Wednesday, November 08, 2006

'The latest jobless rates and what's behind them.'
CBC has a nifty interactive tool offering a very general idea of what's going on with employment in each province.

Q: What do you get when you mix obnoxious attitude, grammatical errors, anonymous hacks and a respectable news magazine?
A: The new blog from The Economist magazine. Hip hip!


amphimacer said...

What's going on behind employment figures? Man, if anybody knew, wouldn't they be the kings of the world? The academic world, at least. And at some point, wouldn't some of this knowledge be slowly filtering its way into the mainstream consciousness of the economic systems we live in? It could take a long time, of course, but a few graphs and captions are certainly not going to do it.

In Tuesday's post, you offered three of the usual theories of why people become self-employed (in my own case, out of need; when a regular job was available, with benefits and regular pay, I took it, having a wife and child to support). My case is not unique, but every person who goes freelance faces a different outcome. I was getting by, but might perhaps have built my freelancing business up into something better if I had kept at it. Others succeed more quickly, find a job less quickly, have more or less determination to succeed at it, and so on. The figures tell the story of a sort of combination of modes, medians, and means. What that says is that there's a whole lot of information needed to understand the trends, which the averages don't quite cover, because when times change, and as the population changes, the numbers change.

As to the vanishing farmer, I think the statistics are clear: we live in an urban society now, and any belief that there is some purer rural life that is available and beckoning is mere fancy.

true dough said...

I have to admit, I spent most of October feeling as overwhelmed as I've ever been about our ability (or lack of) to measure labour productivity. As one reader (for lack of a better term) wrote in an email to me, any time you attempt to calculate labour productivity, you run into a quagmire. As you imply, there are simply too many variables.
This is one reason I'm attracted to measures of self employment. It's such an under-researched area, but one of my theories is that the propensity to become self employed is an important indicator of Canada's climate for productivity.
You say that everybody has their own story. Sure, if some self employed workers were persistent, they might witness increased productivity. But every single peak in the unemployment rate in Canada since 1976 has been followed by increased rates of self employment. As soon as the economy recovers, self employment declines. MOST people do not enter self employment because they have a golden, innovative dream. And, as you imply, those who do have such motivations struggle or are deterred from entering. It's as though all entrepreneurs must pay the price only because the majority of them are unproductive.

My point is that we needn't feel overwhelmed by our inability to measure labour productivity. If we can gain a general idea of the policies that promote productivity for the majority (and take action), we'll discover room to improve. Nobody ever said aggregation = precision.

true dough said...

I should add though, I really do believe that we need to find a way to encourage innovative entrepreneurship and pull the plug on failing, subsidized small enterprises.
So, I guess I agree with you. We could do better to draw distinctions in the self employed sector and look beyond the averages. Good point.

happyjuggler0 said...

I don't know the latest numbers (as in the past 10 or so years), but the US Small Business Administration estimates(d?) that 80% of businesses go out of business within 5 years.

I used to think that was too high, but chalked it up to too many people thinking they could open a restaurant (with restaurants having an even higher failure rate) because everyone liked their cooking. It is much harder than that....

Now, after reading your comments, I suspect that perhaps those companies that go out of business may be augmented by self-employed business owner/operators who did it out of frustration at trying to get a job in a recession. If so, maybe (intentional) entrepreneurship isn't quite as insane as I thought.

Semioff topic, I am reminded once again that there are two reasons why companies lay off workers in a recession. First, because they have suddenly become redundant. Second, because of social pressures not to lay off workers when a business is obviously profitable during an economic expansion.

So to everyone who rags on companies for laying off workers who are redundant even though they are making tons of money, stop it! They will simply get laid off in the next recession when it is much harder to find a job. This also makes it harder for everyone else who gets laid off to find a job.

Finally, the linked graphic reminds me I don't know much about Canada (I am American, be glad I know Canada is not part of the US :o ). Looking at all the unemployment numbers I couldn't help notice they are all much lower in Western Canada than in the East.

Is this due to: A) The west is where all the natural resources are? B) The east is where all the old industries are that may struggle against global competition? C) That so much of Canada is related to trade with the US, and the west (and south) is where all the action is these days in the US? D) It is a conspiracy? :x E) Some combination of the above? F) Other?

true dough said...

To be honest, I had the same idea as you about the self employed until I started playing with the data. It's almost like self employment is the market's 'natural' solution to unemployment. At least, it beats unemployment insurance. I don't mean to imply that the two are substitutes or anything... but check this out:

The data you'll see is all unincorporated self employment. I don't think the pattern is a coincidence. Tonight I was playing with data for the unincorporated self employed who don't have paid help. The fluctuations are pronounced for every boom and recession. I wasn't expecting that. I'm going to look at U.S. data next.

Regarding Canada's current unemployment situation, hooray that you care, American! I think your A and perhaps your C are correct. We're only recently seeing a major shift of the labour force from East to West. I think Ontario's latest unemployment rate shocked people.
The popular phrase lately is “ if you have a pulse, Alberta wants you.” Oil, forestry and support serices are driving the demand. Construction was a big one last month. There have also been a lot of jobs created in the health industry because of government spending but I'm not sure how evenly distributed across the nation. My computer is acting up, so I'm sorry I can't share any juicy details.

Your B is interesting and could be true, especially for Ontario. I think the rest of eastern Canada is comprised mostly of small and medium sized enterprises that aren't affected by international trade, except for support industries. Perhaps international trade is kinder to the west.

You say:
“...I am reminded once again that there are two reasons why companies lay off workers in a recession.... ”

This is really interesting. So, you're suggesting that if firms laid of workers during a boom (when required), the labour force would be more resilient to recessions. That sounds true enough. Essentially what firms are doing during the boom then is re-adjusting to their equilibrium. It's interesting because Canada seems to be undergoing massive re-adjustment right now. But we're hiring, not firing. What's the difference if it's a move towards equilibrium? If a recession should hit, I can't help but think that our labour force will be more resillient than some analysts expect. I almost wish a recession would hit so we could find out. Horrible, I know.