Federal government’s number spinning misrepresents job growth realities

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Appeared in the National Post, October 4, 2023
Federal government’s number spinning misrepresents job growth realities

Statistics without context are often misleading, and politicians are always keen to report numbers only in such a way as to provide evidence of their efficacious management. Any sort of good economic data, they are eager to broadcast widely and take credit for; any sort of bad news, they will advertise less vigorously; and when positive spin can be put on bad numbers, politicians (and their communications staff) will spin them like a top.

For example, upon the Statistics Canada release of August 2023 employment figures, Finance Minister Chrystia Freeland proclaimed, “Good news this morning! The Canadian economy added 40,000 jobs in August. That means there are now 983,000 more Canadians employed compared to before the pandemic.” But her boast was a hollow one. Most of the employment story remains untold by these two numbers, and the economic reality is much worse than they suggest.

Firstly, monthly StatsCan data are estimates that are typically later revised, sometimes by relatively large amounts. As StatsCan discloses in its table, there’s an approximately 32 per cent chance that its estimate of a 40,000 employment increase in August is overestimated or underestimated by at least 30,700, and a non-trivial five per cent chance its estimate is off by at least twice that. So employment may well have gone down in August instead of up.

Nevertheless, taking the 40,000 estimate as the best guess, that growth is rather less impressive considering the population of Canada increased an estimated 102,900 and the labour force by 54,200. Thus the reported employment rate actually ticked down from 62.0 per cent in July to 61.9 per cent in August. It’s a fact omitted from the finance minister’s little cock-a-doodle of employment statistics victory.

Similarly putting the “983,000 more Canadians employed compared to before the pandemic” into context; this too was the result of population and labour force growth, not an improved economic environment. For every month from September 2018 to February 2020, the reported employment rate was between 62.0 and 62.5 per cent, so the August 2023 employment rate of 61.9 per cent is not much to brag about.

To add more context: from February 2020 to August 2023, public-sector jobs grew 12.6 per cent versus only 3.3 per cent for the private-sector (including self-employed); thus, of the 983,000 jobs figure Freeland referenced, about half (or 476,000) were government jobs. The distinction is important—private-sector workers produce goods and services consumers demand (businesses that pay workers to produce what customers don’t want won’t survive long) while government workers are employed in producing what politicians decide.

Importantly, too, reported statistics on private-sector and public-sector employment materially understate labour dedicated to political or government production versus business production. The federal government gave $116.8 million (or more) in contracts to McKinsey since 2015. Those high-priced consultants were recorded as private-sector employees, but those working on federal contracts were producing what politicians decided and not necessarily goods and services Canadians demanded.

A final example: the approximately $28 billion in subsidies for electric vehicle battery plants this year. The workers at these plants are private-sector workers but produce goods decided by government, not consumers.

Putting it all together, it’s misleading to claim that recent employment statistics represent a thriving economic environment producing goods and services that Canadians want and that improve living standards, despite how politicians may try to spin the numbers.

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