The New West: Money, jobs and a flood of young adults

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posted November 20, 2014

Question: If you’re young, or have very little education, where’s the best place in the country to find a job, make a decent income and prosper? Answer: Alberta, followed by Saskatchewan and British Columbia.

Most Canadians likely suspect that economic opportunities are increasingly available in Western Canada. But the hard numbers for young adults (a group I spotlighted in my recent study) reveal stunning, positive facts about the three Western-most provinces.  The same data is flashing neon warning signs at Central and Eastern Canada.

Consider migration patterns for the 25 to 34 age group— call them the “young career class” likely finished their education and seeking a job. Over a 10-year period (2003 to 2012), Alberta gained 60,855 young career class adults, on a net basis, from other parts of the country. British Columbia gained 10,643 while Saskatchewan stopped losing young people and gained 581.

During that same 10-year period, on a net basis, Quebec lost 24,355 young adults while Ontario lost 27,451. (Manitoba and Atlantic Canada also bled young adults but that’s been a constant for some time.)

So what explains this westward migration?

Private sector investment, which left a cornucopia of jobs and income in its wake.

The figures for private sector investment (excluding residential construction but capturing non-residential structures, machinery and equipment) clearly point West.

The numbers are a slog, but revealing. In 2013 alone, Alberta garnered a total of $83.5 billion in investment followed by Ontario ($42.1 billion), Quebec ($26.8 billion), British Columbia ($23.3 billion) and Saskatchewan ($14.6 billion). Do the math. Canada’s two most populous provinces, Ontario and Quebec, had less investment than did just Alberta.

With Newfoundland and Labrador added in (which had $8.2 billion in total private sector investment last year) and converting to per worker calculations, the results are even more stark: In 2013, per worker private sector investment was $57,122 in Newfoundland and Labrador followed by Alberta ($56,675), Saskatchewan ($47,348), and Manitoba ($16,918).

Meanwhile, Ontario ($9,411) saw less private sector investment per worker than did Nova Scotia ($9,878) and also lagged Quebec ($10,206). All three were only slightly ahead of Prince Edward Island ($9,159).

The relative lack of private sector investment should greatly concern Ontarians and Quebecers. It signals that their economies now replicate the economic malaise of Atlantic Canada—save the very recent uptick in Newfoundland and Labrador.

More numbers. The 10-year average unemployment rates for the young career class were significantly higher in Quebec (7.3 per cent) and Ontario (7.1 per cent) when compared with Alberta (4.2 per cent) and Saskatchewan (4.8 per cent).

And here's another statistic to keep in mind. As a share of those already unemployed in the young career class, here is the proportion of those out of work for six months or longer: Alberta (11.5 per cent) and Saskatchewan (13 per cent), and Ontario, where 23.5 per cent were unemployed for more than six months - the highest percentage in the country.

But what about the wallets and bank accounts of working Canadians?

Alberta and Saskatchewan have the smallest proportion of tax filers who declared less than $30,000 in income (42.2 per cent and 47.4 per cent respectively). In every other province, more than half of declared tax filers earn less than $30,000. Alberta and Saskatchewan also have the largest middle classes as a percentage of their populations and a larger share of high–income earners (above $100,000) compared with the other eight provinces.

Lastly, take a look at total household per capita income (adjusted for inflation). Eleven years ago, Alberta led the league (at $40,744) with Ontario second ($37,018).

By 2012, while Albertans ($52,207) remained on top, followed by Saskatchewan ($42,249) and British Columbia ($41,239), Ontario had dropped to fourth place ($40,838) with Newfoundland and Labrador ($39,836) nipping at Ontario’s heels.

Here’s the takeaway. In recent years, the young adult career class in Canada has flocked to Alberta, and to a lesser degree, British Columbia; Saskatchewan is now retaining its young adults.

Why? Because the West is where private sector investment money flowed. And jobs, low unemployment, shorter durations of unemployment, and high incomes have followed. Meanwhile, Central Canada now resembles Atlantic Canada, except Newfoundland and Labrador where things are picking up.

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