Fraser Forum

Alberta’s higher taxes, rapid debt accumulation and higher minimum wages are hurting workers

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A strong labour market is critical for the prosperity of workers. It matches workers looking for the right job opportunity with employers looking for workers with the right skills.

But to properly judge the strength of Alberta’s labour market performance, we must go beyond the headlines about how many jobs were created last month or whether unemployment has ticked up or down. Indeed, a more comprehensive measure is needed.

And that’s what we use in a recent Fraser Institute study that compares the labour market performance in Canadian provinces and U.S. states from 2015 to 2017. The study calculates an overall score (from 0 to 100) for each jurisdiction based on eight indicators including private sector and total employment rates, the unemployment rate, the extent of under-employment (measured as the share of involuntary part-time workers) and worker productivity (measured by the average value of goods and services produced by each worker). Higher scoring jurisdictions ranked better.

Alberta’s overall score on labour market performance was an abysmal 48.1 out of 100. That puts the province near the bottom, ranking 48th of 60 jurisdictions. For a province that was not long ago a centre of opportunity for workers across the country, this should be an alarming result—both for Albertans and Canadians more generally.

Of course, Alberta’s economy was hit hard by a drop in commodity prices. But so were other energy-dependent jurisdictions that have relatively better performing labour markets. Texas, for example, ranks much higher than Alberta—18th overall, scoring 62.8 out of 100.

One of the major sore spots for the province is the decline in private-sector employment, which decreased annually by 1.1 per cent, on average, ranking 58th. Weakness on this indicator is especially concerning given the importance of a strong and dynamic private sector, which ultimately generates the wealth that helps support the government’s collective activities.

Alberta also underperformed on the average unemployment rate over the period (at 6.4 per cent, ranking 54th overall). For perspective, in Texas, the average unemployment rate was lower than in Alberta at 4.4 per cent. In top-performing North Dakota, the average unemployment rate (2.8 per cent) was less than half Alberta’s rate.

Moreover, compared to people in other provinces, Albertans are more likely to experience long spells of unemployment. Over the three-year period, an average of 21.4 per cent of unemployed Albertans were unemployed for 27 weeks or more—the highest rate among Canadian provinces.

Albertan workers were also much more likely to be stuck in involuntary part-time work, when they would otherwise want full time work. On this indicator of under-employment, Alberta ranked 45th overall with an average share of 4.4 per cent involuntary part-time workers relative to the total number of employed. Again, for perspective, Texas’s share of involuntary part-time workers was lower at 3.3 per cent.

While Alberta’s poor overall labour market performance partly stems from the drop in commodity prices, the provincial and federal governments certainly haven’t helped. Policy choices such as higher tax rates, rapid debt accumulation, higher minimum wages, and more stringent labour and environmental regulations have discouraged productive economic activity at time when the province desperately needs to attract investment, entrepreneurs and skilled workers.