Canada’s slow-motion jobs crisis

When it comes to Stephen Harper’s track record on job creation, and what it might mean for his re-election bid next year, it helps to know which employment legacy we’re referring to: his boast that the economy has created 1.1 million jobs since the recession, or the three Senate jobs he doled out in 2008 that haunt him still?

The consensus is that the latter poses the greatest risk to the Prime Minister. The Mike Duffy Senate expense scandal will almost certainly continue to deliver manna to journalists right through the rest of the year, with the possibility of a trial underway next fall, just as the campaign gets going. Patrick Brazeau’s fraud case will probably bubble up somewhere in there and Pamela Wallin’s might, too, if the RCMP follow through on their fraud allegations with charges. All three cases threaten to cast a long shadow over the campaign.

But there’s been remarkably little attention paid to just how much Canada’s job market, the cornerstone of Harper’s economic messaging, is crumbling, and what danger that could pose to the Tories. It’s getting hard to find any good news among the monthly jobs figures. In June, Canada created a mere 72,000 net new positions from the year before, just one-third the average level of job creation for any 12-month period going back to the 1970s. In fact, that 72,000 annual jobs figure was much closer to the 45,000 level Canada endured when the job market briefly cratered after the 9/11 terrorist attacks. That marked Canada’s slowest pace of employment growth outside of a recession in 40 years, and we’re now just a notch above that. Might we reach that low again? It’s entirely possible.

Undeterred, the government has clung to its jobs-a-plenty message. At a speech in Calgary in early July, Harper told party loyalists the 1.1 million new jobs added since the recession ended have been “overwhelmingly full-time, high-paying, private sector jobs.” But even that’s debatable. The quality of new jobs has been on the decline; half of all new employment gains over the last year were in part-time positions, and the bulk of new jobs since May 2009 have been in occupations that paid wages on the mid-to-low end of the scale.

It wasn’t a surprise Harper chose Calgary for that speech. Aside from his party’s deep roots in Alberta, the province has been the one true place where his message resonates. With a population just one-third that of Ontario’s, Alberta created nearly 60 per cent as many jobs as Ontario has since the recession. In fact, Alberta was Canada’s job engine long before Harper came along. Without it, employment growth would be appalling.

And yet the weakening national job market remains an issue squarely on the back burner. Indeed, Canadians seem largely indifferent to it, so far. Two bits of data landed recently that shed some light on how people see the economy, and both show job worries are far from top of mind. A Nanos Research Group poll for Bloomberg News asked Canadians if they feel secure about their jobs, and more than 68 per cent of respondents reported a sunny outlook. At the same time, results from a series of focus groups conducted by the federal Finance Department in January have been released, showing that issues such as education, health care, pensions and veterans were all seen as priorities above the economy. In other words, now that Canadians no longer have to panic about their next paycheques, they feel liberated to worry about other squishier, albeit important, issues.

Part of that is likely due to the nature of this slowdown. Compared to the global recession, which hit employment levels like a sledgehammer, this made-in-Canada jobs crisis is unfolding at a glacial pace.

But it’s also the case that Canadians have spent the better part of the last five years being told, and telling themselves, that Canada’s economy is somehow exceptional. We’ve heard it so many times, we actually believe it. This might seem as though it would play to Harper’s favour. And, to reinforce that notion, we’ll no doubt be inundated with new mutations of Action Plan ads touting measures Ottawa has undertaken to promote “jobs, growth and long-term economic prosperity.”

But there’s a danger for Harper in this complacency. Canada isn’t special. We do not have a Teflon job market. And, unless things begin to turn around, at some point it will dawn on a great many people that the shine has come off Canada’s economic miracle—at which point, voters are going to ask: So, Mr. Prime Minister, what have you done for us lately?

What are Harper’s options? Well, you can be sure that if his government was wary in the past of instituting policies that might rock Alberta’s oil patch—carbon tax anyone?—those considerations are now completely off the table. And for a Prime Minister whose relations with his counterpart in the U.S. have been among the most strained in history, Harper has to hope beyond hope that the American recovery is not just sound, but a real humdinger.

There are limits to what any Prime Minister can do to juice the job market when so much depends on the policies of provincial governments. In the case of Ontario and Quebec, simultaneously the two biggest job markets and biggest job laggards in the country, the trend has been toward more intrusive government, bigger deficits and higher taxes—none of which has resulted in a lick of success at boosting employment. At least in Quebec, Premier Philippe Couillard has embarked on a plan to tackle the province’s fiscal shortfall. But that necessary belt-tightening will itself weigh on a job market where the majority of employment gains in recent years have been in the public sector.

Come to think of it, maybe Harper might welcome a bout of Senate scandal headlines come next year. It would be easier to fend off than the jobs crisis that threatens to gut his track record on the economy.