Canada’s record low unemployment rate just keeps falling, but it may not mean what we think it does. Statistics Canada (Stat Can) labor force survey (LFS) data shows unemployment fell in June. But so did the number of workers employed, while the unemployment rate also fell. The drop was due to more employees giving up on their job hunt, lowering the participation rate.
Canada’s Unemployment Rate Fell To A Record Low In June
Canada has fewer unemployed workers, with the rate hitting a new record low. Unemployment fell 5.15% (-54,000) people to 1 million unemployed workers in June. A million people sounds a lot bigger than it is, with the unemployment rate falling 0.2 points to 4.9%, the lowest recorded. That low is what made headlines but diving a little deeper revealed a few issues in those numbers.
Canadian Employment Also Fell With More Seniors Getting The Boot
The other side of the equation reveals the issue — the number of people employed. Canada saw fewer unemployed individuals but also a drop of 0.2% (-43,000) workers in June. A growing population, a drop in unemployment, and a drop in employment? That doesn’t appear to be a voluntary choice either.
Stat Can made a special note about senior employment in last month’s data. The agency found workers aged 55 and older fell 51,000 workers, representing most of the drop. In particular, men between the age of 55 to 64 who represented a drop of 32,000 workers. Maybe they’re all house rich, and quit early? Nope, at least not all.
The agency also made a special note to emphasize the drop in senior workers wasn’t voluntary. “… more than half (55.4%) of people working past their 60th birthday were doing so by necessity—that is, for reasons such as paying for essential expenses or because they are not yet eligible for a pension,” wrote the agency.
Falling Unemployment Rate Due To Shrinking Participation Rate
Back to the falling employment and a shrinking unemployment rate at the same time. For this to happen, fewer people need to be in the labor force, which is exactly what just happened. The participation rate, the share of people either employed or looking for work, fell 0.4 points to 64.9% in June. A smaller share of the population that’s interested in work is actually looking for a job.
Canadian Participation Rate
The share of Canada’s population that’s either employed or seeking employment.
Source: Statistics Canada LFS; Better Dwelling.
A significant chunk of those who stopped looking for work are long-term unemployed. Stat Can notes 185,500 people were unemployed for at least a year as of June. The agency explained those who are unemployed for over a year are more likely to stop looking for work. This is a problem that’s become a boiling point issue in the US, but remains relatively small in Canada. Though a lot can change in a few years, in case you’ve been in a coma and missed the 2020s so far.