Canada’s Drop In Unemployment Was Due To More People Giving Up On Their Job Hunt

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.

4 Comments

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  • Mark Bayly 7 months ago

    Most jobs pay slave labour wages so people prefer not to work Not sure how they pay their bills unless the government is still handing out money

    • Michael 7 months ago

      Hey Mark, I’ve always found these stats confusing as well. I understand that most people would prefer not to work, if they had a choice. The problem is, as you have pointed out, we all have bills and therefore do not have the luxury of this choice. This makes the current explanation for why people are NOT returning to work voluntarily, quite perplexing. Dazed and confused.

    • Doomcouver 7 months ago

      30 years of mostly stagnant wages tends to do that. Central banks are scared because they know that a wage-price spiral is just over the horizon.

    • Itchy Bear 7 months ago

      I mean slave wages mean you can’t pay your bills even if you work, so why not give up the yoke and starve free?

      Talked to my doctor earlier today – she’s joining these ranks after a tough couple of years. No blame, but if people who get respect and decent pay can’t take anymore, why would someone who’s whipped like a donkey and still facing food and housing insecurity be able to cope with the constant stress of life?

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