You are currently viewing Opinion: Canada’s pandemic jobs recovery has been remarkable in both quantity and quality

Opinion: Canada’s pandemic jobs recovery has been remarkable in both quantity and quality

One of the biggest stories of Canada’s recovery from the COVID-19 recession has been the surprising amount of jobs the economy has generated. Few would have imagined, in the traumatic spring of 2020, when unemployment soared above 13%, that within two years we would have the lowest unemployment rate in over half a century.

But perhaps even more remarkable is the increase in quality jobs in this workforce recovery — judging by the size of the paychecks.

Canadian Imperial Bank of Commerce economist Benjamin Tal released a research note last week showing that in March, the number of Canadian jobs paying more than $30 an hour rose more than 8% from at pre-pandemic levels. On the other hand, the number of jobs paying less than $30 per hour fell by nearly 3%.

This, Mr. Tal argues, is very important indeed. He calls it “a transformation of historic proportions in the composition of the Canadian labor market”.

The thing is, he’s not quite sure why it happened.

At the start of the pandemic, this same type of phenomenon in the wage distribution figures was evident, but the cause was not a happy one. In April 2020, employment fell by two million jobs, but the average hourly wage actually increased 10 percent. Pandemic-related business closures have disproportionately affected relatively low-paying service jobs, such as retail and restaurant workers, while many higher-income jobs have been able to shift fairly transparent to working from home and have been spared the same widespread layoffs. The result was that the pool of workers who still had their jobs and/or were still working full-time were skewed toward higher incomes.

Economists had assumed that as affected sectors reopened and those lost jobs returned, those numbers would reverse. The gains from the recovery, both in number of jobs and in hours worked, would be biased towards the bottom of the wage scale, as these are the jobs that would rebound. Thus, they expected a recovery in employment to be tempered by weak growth in average wages.

Instead, as Mr. Tal’s data indicates, job gains have been channeled into higher-paying positions. It seems that people have returned to better jobs.

Other data indicate that more workers have found jobs that appeal to them more and that use their work capacity more fully. The involuntary part-time rate – that is, the share of part-time employees who actually want a full-time job – was 15.7% in April, the lowest on record and more than 10 points higher. percentage below the August peak. , 2020.

It could be that the massive layoffs forced by the pandemic have created a unique opportunity for workers to pursue work for which they are better qualified. Prior to the pandemic, the labor market was mired in skills mismatch – the pool of available workers did not offer the skill set demanded by employers, a phenomenon that weighed on both wages and employment. hiring. The flip side was that there were workers who were stuck in jobs that weren’t the best use of their skills. This was a bigger problem for new members of the labor force – relatively recent graduates and new immigrants, groups of workers who were overrepresented in low-wage service jobs that temporarily evaporated during the pandemic.

“Maybe, just maybe (and we’re speculating here), COVID has created a situation where previously overqualified workers (university graduates serving coffee) are being welcomed into better paying jobs and have better access to them by working virtually. “, Mr. Tal theorized. “This claim needs to be confirmed by extensive research.”

It certainly makes sense. These workers were hesitant to leave these low-paying jobs before the pandemic, out of need. But being separated from those jobs by public health shutdowns gave them the opportunity to seek out better options, and they did just that. Government income support has provided them with a larger than usual safety net to seek a better adjustment, and new job opportunities have been created by the changing nature of work during the pandemic.

If this is indeed the case, it is good news not only for workers, but also for the economy as a whole. If the pandemic has made it possible for skilled workers and highly skilled jobs to be found, it implies that the workforce will not only be better paid, but also more productive.

On the other hand, this transformation is putting a strain on low-wage service companies whose pool of workers has evolved and progressed in this recovery. They will have no choice but to raise the wages of a shrinking pool of available labor – a pool that has new avenues to more attractive opportunities. Labor cost pressures in these sectors will feed through to consumer prices. This is another complication in this already inflation-laden economic recovery.

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