P.E.I. lags behind most other provinces on employment income and other key metrics
According to a recent study published by the Fraser Institute, despite Prince Edward Island’s record of strong economic growth in recent years, it still lags behind most 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, P.E.I. had the lowest per-person GDP in the country.
The study also spotlights median employment income, which reflects the wages, salaries and commissions of working individual, including the self-employed. For this metric, P.E.I. is also the lowest in the country, with $30,100 in income per person. In fact, median employment income in the rest of Canada (excluding the Atlantic region) was $6,750 higher than in P.E.I.
Consequently, the typical working Islander takes home considerably less employment income than most other Canadians. While the gap has been closing over the past decade, much more progress is required to reverse the Island’s last-place status when it comes to incomes.
More worrying stats. According to the study, P.E.I.’s employment rate (59.3 per cent), which measures the share of the adult population that’s working, is tops in Atlantic Canada but 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 P.E.I.’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. P.E.I. 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, P.E.I. 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 8.8 per cent in P.E.I. While the province’s unemployment rate has trended slightly downward over time, it remained significantly above the national average throughout the entire 2010s.
By global standards, Islanders enjoy a high quality of life, freedom and opportunity. However, this shouldn’t make residents complacent about the province’s underperforming labour market. Key metrics including median employment income, the employment rate or the unemployment rate all suggest P.E.I.’s labour market performance lags behind most other Canadian provinces and the national average.