StatsCans job numbers a puzzle to sort out
As Alberta's job market fades, it's hard to get a read on how many positions have been lost
Today is Jobs Friday, usually a pretty good day for economists and financial reporters alike.
The monthly release of the Labour Force Survey from Statistics Canada probably gets more attention than any other of the agency's reports.
It sets the unemployment rate nationally and for each province and city, something that can then affect public policy, like employment insurance payments. It also tells us how many jobs were created across the country.
The payroll survey is probably the lesser of two evils.–Emanuella Enenajor, BoA Merrill Lynch
According to Friday's Labour Force Survey, Alberta lost 11,000 jobs in October, mainly in the hard-hit natural resources sector.
But over the past 10 months, something odd has been happening with the numbers in Alberta. Most months, the monthly survey showed the market holding up pretty well, with virtually no net job losses.
On the ground in Alberta, that seemed impossible. The province is in recession and job cuts are regularly announced in the oilpatch. Everyone seems to know someone who has lost a job. The energy sector estimates that 35,000 positions have been cut.
There's been a lot of head scratching. Are people losing energy jobs and going to retail? Are they moving to another province? Pivoting to self-employment?
Here's where it gets interesting, though. There's the other employment report, called the SEPH, the Survey of Payroll Employment and Hours. It also comes out monthly, but to little fanfare because of the time lag, two months behind the Labour Force Survey.
However, in August, the SEPH showed that there had been 53,000 jobs lost in Alberta in the past year. The August Labour Force Survey showed that 41,000 jobs had been created over the same period.
2 reports: A difference of 94,000 jobs
That's a difference of 94,000 jobs. So what's going on? Which report is right?
The Labour Force Survey is just that — a survey. Every month a battalion of interviewers contact 56,000 Canadian households to ask them who in their house has a job, along with a long, long list of other questions. Those numbers are then grossed up or extrapolated to get a picture of the whole country. Once you agree to do the survey once, you have to do it for six months.
In the provinces, the sample size is smaller. In Alberta, roughly 5,700 households are contacted, 0.5 per cent of the population. That is clearly part of the problem.
The Survey of Employment, Payroll and Hours is different. It's based on companies remitting taxes to the Canada Revenue Agency. The CRA shares with Statistics Canada the numbers of employees on payroll. It's a raw count of who's got a job with a company. It doesn't include household workers, the self-employed, or farmers. It won't tell you if the jobs were part-time or full-time, or the age, gender or education of the workers who lost or gained jobs
The first instinct is to assume the payroll report is more accurate, since all the jobs are counted. But it's not that simple.
"We do encourage people to look at both, but not necessarily to compare them because they measure different things," said Andrew Fields, an analyst with Statistics Canada, pointing out that SEPH counts payroll entries, not people.
"Someone could have two or three jobs, but in LFS, that would only be one person, in SEPH that would be two or three entries."
Which report is better?
That would likely explain some of the difference. As people lose salaried jobs, they find other work that doesn't place them onto a payroll. For example, Nicole Pittman, who lost her job at an ad agency and sold artisanal popsicles at festivals through the summer.
But that probably doesn't account for a discrepancy of 94,000.
"You have a household survey that's quite volatile and a payroll survey that's lagged and subject to heavy revisions," said Emanuella Enenajor, a senior economist with Bank of America Merrill Lynch Global Research.
"The payroll survey is probably the lesser of two evils."
Unless you need the unemployment rate. There is only one source for the unemployment rate and that is the Labour Force Survey, which shows Alberta's unemployment rate marching higher over the past year, from 4.6 per cent in September 2014 to 6.5 per cent a year later.
The same report shows the creation of 31,000 jobs in that period. Statistics Canada suggests that's because Alberta's population grew over the period. So there are more people looking for work, but no new jobs created, hence the increase in the unemployment rate.
If it seems ridiculously complex, that's because it is, and economists generally look at both reports and over time simply hope that the circle is squared.