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

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CANADA UNEMPLOYMENT 2012
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. | Alamy

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.

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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.”

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