Are women or men more at risk from the coming automated economy?

After a Davos conversation there have been a number of stories recently about which gender is most ask risk from the coming automated economy – driverless cars, robots, etc.  It’s an interesting conversation.  I took at look at the occupational differences between women and men in New Brunswick to add a little local context to this debate.  Most of the findings are not overly surprising but there are a few eyebrow raisers.

For a methodology, I took the share of employment for males and females and then compared the the two with male employment as the base (= 1.00).  Simply, anything less than 1.00 means that the female workforce has a lower share compared to men and anything above means they have a higher share.

The table below shows the highest level summary for the top level NOC codes 1-9.  As would be expected, females have fewer people in management relative to men (36% less) but they have 2.6 times as many working in business, finance and admin occupations.  There are 4.4 times as many females working in health occupations compared to men.  On the opposite end of the spectrum, there are 70% fewer females working in natural and applied sciences occupations, almost none in trades and transportation, very few in natural resources occupations and less than half – relatively speaking – in manufacturing occupations.


chart


The more detailed breakdown (link below) reveals some interesting findings at the more granular level.  There are significantly more females in senior management roles in health, education and social services compared to men; 33% more financial managers, 95% more HR managers, 43% more banking, credit and investment managers, and three times as many managers in health care.

Females are more heavily employed in administrative occupations (three times as many compared to men).  The main outlier – there are 61 times as many females working as medical admin. assistants than men.

There are far fewer women in science-based occupations except biologists where there are 15% more women compared to men.  There are 84% fewer female civil, mechanical, electrical and chemical engineers; 85% fewer computer engineers; 59% fewer architects and 77% fewer computer programmers compared to men.

Women kick arse in health care – except for NOC 311 Physicians, dentists and veterinarians – where there are 27% fewer females than males.  However, there are 35% more female veterinarians, more optometrists, 73% more pharmacists, nearly six times as many females in therapy-based occupations, 5.5 times as many in med. tech occupations.

There are slightly fewer female university professors (21% fewer) but more college instructors (+27%).  There are more than 3 times as many teachers.

There are 22% fewer female lawyers compared to men and 70% fewer police officers.

There are 66% more female bartenders – who knew?

There are very few women working in the trades and transportation occupations. 96% fewer working as machinists or related workers.  98% fewer plumbers, 98% fewer carpenters, 96% fewer heavy equipment operators.

There are far fewer females working in virtually all natural resource-based occupations except nursery workers (67% more) and harvesting labourers (83% more).  More women work in fish plant occupations (12% more) and labourers in fish and seafood processing (75% more).

Here is the full review of 600+ occupations for New Brunswick.  Some interesting stuff in there.

I guess I don’t really address the subject of this blog but I’ll let you draw your own conclusions.

 

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Redux: Does labour follow capital or vice versa?

Should New Brunswick focus more on trying to attract jobs or on growing the population?An interesting new study out of Indiana has important implications for economic development in New Brunswick.

The researchers looked at whether or not job growth (efforts to foster more jobs) lead to population growth or did having a growing population foster new job growth.

They found that “in the 1970s people followed jobs, but by the 2000s they had stopped.”  If the economy was going to grow the workers had to be in place.  In other words, the researchers conclude that communities need to be great places to live and attract people and the jobs will come rather than trying to attract jobs to places with tight and shrinking labour markets.

That sounds a lot like New Brunswick these days.

I have been saying all along that there are some jobs that will attract labour.  Think Fort McMurray.  Sectors such as mining tend to be a magnet for workers.  But most industries are not like that.   If there isn’t a pool of labour, over time investment and jobs will decline. I would not say this is a universal fact but for places such New Brunswick (and apparently Indiana) this is the case.

The study goes further and suggests the tax incentives used to lure jobs to the state were not well spent and the money should have been used to improve the quality of place and boost population.

I wouldn’t be as stark on this point.

I still believe there is an important role for communities and governments to expose firms to potential investment opportunities in their areas.  For example, if a small community has enough local demand for a dentist and there are not a pile of dentists lining up to come, the community should build a business case and use it to convince a dentist to locate there.  Likewise if a province has opportunities in shellfish aquaculture, mining, blueberries, etc.  it should package and promote those opportunities to investors. If it has gateway infrastructure – roads, ports, airports with opportunities – it should promote these opportunities to investors. If it has low cost energy it should promote this benefit to industry.

If other jurisdictions are offering tax breaks or other forms of subsidy, we may well need to play some version of that game but I believe if we are ‘selling’ real opportunities with tangible value to investors, incentives will be less important.

The idea of trying to lure firms to New Brunswick with cash incentives even as the labour market is shrinking is increasingly problematic.  Even if the firms move in they may take workers from existing employers who will then not be able to fill the vacancies.

New Brunswick needs to focus on intentionally growing its population – it’s working age population.  This is foundational to ensuring investment and sustained GDP growth is in our future.

 

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Manitoba and immigration: An interesting case study

The Manitoba example is an interesting one for us to consider as we think more deeply about immigration and the labour market.  Even though Manitoba has no oil and gas industry and only a fairly small mining sector (less that 3% of total GDP) its economy grew robustly between 2006 and 2014.  Not to the level of Saskatchewan or Alberta mind you but still the size of the economy (real GDP) swelled by 20%.  New Brunswick, by contrast, saw its total economy grow by only 2% over the same period.

What is interesting is the drivers of economic growth.  In Manitoba, manufacturing GDP increased by 14% while decreasing 11% in New Brunswick.  Transportation and warehousing GDP up by 12% in Manitoba but down 3% in New Brunswick. The administration and support services sector (where many contact centre jobs are classified) grew its GDP by 8% in Manitoba while declining by 7% in New Brunswick.

If you look at the ‘public sectors’ in comparison to overall GDP growth you see an interesting trend too.  Health care GDP and public administration GDP grew strongly in Manitoba but less than the rate of overall economic growth.  In New Brunswick, by contrast, health care GDP grew five times faster than overall GDP and public administration GDP grew six times.
imms

 

But what is really interesting is the correlation between growing industries and immigration.  Manitoba, a province only slightly larger than New Brunswick, attracted more than 8 times as many immigrants between 2001 and 2011 (defined as those living in the province in 2011 that arrived in Canada between 2001 and 2011).

But when it comes to the occupations that support export-oriented industries, the multiples go through the roof.  Of the more than 18,000 New Brunswickers who worked in manufacturing-related occupations (NOC 9) in 2011, only 175 were recent immigrants (0.9%).  In Manitoba, it was 5,515 (one in five of every workers).  Manitoba attracted 31.5 times as many workers in NOC 9 compared to New Brunswick over the period.

imms2

It’s clear that Manitoba has been attracting immigrants for years to support economic growth.

One final point.  Between 2001 and 2011, Manitoba’s employed workforce expanded by 62,000 people.  46,000 of the workers were recent immigrants.

 

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The size of NB’s workforce is smaller now than back in 2008. Only province to shrink.

New Brunswick saw an uptick in job creation in the last few months on 2015 and an overall real GDP growth rate (the final number is not in) of likely something above one percent.  That may not seem like much but compared to the average rate of zero since 2008 that is a good step forward.

A lot of folks  – me included – now believe the labour market is becoming the biggest drag on GDP growth potential in New Brunswick.  As you can see from the chart below we are the only province in Canada that has seen its labour force shrink since 2008.  Across Canada the number of people working or looking for work has increased by 1.16 million people.  In New Brunswick, it has shrunk by 4,000.


Growth/decline in the size of the labour force (% change 2008-2015)

lfs
Source: Statistics Canada CANSIM Table 282-0002.


 

There is a fairly strong correlation actually between labour force growth since 2008 and GDP growth.  NB has faired the worst among the provinces.  Nova Scotia has been only a little better and PEI has actually had the best GDP growth rate among the four Atlantic Provinces along with its 5.7% increase in the labour force.

How do we grow the labour force?  Either by encouraging more NBers to join or by attracting folks from outside the province or country to come in.  The labour force participation rate (the percentage of adults that are either looking for work or working) has actually gone down from 2008 to 2015.  This is mostly a function of age.  Only 11 percent of folks over the age of 65 are in the labour market (participating) and while that is up from 6.5% in 2008 there is some question about how many more in this age group will join the labour market.

Among those in the prime age group 25-54, 87% are in the labour market (in 2015). There is not likely much more opportunity to expand that group.

Expanding the labour market will be very important if we are to get the economy moving in the right direction.

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The importance of international investment into New Brunswick

Long time readers of this blog will know of my focus on positive investment flows as the underlying foundation for economic development.  Because we are a small province, etc. most of the savings accumulated in New Brunswick flows out of the province to fund economic development elsewhere. If you think about all the public pension monies (provincial and national) that are collected each year in New Brunswick they mostly flow outward for investment elsewhere and then flow back as needed to meet pension obligations.  The Canada Pension Plan, as one example, is investing in toll highways in Australia.  This also applies to private savings.  If you look at where your RRSPs are invested you will find very little if any investment in your home province with the exception of some indirect investment (i.e. if you have shares in a bank and that bank has branches in New Brunswick).

I’m not complaining about the outward investment flow.  Just like people and ideas – the global mobility of capital is now easier and safer than ever. It just puts an onus on us to ensure there is more than enough capital flowing back into New Brunswick in the form of investment in our firms and in economic projects across the province.

This investment can come in many forms.  Like the CPP example above, it can involve investors putting money into low risk publicly back infrastructure projects but more importantly it needs to flow into firms and into greenfield multinational investments in plant, equipment and IP in New Brunswick. Firms investing in the mining sector, manufacturing, professional services, IT, contact centres, etc. that are based on export markets (Canada and international) boost employment, GDP and tax revenue.

New Brunswick needs more of this investment.  While the interprovincial foreign investment flow data is very limited, we have good data at a national level.  Across Canada, foreign owned companies have been pumping in new investment, expanding employment and growing their footprint.  According to Statistics Canada, from 2010 to 2013, foreign majority-owned affiliates in Canada added more than 150,000 net new jobs between 2010 and 2013 including 20,000 in the mining sector (which has likely retrenched some since 2013), manufacturing (18,500), wholesale trade (26,000), professional services (20,500), administrative and support services (11,500) and accommodation and food services (23,000).  The figure below shows the percentage change in total employment by 2 digit NAICS code.

foreignowned

 

While we don’t have the NB data, it is fair to say that multinational investment is not rushing into the province these days.  The wholesale trade industry – adding 26,000 jobs from foreign majority-owned affiliates across Canada – has been shrinking in New Brunswick.   Manufacturing investment is way down. Mining GDP has been cut dramatically.  Even ICT GDP has been relatively flat in recent years.

So how do we encourage national and international investment?  Well, it can come through greenfield investment (i.e. a firm comes here and sets up a new operation to service national or international markets) or it can come through investments in NB firms (equity stakes, outright acquisitions, etc.)  which connect the NB firms into global supply chains and helps build international markets.  According to Statistics Canada, foreign majority-owned affiliates across Canada account for more than 50% of international merchandise exports.  While I can’t give you the NB share it is likely in the 10% range.

Why would international firms want to invest here?  We need to have a value proposition for investment.

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The great Toronto out-migration problem?

 

Below is the chart I used in my presentation earlier this week to make the case that we can’t use outward migration of New Brunswickers as a reason not to attract immigrants.  If you look at the number of people that move into Greater Toronto each year and subtract the number that leave – you get a negative 23,000 in an average year between 2002 and 2014 (a long sample size).  That is a negative inter and intraprovincial migration rate of 428 per 100,000 people living in the community

If you run the same numbers for New Brunswick over the same period you get a negative migration rate with the rest of Canada of 208 per 100,000.  On a net basis, Toronto loses twice as many people each year than New Brunswick to migration elsewhere in Canada.

You don’t hear Torontoians lamenting the loss of their young people to other jurisdictions.  There are no front page stories in the Globe and Mail of the tragedy of outward migration from Toronto.  No laments from the Mayor of Toronto.  No financial programs targeting young people to keep them at home.

Most people understand there are myriad of reasons why people move to and from Toronto.  Besides, over that same period, Toronto attracted an average of 92,500 immigrants per year – 4 times as many as were lost through interprovincial migration.  If New Brunswick had the same ratio of immigrant inflow to outward migration within Canada as Toronto, it would mean 6,300 immigrants flowing into New Brunswick per year.

I’m not suggesting we shouldn’t try and keep young people here.  I’m a big supporter of experiential learning, apprenticeships, co-op education and doing a better job of exposing New Brunswickers to the jobs available here and now in the province.  For example, I understand it is getting harder and harder to recruit loggers.  I suspect a lot of New Brunswickers might find that an interesting career if they gave it a long hard look.  You work in nature, earn good money and work hard for a living.  But I suspect there aren’t many guidance counselors pitching ‘logger’ to high school students.

But at the end of the day people are more mobile than ever before and I don’t think we should spend too much time lamenting their loss.  Many come back eventually and as I have said before many of the most interesting people I meet in New Brunswick have spend a large block of time outside the province (my colleague Susan Holt is a perfect example of this).

The overriding objective is to ensure there is enough labour to meet the demand in New Brunswick.  In the last week alone I have heard about a laundry service in Saint John, a manufacturer in northern NB, a firm looking to hire loggers in central NB and a restaurant in northwestern NB that all can’t find workers.

migrationtoronto

 

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Is self-employment a bad thing or a potential boon for New Brunswick?

There was an interesting article in the Economist magazine this week about the rise of self-employment in Britain and the conclusion by economists that this is basically a bad thing. This runs somewhat counter to the “start-up” narrative that has become all the rage. We want people to “start their own businesses” but we think self-employment is a bad thing?

Of course these are two different concepts – in theory. The sexy start-up is an attempt to build a business based on a novel idea or niche market opportunity. Its goal is to create new wealth. Most self-employment is meant as a source of income and in many cases – think folks who sell stuff at the farmers’ markets – it is purposely meant to be a part time gig.

First, here are the numbers for New Brunswick. The average income from ‘self-employment’ (as derived in Statistics Canada Neighbourhood Income Survey) in New Brunswick is $13,072 per person reporting self-employment income. Remember on this survey a person can be reporting both wages and salary income (day job) and self-employment income (farmers’ market). Nevertheless, the spread between the two sources of income is substantial. In 2000, the average self-employment income was 53% below wages and salary income. By 2013 that gap had swelled to 65%. Again, this is hardly apples-to-apples as lots of income derived through self-employment may not be reported and as mentioned above the type and duration of the work is likely much less.

selfemployment1It is also important to point out the spreads between self-employment and wage income across Canada are similar to New Brunswick (64% in 2013) so this is not just New Brunswick – but on the surface it would seem the economists are right.

However, I think we need to reconsider ‘self-employment’ particularly as most economists are predicting a sharp rise in ‘contractor’ workers (think Uber and Shopify) in the coming year in line with the growing number of Internet-based work to worker matching services.
New Brunswick can sit back and do nothing or we can try and get in front of this thing to benefit New Brunswickers.

Since 2000, the number of persons reporting self-employment income in New Brunswick is actually down by six percent while rising by 12 percent across Canada.

selfemployment2

So here’s the deal. New Brunswick has pockets of high unemployment around the province and dozens of communities that desperately do not want their people to leave. Why can’t self-employment fill the gap? I’m not talking about self-employment based on local markets but based on external markets. There are dozens of firms right now looking for workers to do the job from home (or it could be from small office environments set up in small towns). These are mostly full time jobs and that offer fairly good wages (someone posted that the Shopify jobs are starting around $40,000/year).

It’s worth thinking about.

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Immigration as a driver of economic growth

I keep hearing folks ask the question “how come we need more immigrants when we have high unemployment and young people moving out west for jobs”?  The answer to this question is one of the keys to us getting our economy back on track.

Most of us will not remember the last time there was a real, sustained immigration wave into New Brunswick because it was around the middle of the 19th Century.  We had  a little spike right after WW2 as war brides were brought over and other immigrants were still trying to leave Europe.  But that quickly dropped down to levels well below the average for the country as a whole.  We had a little spike in immigration in the early 1970s (an average of nearly 2000 per year between 1972-1976) which worked out to a rate of approximately 250 per 100,000 population (still well below the country as a whole).  Then we dropped right back down to less than 100 immigrants per 100,000 and stayed there for more than 20 years – even as immigration into Canada remained at a steady and even growing pace by the 1990s.

immigranthistory

If you are of a certain age you may remember the product of that mini-wave in the early 1970s.  Some of those immigrants ended up working in government, some started successful businesses and others set up successful farming operations.

Now we had relatively high unemployment rates in the early 1970s.  We also had young people “goin’ down the road” to find work in Toronto.  We also had a wave of young people joining the workforce every year.  Yet we still allowed in immigrants and many of them stayed and are here today.

In 2015 we have relatively high unemployment (although low by the standards of the mid 1970s) and we have young people going down the road.  What we don’t have is a wave of young people joining the workforce every year.  In fact, the young workforce is shrinking and has been for years.

Labour and capital are the two main drivers of economic growth.   For most industries capital follows labour (think ICT). For a discrete number of industries labour follows capital (think Fort McMurray).   If you think about many of New Brunswick’s key industries – from sawmills to fish plants to manufacturing to contact centres – if the labour pool dries up – so will the capital.

So, immigration becomes key to our economic renewal.  Not necessarily Phds or highly skilled labour (although we will need some of that) – we need labour to fill the needs of industry – across the wage and skill spectrum.  And, by the way, not just to fill the needs of existing industry but we also want to grow the economy and employment base of the province.

The next time someone tells you we don’t need more immigration, you now have some food for thought.

 

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New Brunswick, if……

The Economist magazine has an interesting segment this week called “The World, if….” which provides a series of stories similar to its The World This Week but only at some point in the near future after Hillary Clinton is President.  It is a fun but serious look at one possible future.

It got me thinking about New Brunswick.  Specifically, New Brunswick, if we are able to address some of our foundational challenges in the next few years.  What would New Brunswick look like….

-If we get serious about immigration and demographic renewal.
-If we create an environment where high growth potential entrepreneurs want to build their businesses.
-If we address systemic challenges with the workforce.
-If we shed our fear of multinational firms and embrace the fact we are part of a global economy.
-If we are able to strategically develop our natural resources with a limited environmental impact and a high economic return.
-If we evolve our partnership with the federal government to one with a bold vision of growth for New Brunswick – not one of “ensuring comparable public services” through transfers.

If we got these fundamentals right, New Brunswick would be a different place than it is today.  It would be a place of growing multiculturalism, where dynamic and ambitious entrepreneurs from Minto to Mumbai would want to come and build export-based businesses. Where key export-oriented industries had certainty that the future workforce would be in place giving them clarity for their business and investment plans. Where the resources sector would be creating high paying jobs and high value tax revenue for governments. Where are urban centres would be growing and thriving. Where communities around the province would be growing and grappling with the problems of growth – not the problems of decline.

Where the provincial government could be looking to cut tax rates as a dividend arising from growth not increasing them as a response to stagnation and decline.

Yes, housing costs would be rising. Yes, wages would be rising. Yes, some industries might be more challenged than others. But, in the end, New Brunswick’s challenges would be related to managing economic growth not – as is the current reality – managing economic stagnation and population decline.

What kind of New Brunswick do we want?

It’s worth more of us giving this some thought.

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Why are we not promoting ‘homework’?

There is an excellent article in The Economist magazine this week about the rise of the freelance ‘bughunters’.  These are folks who get paid to find bugs that hackers use to break into websites and secure networks.  There are tens of thousands of people that work in this area from home.  I know a guy in Fredericton that does it from his basement in the evenings.

This is a recurring theme on this blog.  There are now millions of jobs that can easily be done from home – some requiring limited skills and other requiring very high skills but the common denominator is that they can be done from anywhere.  New Brunswick seems to have high unemployment in certain areas around the province – why are we not doing a better job at promoting and exploiting freelance and home-based work as an economic development effort?

homework

Enterprise Rent-A-Car was looking to hire 100 or more people in New Brunswick at nearly $15/hour, full time work to take calls from home.  I haven’t heard recently but they were promoting in Moncton, Fredericton and northern NB but were struggling to find workers.

IMO, this is a golden opportunity.  We need more people working in New Brunswick, paying taxes and contributing economically to our communities.  That is the fundamental challenge for our economy and ultimately for the fiscal sustainability of our province moving forward.

If we don’t want people to move to the jobs, we should bring the jobs to the people.  There are millions of jobs that could be done in New Brunswick from home and – as the NHS data shows – we are at the lower end of the spectrum for home-based work.

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