Southwestern Ontario hit hardest by decline in manufacturing, study shows

A Statistics Canada study on the impact of the decline in manufacturing since the early 2000s shows employment rates in southwestern Ontario plummeted by 10 per cent or more – almost twice the rate of the national average.

The analysis confirms the extent of job losses and reduced wages for men since the early 2000s

A new StatsCan study shows the downturn in manufacturing since the early 2000s triggered male unemployment rates of 10 per cent or more in southwestern Ontario - almost twice the national average. (Rebecca Cook/Reuters)

Employment rates for men in southwestern Ontario plummeted by 10 per cent or more, almost twice the national average, since the manufacturing industry's decline in the early 2000, a new Statistics Canada study shows. "These are eye-opening figures. We've all known for a while the effect of disemployment on local communities, but just the sheer size and magnitude of this confirms how big a problem it was losing all of these manufacturing jobs," said Mike Moffatt, assistant professor in the Business, Economics and Public Policy group at the Ivey Business School in London.

As employment in the manufacturing sector fell, proportionately few men became employed on a full-time basis, the study found. The percentage of Canadian men aged 21 to 55 who were employed full time declined by 5 per cent, from 63.6 per cent in 2000 to 58.6 per cent in 2015.

However, the drop in full-time employment rates was more pronounced in areas such as southern Ontario, where the downturn in manufacturing was most severe. Full-time employment rates for men fell by 10 per cent or more in centres such as Windsor, Sarnia, Oshawa and Kitchener-Cambridge-Waterloo.  The decline in London was 8.5 per cent.

In contrast, the results show little evidence that the decline in employment in the manufacturing sector reduced full-time employment for women.

The study also reveals the decline in manufacturing reduced real wages for men, especially less-educated men. It found that from 2000 to 2015, a 5 per cent decline in the share of the population employed in manufacturing led to a decline in real weekly wages of male employees of at least 6.9 per cent in the affected areas.

Real wages for men with a high school diploma or less dropped by at least 7.3 per cent , compared with a decline of at least 4.8 per cent for men with a bachelor's degree or higher.

The study found that the decline in real wages for men was not mirrored in wages for women. There was little evidence that women's wages were affected by the downturn in manufacturing.

Moffatt said he found that finding surprising. His own study, to be released later this year, contradicts that conclusion. "It does actually find some declines in both women's wages and women's employment levels."

MIke Moffat is an economist and assistant professor at the Richard Ivey School of business. (CBC News)

"We often think about manufacturing as being a male-dominated industry, but in fact some of the sub-industries … that faced the largest declines were in things like clothing manufacturing, which had over 50 per cent of the workforce [consisting] of women."

The downturn in employment and the decline in wages has big political and economic ramifications, Moffatt said. .

Across southern Ontario, there are fewer people working and fewer people paying taxes and that's particularly problematic at the municipal level,he said.

"We're seeing both in Canada and the United States, the opioid crisis hitting areas that have lost manufacturing jobs harder than other areas. So, there are social ramifications."

The most obvious political impact was seen in the last US election, Moffatt said.

"It was not a coincidence that Trump did very well in the so-called rust-belt states. There's a lot of discontent on what's been happening in the manufacturing sector and what's been happening to manufacturing jobs, and you know that will absolutely change voting behaviours."

Moffatt said it's taken a long time for this data to surface, and the one big takeaway for him is that governments need to be paying more attention to what's happening on the ground to try and reverse the changes "while they're reversible."

There's also a need for stronger analytics, he said. 

"We need better labour market data, so that [governments] have a better idea of what's going on on the ground and are able to make those changes before it's too late."