) data show employment in BC increased by 23,700 between April and May. After applying seasonal adjustment to remove normal fluctuations Statistics Canada counts the gain as a loss relative to what the normal May increase would be. If you are confused, you are not alone.

The unadjusted data shows a possible recovery from the big job losses that followed the 2001 election, but May's seasonally adjusted number suggests another downturn. Note that the softwood countervail did not start to be collected until May 22, 2002. The big job loses from the countervail are yet to come! We can all hope that the red line (unadjusted data) will continue to go up, but the seasonally adjusted data may be accurately showing bad news to come. One month does not make a trend. The June data are out on July 5th. By the time the August data are out on September 6th we should have a much better idea whether the hoped for recovery is underway. By late September, Minister of Finance, Gary Collins will present his first quarter financial report with updated economic forecasts.

Regardless of what lies ahead, BC is the only province with fewer jobs in May 2002 than in May 2001. What we don't know is whether BC is climbing back to last year's employment levels or whether the province is on the verge of further job loses. Bank economists have commented that Campbell's cutbacks would likely neutralize any stimulative effect of his tax cuts. The Premier remains optimistic.

On May 26, 2002 (four days after the countervail had to be paid), Premier Campbell gave a partisan speech to the Canadian Council of Grocery Distributors. In it he said:

"If you look at the tax regime, you'll see we've gradually cut 17 separate taxes in the first year. That adds up to $1.1 billion in people's pockets and over $400 million in investor and corporate pockets. Hopefully, those dollars will come back."

"Some people say it was a bad idea and hasn't worked. Well, in British Columbia last year, consumer spending was 25 per cent higher than the rest of the country. The reason for that, I would suggest, is that people had money to spend. Our housing starts are at record levels. We have started to move, and we're not even close to being finished."

Low interest rates have spurred housing starts across the country. When the Premier spoke of tax cuts note that he failed to mention how he clawed back the cuts from most British Columbians with 50% increases in MSP premiums, an increased sales tax, higher user fees and massive cuts to services. His claim about consumer spending being 25 per cent higher than the rest of the country does not balance with the retail trade numbers on the Statistics Canada website. Retail trade has grown in BC but only as much as the Canadian average and not as much as it has in some provinces. Many would consider employment to be the most important economic indicator. As is plainly seen from the graph BC has had some job growth in early 2002 but it has yet to reach the levels of a year ago.

The BC economy generated 374,200 new jobs during the NDP years. So far the stimulus of high income and corporate tax cuts in the first year of the New Era has not taken BC back to the employment level of May 2001. Sadly for many BC communities the other shoe is about to drop with the impact of the softwood dispute which the Campbell government had said would be solved by Christmas. Of course, they didn't say Christmas of what year. The May Ipsos-Reid poll showed that people accept short term pain for long term gain. Premier Campbell ought to say when he expects his economic miracle to occur, and when those tax cuts will pay for themselves.