Canada’s Growing Jobs Advantage Over the U.S.

In September, Canada’s labour market reached a milestone: the total number of people employed finally regained (and slightly surpassed) the level when COVID hit back in February 2020. While this isn’t a full recovery, it is evidence of an encouraging rebound in work, participation, and incomes. In this commentary, originally published in the Toronto Star, Centre for Future Work Director Jim Stanford compares Canada’s employment rebound to the less impressive recovery south of the border. Far from inhibiting the rebound in employment (by ‘encouraging’ workers to stay at home instead of getting back to work), Canada’s more comprehensive income support measures have contributed to a stronger economic recovery.

Canada’s job recovery numbers are leaving America in the dust

By Jim Stanford

The latest Statistics Canada employment report marked a milestone: for the first time in the pandemic, we’ve regained the same total employment (19.1 million workers) as when COVID hit. It’s not quite a full recovery, since population grew over that time. But by any measure, Canada’s labour market rebound has been extraordinary.

A largely unnoticed angle to this good news story is the emergence of a significant employment gap between Canada and the U.S. Both countries experienced equal job losses in the first lockdowns: employment fell 16% from February through April 2020. And the path to recovery was initially similar. Over the past year, however, we’ve opened an impressive lead over our American cousins.

As we were regaining pre-pandemic jobs totals last month, U.S. employment still languished 5 million jobs lower than when COVID hit. And over the last four months Canadian employment has grown more than twice as fast.

Canada is not just excelling in the quantity of jobs. The quality of our new jobs is also superior. Full-time employment in Canada exceeds pre-pandemic highs. Public sector employment (which tends to be more secure and better paid) is 250,000 positions higher than in February 2020. In the U.S., in contrast, public sector employment is 1 million jobs lower (mostly at cash-strapped state and municipal governments). Canada’s minimum wages are far higher than in the U.S., and union representation has risen (not fallen).

Perhaps most telling is the sharp contrast in labour force participation. Canada’s participation rate (measuring the share of adults either working or actively seeking it) has regained its pre-pandemic level. In America, it’s still almost two full percentage points below February 2020 – and it hasn’t improved at all in the last year. That represents 3 million Americans who’ve essentially given up on work, and extends a socially devastating disengagement from the labour market that was visible long before COVID.

Several factors explain Canada’s stronger labour recovery. Each of them attests to the economic value of social cohesion and participation. And each discredits the knee-jerk ‘dog-eat-dog’ assumptions that too often infect public attitudes to work and workers.

Most obviously, we did much better at controlling the spread of COVID-19: thanks to stronger public health measures and more acceptance of vaccination. The U.S. has had three times as many COVID cases per million inhabitants as us, and twice the share of Americans are unvaccinated. That’s given the Delta variant far more room to run, with devastating effects on work and the economy.

This confirms again there’s no trade off between economic resilience and protecting public health (contrary to the musing of certain provincial premiers). Rather, they are one and the same. The economy is composed of human beings; taking good care of those human beings is the best way to protect the economy. Canada’s stronger post-COVID recovery proves it. Moreover, our higher levels of education and trust in government reinforce this social advantage: more Canadians follow scientific and public health directives, without falling prey to misinformation and conspiracy theories. That’s helped us all get back to work.

Another perhaps counter-intuitive factor in Canada’s labour market success has been our stronger emergency income supports. Some business lobbyists argue the CERB and other pandemic payments encouraged Canadians to stay at home, instead of returning to work. U.S. COVID support payments, in comparison, were less generous than ours – and they were cut off entirely in September. Did that compel American workers to leap back into work? Quite the opposite: U.S. participation declined, not recovered, as thousands more desperate workers simply withdrew.

Our more generous and continuing income supports are just one dimension of an overall fiscal response by government that was also stronger than America’s. Federal and provincial governments pumped more spending power into the economy than their U.S. counterparts – and it shows. Far from bankrupting the country as naysayers predict, that stimulus is fueling a more robust recovery.

With a bigger state, a better health system, and more social cohesion, Canada’s job market is surviving the pandemic much more effectively than our neighbour. That’s something to be proud of. And it’s something to remember, the next time someone tells us we should emulate America’s lower taxes and more privatized economy.