On trends in employment rates in Canada

I drew attention to Statistics Canada's updated projections for demographic trends a few weeks ago; the reason for being concerned about them is that unless worker productivity and/or rates of return on retirement savings increase dramatically, per-capita incomes are likely to fall as 8-12 per cent of the population ages out of the workforce.

Of course, there's (at least) a third way out: more people could decide to defer retirement. And it looks as though that's already happening.

This post is about employment rates: the number employed expressed as a percentage of the population. It's an important series, although it's invariably overshadowed by employment levels and the unemployment rate. But since they are hidden behind StatsCan's paywall, people may not know much about them.

Here is the total employment rate:

One thing this graph shows is that the recent recession wasn't as severe as the two that had preceded it. But it also masks some truly startling trends. For example, here's what you get when you break out the employment rates by sex:

We've all heard about the increase in paid employment among women over the past few decades, but this graph brings home just how striking that shift has been: a 15 ppt increase in less than the space of two generations. In contrast, male employment rates have been drifting downwards. And each time there's a recession, male employment rates are hit hardest - and they never seem to completely recover.

This graph tells us that employment rates of young men and women have completely converged since 1976. Again, nothing surprising, but it's an interesting graph nonetheless.

Here is the graph for people of prime working age

A gap of more than 40 percentage points has been reduced to one of less than 10.

Now we get to the part I wanted to talk about: employment rates among older workers. Here are the employment rates for those between the ages of 55 and 64:

In 1995, employment rates for this age group were roughly 30 points below those of prime working age, but this gap has closed to 20 points in the last 15 years, and more than half of this increase is due to an increase female employment rates.

An echo of this trend seems to have begun among those over 65. Although the vast majority of the 55-64 age group stop working after age 65, employment rates in this group have been rising over the last 10 years.

(Everyone will note that I did not say that employment rates have doubled.)

Are those older workers working full-time or part-time? StatsCan's Cansim data doesn't let me break it out at a level more detailed than for the 55 and over group, both sexes:  

It would seem that the increase in older worker employment rates is being driven by an increase in full-time employment.

It's not obvious to me how to interpret this trend.

• Good news: Many of those over 65 enjoy working, and would rather continue to do so. To the extent that this attenuates the effects of population aging, this would be a win-win development.
• Bad news: Remember those 'Freedom 55' ads? How many people are finding that they simply can't afford to retire at 65?

 

Comments

[Nick Rowe]

Good. Just the data that were needed.

The most puzzling/surprising fact in your graphs: males 55-64, the big steady decline in the employment rate from 1975 to 1995. A drop from 75% to under 55%. Wow! What was going on there? (And it's matched, though not so dramatically, by a similar decline in males 65 and over.)

Since 1995, what we have been doing is slowly reversing that long decline.

[Determinant]

I would surmise that the rate for males 55 and older is related to men taking advantage of generous pension provisions and retiring. My grandfather retired in 1981 from teaching when his age plus years of service equalled 85. He was 55.

Those were the good years of defined-benefit pension payouts. Early retirement was in fashion.

After 1995 you have the first inklings of pension problems with reduced pension provision, the switch for more insecure forms of payout and the first wave of DC pension retirees happening.

[Nick Rowe]

Another thing I notice, though it's not surprising/puzzling like the first: you can see the recent recession in the data for the 20-24, and also in the 25-55 group (especially for men, in both cases). But you can barely see it in the 55-64 group. And you can't see it at all in the 65+ group.

[Frances Woolley]

Nick: "The most puzzling/surprising fact in your graphs: males 55-64, the big steady decline in the employment rate from 1975 to 1995. A drop from 75% to under 55%. Wow! What was going on there?"

1980s. Bruce Springsteen. My hometown.
"They're closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they aint coming back to
My hometown..."

It's 1985. You're a 50 year old with a job working in manufacturing or mining or forestry. Your employer goes out of business. What do you do?

If you're that age and have been doing hard manual work all your life, you can likely qualify for CPP disability. So that's what you do.

[K]

Nick: "The most puzzling/surprising fact in your graphs: males 55-64, the big steady decline in the employment rate from 1975 to 1995."

The bottom of the 55-65 graph is around 1995 and the 65+ graph around 2002 so on average those born around '35. Which makes me wonder if this is principally an effect of changing employment, or rather that 1935 is an underemployed cohort?

Great data, Stephen, thx! I only wish we could see it all by cohort, rather than age group.

[K]

In fact, I'd be willing to bet that's what's going on. It seems inconceivable that any cohort declined in employment by 20% points between 1975 and 1995. What really happened (I think) is that those who were born in the thirties came of age in an era where they had to compete for jobs both with soldiers returning from work, and with their own mothers who had entered the workforce during the war. So they never got a start.

Just a theory, as I'm woefully ignorant of the actual facts, which are probably readily available. :-(

[Wendy]

I agree with Frances that it may be the structural shift in the types of jobs that has resulted in this new look for the labour force. Traditional almost "male-only" occupations in factories, logging camps, saw mills, mines etc. have been declining steadily for years. Knowledge and service occupations have been growing. These latter types of jobs tend to be easier on the body, so physically people are not worn out at age 65, and both men and women participate in these occupations.

Hard economic times tend to accelerate structural change, which is probably why we see more jobs disappear quickly during a recession.

I'm now wondering if different metropolitan areas have different trend lines in these respects--does the GTA's employment rate graph look roughly the same as Calgary's? or what if we could segregate major-urban vs smaller town rates? Anyone know if the data are available? or analysis that has been done?

[Patrick]

Calgary has become a head office town like Toronto. Edmonton might be a better bet to see blue-collar, mostly male job trends if you can parse out the AB government jobs in Edmonton.

[Paul Friesen]

I don't see how an underemployed cohort could account for this. Such a cohort should have been in the data from the 30's onward, and becoming less prominent as the population grew.

I have some questions about the data. Does employment include self-employment? How is agriculture treated? This was a time of a huge shift from farm to city, and I wonder if that accounts for it somehow.

[Wendy]

Patrick, I'm not so sure Calgary and Toronto would look similar. The Toronto labour force trends graph (Labour Force Survey by NAICS for Toronto CMA)shows the most dramatic decline in "male" labour of any city I've looked at. Manufacturing has been steadily declining for years while FIRE and Prof Sci Tech as well as Public Admin and Information and Culture have been steadily increasing. Transport/Logistics employment has been roughly flat over the past 5-10 years.

That's why I wonder if the employment rate graphs by age and gender might look different if we separated cities. Toronto may be driving much of what we can see in Stephen's graphs above.

From your question, I became curious...I just looked up Edmonton's numbers from the April Labour Force Survey (that's the last one I downloaded), and "Male" employment is near or at all-time highs ("male" being construction, transportation, manufacturing).

[K]

Paul Friesen: "I don't see how an underemployed cohort could account for this. Such a cohort should have been in the data from the 30's onward, and becoming less prominent as the population grew."

If they were born in the 30's, it should have shown up in the employment data from around 1950 on.  Why would it become less prominent with a growing population? The male employment rate of 55-65 year olds in 1995 is a fraction of the number of men born in the 30's and still alive. Those born at other times are irrelevant.

This paper has some graphs (see fig 10) that at least partially back my theory.  Unfortunately they only show some model-adjusted numbers rather than raw cohort data.

[Bill Lee]

CPP rules change in 2012. Some people might be waiting for the rule changes.
Benefit increase for later retirement.
Collect CPP/OAS with no interruption of work required for qualification, for the first time.
Ect, etc.

[Patrick]

Wendy: Now that I think about it, you're probably right about Calgary. It's now a head office town, but its legacy is totally different than TO.

Given that Edmonton is the last major city on the road to the oil sands what you found makes sense, I guess. Much of the labour demanded in the oil sands is relatively high skill, but it's historically male dominated stuff - welders, electricians, pipe-fitters, heavy equipment operators and mechanics, and anything drilling related (most people don't realize that the vast majority of oil sands are too deep to be stripe mined, so in-situ processes are used).

[Paul Friesen]

K: Sorry. I was a bit mixed up about the problem. I thought employment had declined for the 25-54 age group, which it did not. So your idea does make sense. Also the idea about good retirement benefits before 1995.

[Neil]

For as long as I can remember, I've been told that the boomers are retiring, and it's going to open up lots of opportunities for my generation. As far as I've been able to tell, baby boomers (or, at least successful baby boomers in desirable jobs) don't retire.

Also, here's a question. If boomers ever get around to retiring, and real per capita income drops...is this really a problem. People remaining in the work force shouldn't be affected by this drop (fewer workers means more opportunity, right?), and the retirees who are have drastically increased their leisure time, which isn't really a drop in wealth even if it does reduce their income.

[Determinant]

Yep, that hackneyed old phrase. We have an entire generation of young people, born to Baby Boomer parents in the early 1980's who are flinging themselves left, right and centre trying to get a job and they can't. Or they end up with a university degree and working a checkout.

How long before we start creating a lost generation?

[Patrick]

"fewer workers means more opportunity, right?"

I *think* the idea is that, over the whole economy, and keeping everything else the same, less spending by a big chunk of the population (e.g. aging boomers) makes us all poorer because our incomes drop. We have less income, so we spend less. Lather rinse repeat and voila! Recession and unemployment.

Also, as Frances pointed out a while ago, boomers are going to have much reduced appetites for risky assets. Already people are paying the US Treasury to store their cash for them (looking at real yield). It's beyond me to say what the general equilibrium effect will be of all that money sitting in bloody great big piles, but with the US gov't headed for fiscal consolidation and the Fed obstinately sitting on its hands, I suspect it's not good.

In moments of severe cynicism, I think the best thing we could do is subsidize the production of butter, potato chips, 20oz steaks, ice cream, and strong drink for anyone over 55. Then start training their kids as orderlies, nurses, cardiologists and undertakers since, apparently, health care and funerals is the only thing the oldsters are likely to consume in any significant amounts.

[Determinant]

In another moment of cynicism I wonder how the older generation expects to be paid pensions and other other retirement income when they refuse to hire the next generation that needs to start work in order to provide that income. Then they have the gall to ask why you aren't working when you go to family functions.

You can tell an unemployed person at a family event a mile away; they don't talk, don't mix and stay away from everybody else. Anything to not talk about work.

[Patrick]

Determinant: based on Wendy's data, moving to Edmonton is the solution! It's not so bad. It's a dry cold. 8 months of the year. The other 4 you keep warm locked in mortal combat with the mosquitoes trying to exsanguinate you. I'll stop with the OT now. Promise.

[Determinant]

I was born in New Brunswick. I can do cold.

I actually tried that. I don't have the money to move. Job hunting at that distance is *really* difficult.

The killer is the three month wait between interview and offer; I'm in that right now, assuming an offer will come through.

Speaking of which, a six to eight month wait between responding to an ad or inquiry and offer can't be good for employment statistics

[Andrew F]

Three month delay between interview and offer? Usually hiring managers know immediately after the interview whether they'd hire you.

I found that the longest delay is between submitting a resume and being interviewed. It is often as much as four or five months. It might depend on the field.

[Patrick]

Yup. Been there, done that. It's hard for people who have never experienced unemployment to really understand how demoralizing it really is, and how HARD it is to even find a suitable job to apply for. It really comes through when people like Tyler Cowen blithely tell people to just lower their reservation wage and get back to work. Since when does anyone apply for a job saying "Unless you pay me $X, don't even bother". People don't have reservation wages in any meaningful way. They have "reservation use of their accumulated human capital". In other words, a PhD economist (even one from GMU) is not going to be flipping burgers until things get really, really hopeless. Anyway, I better shut-up before I make Stephen grumpy.

[Wendy]

Determinant's comments have me thinking about a couple things. First, statistically, employment rates are much better for the current generation of youth than when gen x or the boomers were in their 20s. Just look at the 20-24 chart above, paying attention to recession years.

There's also another great graph on this blog that I occasionally refer people to here: http://cmhc-schl.gc.ca/en/corp/about/cahoob/data/data_004.cfm

So, this generation won't be any more lost than the boomers.

But, more important to me as a westerner who has seen severe labour shortages is the fact that Determinant can't find the money to move to where the jobs are. It was crazy even in Vancouver in 2007 and Calgary was ridiculous for the lack of staff as was Edmonton.

Maybe when the next labour crunch hits out west there needs to be some sort of a program to help Determinant move. I know of hotel chains and fast food restaurants in Edmonton that imported workers from the Philipines in big numbers during the last crunch (and were thrilled with how well this worked for them). If there are people in New Brunswick who want to do this work, why not find a way to send them to Edmonton?

[Determinant]

Andrew:

In this case I was told I was part of a batch of 24+ to fill 24 positions, and from what I understand I was at the top of the interview list, by luck or merit. That was with the Government of Canada.

For this particular position, I know from personal experience there is demand for it. Lots of demand. People ask for this government service. People may make insulting remarks about the federal government, but their hiring process, once you understand it, it very transparent and fair. They don't toss people aside without a reason. You may not like the reason, but there is a reason and you are told about it.

Actually the Government of Canada has been faster at getting to the post-interview stage than any of the private sector jobs I have tried for. I like government because at least they inform you via e-mail if you don't make it. I have been to many private-sector interviews where companies have not bothered to e-mail me to at least tell me I didn't make it. Most private sector HR people can't even be bothered to give you a form e-mail saying you didn't make it.

I had a very nice industry-oriented summer job in 2004. It took me 4 months to get from the time I called them to the time I started work on May 15. After I was told I got the job because I lived locally. Other engineers drove 3 hours from Ottawa and Toronto to get to the workplace. That's what got me that job, aside from eagerness and persistence.

[Jacques René Giguère]

Wendy:"Maybe when the next labour crunch hits out west there needs to be some sort of a program to help ...to move".
In 1978, at the top of the qualified baby-boom ( top natality was in Sept-Oct-1955, add in university), there was a Federal Mobility Program. They would pay transportation to your interview and part of your moving expenses ( apart from income tax deductibility). That's how I moved from Québec City to Sept-Îles. They paid the plane! ( No nonsense about wasting time on the bus...). During the 1981-82 recession, it was cut to preserve the budget from deficit ( If you ever thought that idiocy is new...)

[Determinant]

There is also the ridiculous "5-year experience" rule. Translation: we won't pay for training, we only want to hire away from competitors, industry rookies and grads need not apply.

Training has become a Tragedy of the Commons in employment.

Or how about "here's a contract. No benefits, it's six months renewable." How does one account for the rise of such precarious employment like that? I have seen companies riven between contractors and permanent staff. It's not nice.

[hosertohoosier]

Has there been a study on the long-term impact of economic conditions when one enters the workforce? It just seems as though this generation is going to have to either accept unemployment or underemployment, depriving them of relevant experience for the jobs they actually want and are trained for (at least until the boomers die, and Gen-X starts retiring).

We may develop good habits (like saving and thereby actually contributing to capital accumulation) during our time in penury. However, my fellow millennials still don't think poor. They assume their parents will bail them out - and with smaller and smaller families, many stand to inherit all or most of their parents' assets anyway.

[Frances Woolley]

hosertohoosier: "Has there been a study on the long-term impact of economic conditions when one enters the workforce?"

Phil Oreopoulos at University of Toronto has done some work on this - you can find the papers on his website. Basically some people do fine anyways, and some people are permanently scarred, i.e. have lifetime lower earnings. .

[Determinant]

Following on hosertohoosier's comment, here are the incidents that taught me not to take "Business" so seriously. I was either in a suit in an interview, having driven to the company, or at a recruitment fair in a suit.

1) Recruitment Fair: Well-known manufacturer announces layoffs the same day they have a booth at the recruitment fair. I asked if they were actually recruiting, they said they weren't.

2) First Toronto Engineering Consulting Firm: Said they were recruiting, invited prospects to an open house. The entire floor of their office building (big building too) was packed that night. I got an interview but they never called back. I called them repeatedly to no effect. They never replied after my interview.

3) Second Toronto Engineering Consulting Firm: During the interview, the interviewer asked where I lived, where my family lived, where I was born and where my grandparents were from. She was obviously "probing" for the immigrant in my family. She was an immigrant, I am not. It was racist and unprofessional and left a distinctive bad taste in my mouth.

After I called them, they said they did hire me because I had no experience in the field, even though the position was advertised as Junior Engineer or Engineer-in-Training (means entry level).

4) Let's just call them "Engineering Site X". Headline employer. Drove three hours to get to the interview, they did not pay me a dime for this and did not reach a decision (a rejection) for three months.

5) A municipal electrical utility. Again had to call the HR person to learn my fate after an interview. Said they interviewed three people, they wanted the person who previously interned with them. The job was marked for this guy. Why was I even interviewed in that case?

6) Interviewed twice a year apart, two different rounds, for a provincial electrical utility. In both cases they never called back to tell me my fate and failed to deliver a rejection e-mail. At least it was a phone interview.

7) I drive three hours in the other direction to a manufacturer. I was told in the interview "we like you, we want to hire you, but our customers have no credit and we can't hire you right now." This was October 2008. Why they couldn't tell me this by calling me at home I will never know. They did give me gas money by way of apology. I felt practised upon.

8) Decided to change fields. A sales oriented field. Forced out of that field by a competitor who admitted to me that he was engaging in legally dubious practices to secure his position. The businessman tried to recruit me before he crushed me.

9) Recently interviewed with the Public Service of Canada. The time from Ad to aptitude testing (a written interview) was two months, the interview took place a month an a half after that (I received less than 48 hours notice to drive three hours to Ottawa) and I am awaiting a response. By the standards of 1-8, the Public Service has been quicker, more considerate, more focused and more honest in their dealings with me. I have received more correspondence notifying me of where I am in the process than all other jobs combined. Unlike everyone else, this is a System.

So do I expect corporate people to be reasonable? No. Do I expect something approaching manners and basic civil consideration from HR people? No.

I do however know that there are lots of young people flinging themselves at Corporate Canada hoping for jobs and hitting the glass window. If Corporate Canada has a recruitment problem it is entirely of their own making.

After all this I can't say whether I believe in capitalism anymore. Not unreservedly, anyway. I did join the NDP though, which I would not have were it not for the experiences I just described.

[Patrick]

Determinant - As a refugee from the tech wreak, I hear ya. If you want, contactme by email here: gwilym dot marles at gmail dot. I can't do much, but I might be able to help reduce some of the search frictions. There IS work in AB.

[Patrick]

Oops - of course that is gmail dot com. Damn tablet again.

[Determinant]

Thanks patrick. I'm in the post interview stage with the Public Service of Canada, and you either get a job now or you go on a waiting list for appointment to a position, you don't go in the trash. For once I'm not entirely dangling. And I really want to move to Ottawa. I have decent French results from the Public Service Commission which really, really helps. The lines for French-rated jobs are shorter, I find.

My little list is not meant to be a plea for mercy or a litany of grievances, it's to show people just what employers behave like in real life. When I say a generation is flinging ourselves at employers asking for jobs, I mean it. Employers have consistently been presented with a line of people doing everything they can to get work and then these people aren't hired. This isn't isolated, it's general.

I get the sense that industry really don't know what it wants, it doesn't know where or how to expand and it isn't sure about the investments it is making. Thus hiring is at best limp. Look at it this way: in a genuine investment boom employers will reduce their standards and hire quickly. In a slump they will become much, much more picky. This isn't a reflection on the employees or applicants, it's actually a result of the employer's prospects.

I really, really don't like "structural" arguments or lack of training as explanations. Those explanations are employee-centric and let employers off the hook. The employers really are on the hook here.

[Patrick]

Do what you think is best. The offer (such as it is) stands. Good luck.

[wjk]

> If Corporate Canada has a recruitment problem it is entirely of their own making.

My own experience with the Canadian branch of a large multinational is that HR and Finance makes it hard to hire in Canada or the US and easy to hire in India, China, etc. because that's where they really want you to hire.

Speaking of which, globalization and the collapse of private sector unions really started taking off in the early 90s resulting in extreme wage presures in manufacturing and blue/grey collar industries. People in those fields now need to work part time jobs or send their spouses to work just to make ends meet.

> I know of hotel chains and fast food restaurants in Edmonton that imported workers from the Philipines in big numbers during the last crunch (and were thrilled with how well this worked for them).

Did they pay the same as they would for a Canadian? If not, no wonder they were thrilled... If you look into it, a lot of these workers are exploited under threat of being sent home and/or voluntarily so that they can become landed immigrants. For example, I know lots of people that brought over Philipino nannys - all of whom left when they had served 2 years and could get permenant resident status.

[richard]

"I'm in the post interview stage with the Public Service of Canada"

Having just retired from the federal public service, I wish you success. The public service can be a great place to work, provided you keep your head down at times and learn to 'go with the flow'. Budgets tend to be feast or famine so you need to develop flexibility skills that let you get a lot done with few resources. I was with an R&D group and found that the level of tech and equip support was generally excellent - although much of that depends upon the quality of local managers. There are great opportunities for re-location, so don't worry if the first offer is not in your preferred city, or if the local manager is an arse. French will definitely be an asset, especially if you have management aspirations.

[Determinant]

To be honest, I didn't intend this to be about me but more about my random walk through Corporate Canada, what life looks like down on the microscopic level and how Corporate Canada is actually behaving. Stephen does the really high level view well, but I think that view needs context.

For what it's worth it is in a social department, but one whose mission I care about and there is the opportunity for a person with an Electrical Engineering degree to move into the regulatory branches where those skills are useful.

For various reasons I do not wish to be terribly specific about the department or program.

The job is in Ottawa which is where I want to live. I like the place and I have friends and close family there. I wouldn't be alone like I would in other cities.

Very true about French. I surprised myself with a B-level Reading and A-level Writing (2 points below B threshold; I should try harder next time) in a previous process. Verified PSC results are a nice thing to have. The PS process hates gratuitous claims in recruitment; they won't get you anywhere. It all comes down to "prove it".

Many things in Ottawa require BBB standard and it was apparent to me that French was required in the PS, if not now then later as you said richard. When you read the job ads and see how often French is listed, especially CBC level for senior positions, it becomes clear (C speaking means you can use the subjunctive in spoken conversation appropriately, I learned from a friend).

If I get the job (knock on wood) then one of my goals for the first two years is investing in French lessons for full BBB standard. It's jet fuel for your career.

[richard]

"one of my goals for the first two years is investing in French lessons for full BBB standard"

In many fed depts, you do not have to invest a cent; they pay the costs for you AND give you time off to do it. In my group, we actually had an instructor come into our workplace and provide lessons to the 3-4 of us who were interested! No doubt that policy causes a lot of eye-rolling in the private sector. On the other hand, I've seen too many cases where language proficiency rated higher than technical or management skills in internal competitions. In any case, good luck.

[Determinant]

From what I gather strained budgets have restrained that practice. I'll take if it's offered but won't cry if it isn't.

[statistics_challenged]

I think it's pretty interesting that only 8% of women work past the age of 65. The economic prospects don't look particularly good for women as they get older.
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