Where Have All the Workers Gone? Don’t Blame COVID, Economists Say
Canada is in the throes of a serious labour shortage, but economists say it’s not all the pandemic’s fault — it’s the inevitable culmination of a seismic demographic shift decades in the making.
“It’s the slowest-moving train on the planet. It was predictable 60 to 65 years ago, and we have done nothing about it,” said Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers. “We knew this transition was going to happen.”
The numbers behind all those help wanted signs are startling. According to Statistics Canada, the unemployment-to-job vacancy ratio — a key measure comparing the number of Canadians looking for work to the number of available jobs — is currently hovering at a historic low in every province. In fact, the ratio is significantly lower now than it was before the COVID-19 pandemic began.
The reason isn’t that there are fewer jobs opening up, it’s that there are fewer workers available to fill them. And the reason for that, economists say, can be traced back to the post-war baby boom.
Not enough replacements
While those 55 and older have been steadily exiting the Canadian workforce — an exodus that some economists believe was accelerated by the pandemic — there simply aren’t enough younger workers to replace them. In fact, participation in the workforce among those ages 25-54 approached 88% in May, up more than 1% from February 2020, before the pandemic had taken hold in Canada.
“That’s what happens when a baby boom finally starts exiting from stage left, and there’s not enough people entering from stage right,” Yalnizyan said. “We’ve actually got a higher share of the working-age population working than ever.”
That contradicts the theory that some sort of “great resignation” among working-age Canadians, many of whom took advantage of pandemic income supports, is to blame for all those job vacancies, according to Ian Lee, associate professor at Carleton University’s Sprott School of Business. “I just found that very suspicious because unless you’re independently wealthy … most of us have to have income to survive,” Lee said.
“Your first suspicion as a labour economist is, well, are people just not in the labour force anymore?” said Gordon Betcherman, professor emeritus at the University of Ottawa’s school of international development and global studies. “But that’s not the case. It’s back up to levels that we had before COVID.”
An employees’ market
Instead, economists say the data points to the emergence of an employees’ market where workers are enjoying an enormous amount of leverage over employers. According to Statistics Canada, that has led to virtually unprecedented labour shortages across nearly every employment sector.
In particular, the construction and manufacturing sectors are having a difficult time recruiting skilled workers, followed closely by accommodation and food services, which includes hotels, restaurants and bars.
“Workers have a lot more choices now,” Lee said. “If you have more choices and you don’t have to work in that industry, you’ll go and work in an industry where there’s a better career stream and where the wages are higher and the hours are more predictable.”
That could force employers in certain industries to raise wages, Lee said. “I’m not suggesting that the demand for these jobs is going to go away. It’s not,” he said. “It suggests to me that we’re going to see some pretty serious wage inflation in these industries over the years ahead.”
Wages predicted to rise
According to Yalnizyan, this competitive new environment means employers in certain sectors will need to raise wages if they hope to retain skilled workers. That’s borne out by Statistics Canada data showing the reservation wage — the minimum hourly rate at which job seekers are willing to accept a position — surpassing the current offered wage in nearly every sector, whereas Canadian workers have historically been willing to settle for less.
Economists believe there are other possible outcomes — increasing automation to fill the vacuum left by the labour shortage, for one. Some industries could also bring in more temporary foreign workers to help fill gaps at the lower end of the labour market, potentially blunting the gains made by domestic workers.
But Yalnizyan said rising wages could help erase some of the inequalities caused by a labour market that has for years paid some workers well and the rest poorly. “If we actually improve wages and working conditions, particularly at the bottom, we could be creating the conditions for making a more resilient middle class that can actually afford to buy stuff. That’s what we’ve been missing out on for quite a while now,” she said.
Random COVID Testing Returns at Canada’s 4 Major Airports
If you’re travelling back to Canada from an international trip through four of the country’s major airports — Vancouver, Calgary, Montreal and Toronto — you may be selected for a random COVID-19 test starting July 25. Ottawa has brought back mandatory random testing after the federal government halted it on June 11. However, new for this round, testing will be done offsite either by an in-person appointment at select testing provider locations and pharmacies, or by a virtual appointment for a self-swab test.
Travellers will be notified by an email within 15 minutes of completing the CBSA’s customs declaration. Both vaccinated and unvaccinated travellers could be selected for the test.
According to the federal government, travellers who do not qualify as fully vaccinated, unless exempt, must continue to test on day one and day eight of their mandatory 14-day quarantine. If selected for the random test, unvaccinated travellers will be able to complete their tests by a virtual appointment or by an in-person appointment with a test provider at select stores or pharmacies to stay within their mandatory quarantine requirements. To qualify as a fully vaccinated traveller to Canada, travellers must have been vaccinated with a primary series of a COVID-19 vaccines accepted by the Government of Canada for the purpose of travel at least two weeks before entering Canada.
According to a government handout, if a traveller’s arrival test result is positive, they must go into isolation and follow the federal requirement to isolate for 10 days from the date of the test result. Even if the isolation requirement is shorter in a traveller’s province or territory, the federal government requires the full 10 days of isolation.
Deputy chief public health officer Dr. Howard Njoo has previously said random mandatory testing is an important part of Canada’s strategy to detect new variants coming in to the country. Meantime, random testing continues at land border points of entry.