The ‘real’ real unemployment rate in New Brunswick

There was a good article in the TJ over the weekend about the ‘real’ unemployment rate in New Brunswick.  UNB economist Constantine Passaris postulates the real unemployment rate is much higher than 9.3 percent because people are responding to the Stats Can Labour Market Survey by saying the are not looking for work because in many small communities there are no jobs to look for.  That puts them out of the labour market altogether and drives down the unemployment rate.

It is a fair point.  A person that lives in a small town that doesn’t have many jobs may want to work but may not be looking (in the Stats Can definition of that term) and therefore be excluded from the formal data.

The broader point that neither expert addressed however was the ‘real’ real unemployment rate.

I estimate that somewhere around 35,000 to 40,000 New Brunswickers collect EI at some point every year.  They work a certain number of weeks and then ‘quit’ or are ‘laid off’ and start collecting EI. Again, by definition, these people must be ‘looking for work’ in the Statistics Canada definition of that term and therefore must be included in the formal unemployment statistics.

But are they really available for work?  By all technical definitions – Stats Can and Employment and Social Development Canada – they must be ready and willing to take work – and some do.  But a large number do not.

The other issue relates to the skills and mobility of the unemployed.  If a call centre in Moncton is hiring, it is realistic to think a former mill worker in northern NB will be a candidate for that job?

What is the ‘real’ real unemployment rate?  The formal data is therefore a very crude metric to assess the state of the labour market.  But it is used by the feds for example to establish various policies from EI eligibility to TFW programming.

The ‘real’ real unemployment rate should be measured by the ability of firms to find workers.  In a ‘high’ unemployment area it should be easy to find workers (think Moncton circa 1992 when firms would get 200 qualified applicants for each available job – this was almost completely independent of the headline unemployment rate).

If you go around New Brunswick and talk with business people you will find them saying it is getting harder and harder to find workers – in low, semi- and high skilled occupations.

That is the best indication of the ‘real’ real unemployment rate.

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2 Responses to The ‘real’ real unemployment rate in New Brunswick

  1. David Upton says:

    I agree that the stated unemployed rate of 9.3% doesn’t really give an indication of what is really going on and I also agree that an interesting way to look at employment might be to consider the number of qualified (this is a relative term) applicants for each job. However, those are different things and can’t be viewed the same way.

    Your comment about how realistic it is for a millworker to move from the N. Shore to Moncton to work in a call centre is fair. Moving to Moncton might solve the call centre’s problem (assuming the mill worker is trainable). However, what logic would possess a millworker to move 200 miles to a job that would pay her less than a living wage to support her family.

  2. Paul Chapman says:

    ” they must be ready and willing to take work – and some do. But a large number do not.”

    While this may have been true some years ago, I am not so sure this is still the case. Do you have any evidence that “a large number do not,” or indeed, if they are not, why not.

    I do know a large number who work in the provinces school and health system, providing valuable service at very low cost. Not only the full time people, like bus drivers, Teaching Assistants, Librarians, Nurses, custodial staff and many who provide sick leave coverage in all sorts of positions. They are “working their way into the system”, and if it wasn’t for EI many would not be available. It would be impossible for them to be available to work (which is the only way in) and also hold or look for other work.

    Many other people, not working for government, work two or three jobs to get enough hours to apply for EI, which becomes their back up revenue, sick leave, vacation pay, if their is part time work…i.e. retail workers is January to March.

    To simply say they are not looking for work makes them sound lazy, which most are decidedly not, and we should not perpetuate stereotypes unless we have the evidence to support it.

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