Nova Scotia lags behind most other provinces on employment income

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Appeared in the Halifax Chronicle Herald, May 6, 2023
Nova Scotia lags behind most other provinces on employment income

According to a new study published by the Fraser Institute, Nova Scotia lags behind most other provinces on key labour market indicators.

Let’s start with the broadest measure of income analyzed in the study—Gross Domestic Product (GDP) per person, the most commonly used metric to compare overall economic performance across jurisdictions. In 2019, the last pre-pandemic year, Nova Scotia had the second-lowest per-person GDP in the country, ahead of only Prince Edward Island.

The study also spotlights median employment income, which reflects the wages, salaries and commissions of working individual, including the self-employed. For this metric, Nova Scotia is the third-lowest in Canada, ahead of only Newfoundland and Labrador and P.E.I. Specifically, median employment income in the rest of Canada (excluding the Atlantic region) is 11.3 per cent higher than in Nova Scotia.

Consequently, the typical working Nova Scotian takes home considerably less employment income than most other Canadians. And the gap persisted over the 2010s.

More worrying stats. According to the study, Nova Scotia’s employment rate (57.9 per cent), which measures the share of the adult population that’s working, trails the rest of the country (outside Atlantic Canada) where 62.4 per cent of adults are working. A similar gap has persisted throughout the period analyzed, going back to 2011.

One reason for this difference is Nova Scotia’s older population. However, once analysis is restricted to the core working age (25-54), a gap still exists. Regardless of the causes, a lower employment rate is worrying for several reasons including the implications for government finances. The province already faces a number of long-term fiscal headwinds. All else equal, a smaller share of the population working will mean less income tax revenue flowing into government coffers to help provide services to an aging population.

Finally, the province’s lower employment rate is also due to the fact that more people actively looking for work in the province are unable to find it. The Bank of Canada defines the unemployment rate as the percentage of the labour force that does not have a job and is actively looking for work. On this indicator, too, Nova Scotia lagged behind most of the country in 2019 and throughout most of the preceding decade. In 2019, the unemployment rate in the rest of Canada (excluding the Atlantic region) was 5.5 per cent compared to 7.4 per cent in Nova Scotia. And the province’s unemployment rate was higher than the Canadian average every year of the 2010s.

By global standards, Nova Scotians enjoy a high quality of life, freedom and opportunity. However, residents should not be complacent about the province’s underperforming labour market. Key metrics including median employment income, the employment rate and the unemployment rate all suggest Nova Scotia’s labour market performance lags considerably behind most other provinces and the national average.