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.