05/13/2013 01:00 EDT | Updated 07/13/2013 05:12 EDT

The LNG Jobs Myth


That B.C. is a resource economy has become a mantra for politicians and the media, and LNG is just part of the club.

Anyone who questions development in the resource sector, of mining and fracking and pipelines, is written off as a BANANA--Build Absolutely Nothing Anywhere Near Anything. They are nattering nabobs of negativism who don't get how the economy works.

Growing the economy is the best way to create jobs, they say.

Jobs are the new mantra. Jobs Jobs Jobs. And businesses have a new name. They are "job creators". Anything you want to sell to the public, just promise jobs.

This didn't happen by accident.

Gallup to the Polls

In 2005 Gallup commenced a massive global study of human needs and desires. As company chairman and CEO Jim Clifton related in his recent book, The Coming Jobs War, the Gallup team stumbled onto "the single most searing, clarifying, helpful, world-altering fact" very early on. There is a universal key that we all respond to:

"What the whole world wants is a good job."

Suddenly, by remarkable coincidence, everyone in business and everybody running for everything from dogcatcher to prime minister now promises jobs. Jobs are the royal jelly, the secret sauce of elections.

That's why the resource sector is so important. For the jobs. For example, the B.C. government tells us LNG development will give us 100,000 jobs.

But there's a catch. You knew there'd be a catch.

Natural Gas is a Lousy Job Creator

It turns out that the BANANA republicans vastly over-state the job benefits of resource development, none more so than in natural gas.

Did you know that forestry, fishing, mining and oil and gas extraction combined provide only 2% of B.C. jobs? All these numbers can be found in a handy-dandy guide on the BC Stats page here: Click on the unpublished detailed industry data in "employment by industry".

To give you some idea, B.C. has a work force of about 2.3 million. Yet with employment of only 46,000, the forestry, fishing, mining and oil and gas industries can barely compete with the real estate sector, which employs 44,000. Of course the sector produces spin-offs and induced jobs-for instance in construction, transportation, and manufacturing.

Yet natural gas, being sold as a huge job creator is actually an employment deadbeat. While natural gas contributes fully 3.2% of our total GDP, its work force is tiny, just 3,500 souls, or .15% of provincial employment. Electrical equipment manufacturers employ more people in BC than oil and gas. Natural gas is shipped east through pipelines, so there are no trucking or ports benefits. And most of the $6 billion in natural gas earnings don't stay in B.C., but take a direct flight across the Rockies to Calgary. Which might explain why some B.C. politicians organize fundraisers there.

By comparison the tourism industry, which draws about the same GDP percentage as natural gas, puts groceries on the table for 127,000 British Columbians working in thousands of businesses across the province. Those employees work in every occupation from table-waiting to fishing guides to senior hotel executives, and their employers are, for the most part, B.C.-based small businesses. Scenic tours alone employs 6 times more British Columbians than the entire natural gas industry.

All these folks spend their pay-cheques locally and pay taxes here at home to support education, health care, and the delivery of vital public services. The beauty of tourism is that it operates like an export business, drawing income to B.C. from around the world.

You've gotta love tourism, but it's only one of several sectors that deliver job numbers that far outstrip the resource sector.

So Where's the Growth?

Actually, we've been pretty darn good at job creation in B.C., adding some 360,000 new jobs over the last ten years. It's just that next to none of those jobs have been in the resource sector, which was largely stagnant, with job losses in forestry and fishing.

The natural gas business, which grew revenues at an astonishing clip through the last decade, only added about 150 jobs a year, for a grand total of 1500 new jobs. Computer system design added 15,000.

In reality, the huge source of new jobs has been in in the service sector, in science and technology, skilled trades and construction, film, animation, tourism and retail operations. And government--specifically health care and education. Small and medium enterprises (SMEs) are job-making machines.

Paradoxically, the greatest job growth is in sectors that do not generate high revenues for corporate ownership or royalties for government, as the resource sector does.

There are lessons here, big ones.

Economic Growth (by itself) Doesn't Drive Employment Anymore

The developed world is undergoing a major structural economic shift. Nobel Prize-winning economist Michael Spence cautions that globalization has brought a new economic dynamic, that "growth and employment are...diverging in advanced countries." In other words, many Western industries experience massive growth without increasing employment, or even cutting it dramatically.

Just look at McDonalds and Facebook. It took McDonalds almost 70 years and over a million employees to reach $60 billion in value. Facebook got there in eight years, with a payroll of fewer than 5000 people.

Until very recently, economic growth and employment synchronized like pedals on a bicycle--driving each other forward. As Facebook shows, innovations in technology and globalization disrupt that relationship in ways that have broad implications for all of us.

What's happening in B.C. is happening to some degree across the developed world. Job growth is not uniform across all industries, but subject to wildly divergent patterns.

But there's a huge difference between McDonalds and Facebook, and between Encana and the thousands of small, independent businesses that employ hundreds of thousands of British Columbians.

Beware the Jobs Deadbeats

It's undeniable that B.C. depends on resource sector royalty revenue, and government would naturally love to get more through natural gas development. But industry and politicians should be upfront about that reality, not wrap themselves in a jobs flag that doesn't fit.

Growing the economy is not equivalent to job creation. We need leadership that can tell the difference, and that understands that delivering real, secure, high quality employment in the 21st century is a deeply challenging and difficult task.