Canada Unemployment April 2012: 'Hidden Unemployed' Phenomenon Means Real Jobless Rate Much Higher

Posted: 05/11/2012 8:51 am Updated: 05/11/2012 8:53 am

According to new labour force data released on Friday, Canada’s unemployment rate edged up slightly to 7.3 per cent in April. Though the economy added 58,000 jobs, more people were looking for work, pushing the jobless rate up by 0.1 per cent over the previous month.

But when it comes to taking stock of unemployment, the headline number is only part of the story. In addition to the 1.3 million people that are now counted among Canada’s unemployed, by any estimate there are tens of thousands more who aren’t identified as jobless, despite the fact that, for all other intents and purposes, that is precisely what they are.

Often referred to as the “hidden unemployed,” these individuals don’t satisfy Statistics Canada’s definition of unemployment because they are waiting for a job to start, are underemployed or have simply given up looking for work.

But that has little bearing on their daily struggles, or how they see themselves.

PHOTOS: 7 IMPORTANT TRENDS IN CANADA'S JOB MARKET

Corinne Isaacs-Frontiero has been looking for a job since moving back to Windsor, Ont., from the U.S. in 2010. Despite a slew of professional credentials and a background in psychology, writing and consulting, the 50-year-old has yet to land anything substantial.

Since last fall, she has been working five hours a week as a school aid in a kindergarten class, earning just above minimum wage. She is currently making ends meet with social assistance and frequents the Unemployed Help Centre, where she accesses the same services as those who are officially designated as unemployed.

Though she finds strength in volunteering and counselling friends that are also going through tough times, it can be difficult to remain optimistic.

“I am accustomed to working a fulltime job, and that’s ultimately what I want to do,” she said. “I have to work at not getting discouraged.”

Isaacs-Frontiero is not technically jobless, but as far as she’s concerned, “I’m unemployed. There’s no two ways about it.”

As her experience illustrates, unemployment is often a matter of perspective. But for the purposes of Statistics Canada’s Labour Force Survey, to be included among the unemployed you must be jobless, available to work, and have actively looked for employment at some point in the last four weeks.

But when it comes to gauging hidden unemployment in Canada, other Statscan data offers some insight.

Though the agency doesn’t explicitly track hidden unemployment, it does measure “discouraged searchers,” people who want to work and were available to do so, but “did not look for work because they believed no suitable work was available.” It also takes note of “involuntary part-timers” like Isaacs-Frontiero, who cited “business conditions” or their inability to “ find work with 30 or more hours” as reasons for working part time, and those who are not working, but are awaiting recall or replies from employers.

When those groups are factored into the equation, you get the closest thing that Statscan has to a rate that considers hidden unemployment. Called the “unemployment and underutilization rate,” it includes the unemployed, the underemployed, discouraged workers and those who are marginally attached to the labour force. Whereas the average unemployment rate in 2011 was 7.4 per cent, the unemployment underutilization rate was significantly higher at 10.6 per cent.

That figure is down from the recent 2009 high of 11.5 per cent but still well above the pre-recession low of 8.6 per cent.

An increase in involuntary part-timers appears to have been the primary contributor to the growth in the underutilized segment of the labour force. As Statscan observed in a report early last year, between October 2008 and October 2010, the number of involuntary part-timers ballooned by 140,000 people -- an increase of 20 per cent.

In that report the agency put the total number of people who were jobless but did not fit into the official box of unemployment (excluding involuntary part-timers) at 181,600 -- a 17 per cent increase over 2008.

But according to Canadian Auto Workers union economist Jim Stanford, the number of hidden unemployed in Canada is actually much higher.

Rather than rely on the answer to what Stanford describes as an “arbitrary question” about the reason people have abandoned their job search, Stanford suggests looking at the decline in labour force participation in recent years. Based on non-seasonally adjusted Statistics Canada data, he says more than 330,000 people have dropped out of the labour force since the pre-recession peak in 2008 -- about 10 times the number of “discouraged searchers” identified by the agency.

Add in involuntary part-timers and those who have a job but are waiting for it to start or recommence, and Stanford puts what he calls the “true unemployment rate” for March at more than 12 per cent, and the total number of unemployed at over two million people. That’s more than four percentage points higher than the official unemployment rate in March, which, using comparable non-seasonally adjusted data, was 7.7 per cent.

“It is convenient for politicians that so many unemployed Canadians are excluded from the official unemployment statistics, but it hardly changes the painful reality that they are not working,” he said.

Tom Baker, a job evaluation specialist for the Canadian Union of Public Employees, suggests an even broader definition of hidden unemployed to include people who were propelled by joblessness to go back to school.

“We have a 17 per cent increase in people who think they’re students in Canada since October 2008,” he said. “You can say, well, ‘A workers’ education movement is occurring like the 1920s,’ but it’s more likely that they can’t find work, so they’re enrolling into school.”

As he sees it, policymakers do a disservice when they fail to consider hidden unemployment in making decisions about the economy.

Unlike in the U.K., he says the tools being employed in Canada are continuing to create some stimulus, “but it’s the hidden unemployment -- its size, its persistence -- that tells you we can do a lot better.”

PHOTOS: 7 IMPORTANT TRENDS IN CANADA'S JOB MARKET

Loading Slideshow...
  • 7. Huge Regional Disparities

    Wood Mountain (includes oil rich Fort McMurray, pictured here) saw its employment level shoot up by 95% over the 2000 to 2011 period, while forestry based Miramichi suffered the biggest decline of 63% in job numbers.<br> <br> Two out of 33 Census Metropolitan Areas (Windsor and Thunder Bay) had fewer jobs in 2011 than in 2000 while 13 of 45 smaller cities were in this situation. In 2011, only 5.5% of the labour force in Wood Mountain were unemployed while 16.4% were unemployed in Miramichi.<br> <br> -- <a href="http://peoplepatternsconsulting.com/pub_can_job12.html" target="_hplink">People Patterns Consulting</a>

  • 6. Jobs Up, Wages Down

    The unemployment rate jumped from a near record low of 6.1% in October 2008 to a high of 8.7% high in August 2009 and has declined slowly since then to 7.2% in March 2012. In spite of the recovery, unemployment duration increased again in 2011.<br> <br> There was a another slight decrease in the number of discouraged job searchers in 2011, who just quit looking because they believed that nothing suitable was available, but their numbers were still 50% above pre-recession levels. Actual hours worked at all jobs advanced to 36.4 hours in 2011 up 24 minutes from the all-time low of 36 hours in 2009.<br> <br> Real (after removing inflation) average weekly wages fell by 0.5% in 2011 following an increase of only 0.2% in 2010. This helps explain why the number of workers who have more than one job climbed for a third straight year to a record 5.4% in 2011. Women (6.4%) are now more likely to have a second job than are men (4.5%) while both were the same (4.6%) in 1989.<br> <br> -- <a href="http://peoplepatternsconsulting.com/pub_can_job12.html" target="_hplink">People Patterns Consulting</a>

  • 5. Bad News For Working Parents

    In 2011, the employment rate for lone-parent mothers (55%), lone-parent fathers (79%) and mothers with an employed husband present (70%) all with children under the age of six continued to be below their prerecession peaks. The only exception in 2011 was for women with a non-employed husband for whom the employment rate (53%) was above the pre-recession rate.<br> <br> The "monetary" value of childcare remains undervalued. In 2011, childcare and home support workers working full-time (30 hours or more per week) earned an average of $598 per week. This was the third lowest behind full-time chefs and cooks ($545) and retail sales persons ($589). On a more detailed level, babysitters, nannies and parent helpers were the lowest paid occupation from among over 700 occupations in the 2006 Census.<br> <br> -- <a href="http://peoplepatternsconsulting.com/pub_can_job12.html" target="_hplink">People Patterns Consulting</a>

  • 4. Manufacturing Still Struggling

    After eight years of decline, the manufacturing sector created only 15,900 jobs in 2011. Employment in 2011 was about where it was in 1993 and down by 532,200 jobs since the peak in 2004.<br> <br> Based on employment growth over the 2000 to 2011 period, the most rapidly expanding industries in Canada were mining and oil and gas extraction (+70.3%) and construction (+56.4%). Other leading growth industries (all service related) included professional, scientific, technical services (+39.9%), health care and social assistance (+37.9%) and real estate and leasing (+30.1%). <br> <br> -- <a href="http://peoplepatternsconsulting.com/pub_can_job12.html" target="_hplink">People Patterns Consulting</a>

  • 3. Labour Shortages

    For 2011 as a whole, eight (35%) out of the 23 major occupations were in a shortage situation, compared to six occupations in the previous year but still much less than the 10 occupations before the recession began. When examined from an industry basis, there were shortages in five (25%) of the 20 sectors in 2011, up from four during the previous year. <br> <br> In 2011, the unemployment rate among professional occupations in health, nurse supervisors and registered nurses stood at only 0.8%. Unemployment was only 1.9% in technical, assisting and related occupations in health and in professional occupations in business and finance. Demographics point to more shortages in the medium-term.<br> <br> -- <a href="http://peoplepatternsconsulting.com/pub_can_job12.html" target="_hplink">People Patterns Consulting</a>

  • 2. Alberta - The Youth Job-Bringer

    Based on a ranking of 10 youth related indicators, Alberta was the best place for youth in 2011 followed by Saskatchewan in 2nd spot and Quebec in 3rd spot. Next in line were Manitoba (4th), Prince Edward Island (5th), British Columbia (6th), Ontario (7th), New Brunswick (8th), Newfoundland (9th) and Nova Scotia (10th).<br> <br> At the national level, recession is still the reality for youth. Youth employment plummeted by 195,400 jobs in 2009 and 2010 combined but only 19,300 jobs came back in 2011. In 2011, employment rates for all youth slipped further to 55.4% (lowest since 2000), was flat for returning students working in the summer (53.8%) but down a lot for full-time students who were working during the school year (36.6%). <br> <br> In 2011, the unemployment rate improved slightly for all youth (14.2%) but worsened for returning students working in the summer (17.4%).<br> <br> -- <a href="http://peoplepatternsconsulting.com/pub_can_job12.html" target="_hplink">People Patterns Consulting</a>

  • 1. A Greying Workforce

    More and more seniors are working longer. The percentage of those aged 60-64 who are employed rose from 34% in 1989 to 47% in 2011 ... a new record. The percentage of those aged 65-69 who are still working jumped from 11% in 1989 to 23% in 2011 ... another new record. The percentage of the 70 and over group who are still working increased to 6% in 2011 ... one more record high. <br> <br> Over the 1989 to 2011 period, the labour force aged 45-54 more than doubled (+108%), those aged 55-64 also more than doubled (+133%) while those aged 65 and older grew even faster (+180%). <br> <br> The recession delayed retirement for many, as record numbers of persons 60 and older remained in the paid workforce. The median retirement age among men (63.2 years) rose for a third consecutive year in 2011 and was the highest since 2003. The median age of retirement among women increased to 61.4 years in 2011 and is the second highest since 1994.<br> <br> -- <a href="http://peoplepatternsconsulting.com/pub_can_job12.html" target="_hplink">People Patterns Consulting</a>

FOLLOW CANADA BUSINESS