Alberta has just set a record. No, it has nothing to do with our cold weather. It has to do with joblessness.
While Canada’s employment numbers are up, Alberta’s are down and that’s bad news, not just for Alberta but for the entire country.
University of Calgary associate economics professor Trevor Tombe has crunched Statistics Canada’s latest numbers released Friday and discovered that in January the share of young men employed reached the lowest level on record. Ever since records have been kept, starting in 1967, the number of young men without a job has never been higher.
Less than 55 per cent of young men between the ages of 15 to 24 have a job — or about 45 per cent don’t!
According to Tombe, when the recession started in October 2014, 67 per cent of men aged 15 to 24 had a job. In 2016, when the recession formally ended, 60 per cent had a job.
But now, in 2019 — when much of the rest of the country appears to be rebounding soundly from the end of the economic doldrums in 2016 — Alberta’s young men are even worse off than at the peak of the recession.
For 22-year-old Josh, who asked that his last name not be used, he says he has had to seek counselling for depression.
“I’m really not very good at school, but I’m smart in other ways,” he said from his Calgary home. Josh may not be well-educated but he has lots of skills. He “can fix just about anything” and is pretty good at carpentry, but his job framing houses and drywall taping dried up in September and except for a few odd jobs he’s gotten here and there by placing classified “handyman available” ads online, he’s been sitting at home collecting employment insurance benefits that will soon run out.
“I’m losing hope,” he said. “I feel like a loser, though I’m working hard at changing that dialogue in my head. Some of my friends have finished university degrees and have good jobs and I’m back living in my parents’ basement — I’m a living, breathing example of the loser cliche.”
It’s so upsetting to hear a young person with so much promise sound so down on himself. Luckily for Josh, he has a supportive family that is willing to pitch in to help him get more education to improve his prospects.
And that, says Tombe, is often what happens during economic slumps in Alberta. Young people with great-paying jobs during boom times end up upgrading their education during down times.
According to Statistics Canada, Alberta jobs declined for the second consecutive month, down 16,000 jobs in January and 15,000 in December. The unemployment rate increased by 0.4 percentage points to 6.8 per cent.
Renowned economist Jack Mintz, President’s Fellow at the School of Public Policy at the University of Calgary, says it’s not surprising that jobs are down in light of oil curtailment. Sure, curtailment was needed and helped narrow the oil price differential, but when you make less oil, you need fewer workers.
Outside of the oil price collapse, Alberta’s woes, however, really started, he says, when Rachel Notley first announced upon becoming premier in May 2015 that she would review Alberta’s royalty rates for the province’s energy sector, which “created great uncertainty and spooked investment.” Ultimately, Notley, to her credit, didn’t raise royalty rates, but in the almost one-year review period, investment interest just dried up, says Mintz.
“Raising the corporate taxes in Alberta didn’t help and then the carbon taxes were a big negative, as well as the personal tax hikes,” he said.
Then comes the regulatory quagmire for energy projects. While most regulatory issues for pipeline projects are federal, even provincially regulated projects take much too long, added Mintz, who sits on the board of Imperial Oil.
“You talk to Imperial Oil and it took five years for the Aspen in situ oilsands development project near Fort McMurray to get approved by the Alberta government and you talk to people in the sector and they’ll talk about the slowness of the Alberta regulatory system whereas in Texas you can get a drill approved in a month or two. So some of those things were inherited from the past, but it’s been death by a thousand cuts,” said Mintz in a telephone interview Friday.
“U.S. tax reform has also put Alberta’s corporate tax rate really at a complete disadvantage now,” he said.
Alberta’s corporate tax rate is 12 per cent and the federal government’s is 15 per cent for a total of 27 per cent. Ontario and Quebec are now at 26.5 per cent. Both of those provinces are doing the best in Canada in terms of job growth.
Meanwhile, the corporate tax rate in Texas is now 21 per cent, thanks to U.S. federal corporate tax reductions to 21 per cent — compared to 35 per cent one year ago.
Mintz says even if all of the above provincial issues are addressed in the next few months, either by a change in government in the coming spring election or with radical policy changes, investors are well aware of federal issues, particularly Bill C-69, is going to be “disastrous” for the sector.
“Then there’s the tanker ban on the West Coast, and even if Trans Mountain Pipeline does get built, the concern is Alberta is still not a good place to invest even if there’s a better and more accommodative provincial government,” said Mintz.
“This is what happens when policy is made for ideological reasons and you don’t want to listen to the experts,” added Mintz.
Yes, folks, policy matters — a lot. In five short years, Canada has gone from one of the best places in the world to invest capital to one where capital is fleeing.
Here’s hoping for the sake of young men like Josh that the provincial and federal elections will bring in new business-friendly governments so that a rising tide of confidence and investment will lift all our boats.
Licia Corbella is a Postmedia opinion columnist.
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