In Bill Morneau's fight to keep his job, a falling unemployment rate helps
Governments that enjoy periods of low or falling unemployment have better chance of being re-elected
For a finance minister in desperate need of good news, word that Canada's unemployment rate has hit its lowest point in almost a decade — and one of its lowest levels since the 1970s — could not have come at a better time.
If the opposition parties have their way, embattled Finance Minister Bill Morneau may yet sink the Liberals' chances of re-election in 2019. But governments that keep the unemployment rate dropping during their mandate are more often than not given another term in office.
The latest numbers from Statistics Canada's Labour Force Survey put the unemployment rate at 5.9 per cent in November. The last time it was that low was between August 2007 and February 2008, when the unemployment rate was hovering between 5.8 and 6 per cent. Prior to that, the last time the annual rate dipped below 6 per cent was in 1974.
Not surprisingly, a lower jobless rate bodes well for a government's re-election prospects.
Since 1949, the annual unemployment rate averaged 5.9 per cent in election years in which federal governments were re-elected. It has averaged 7.6 per cent in election years coinciding with a government's defeat.
Follow the trends
The trend line is also significant.
Though Brian Mulroney's Progressive Conservatives were re-elected in 1988 when the unemployment rate was 7.8 per cent and Jean Chrétien's Liberals were victorious in 1997 when the rate was 9.1 per cent, these governments had seen the unemployment rate reduced by 3.5 and 2.3 points, respectively, since the previous election.
On average, the unemployment rate has dropped by 0.4 points between elections that returned a government to office, while it has increased by 1.2 points between elections resulting in defeat.
Since 1949, six of the seven governments presiding over the biggest decreases in the jobless rate were re-elected — while five of the six governments that saw the biggest increases were defeated or reduced from a majority to a minority government.
But the Trudeau government is the fourth consecutive one to see the unemployment rate drop during its entire tenure.
Between 1980 and 1984, when Pierre Trudeau and John Turner were in the prime minister's office, the annual unemployment rate averaged 9.9 per cent.
That dropped to 9.5 per cent during the Mulroney-Campbell years, to 8.2 per cent during the Chrétien-Martin era and to 7.1 per cent under Stephen Harper.
So far, Justin Trudeau's government has averaged a monthly unemployment rate of 6.8 per cent.
Low unemployment not a cure-all
A dropping jobless rate, however, is not a panacea. Despite seeing the rate drop from 7.5 per cent in 2011 to 7 per cent in October 2015, Harper was still defeated. When Paul Martin became prime minister in December 2003, the unemployment rate was 7.4 per cent. It was 6.6 per cent when he was defeated in January 2006.
The Liberal defeat in 2006 was the culmination of a period of decline for the party, sapped as it was by the sponsorship scandal. The party had also been in office for more than 12 years. In 2015, Harper's Conservatives were approaching the 10-year mark, when voters' appetite for change can get stronger.
But since before the Great Depression, only Louis St. Laurent in 1957 and John Diefenbaker in 1963 have met defeat with an unemployment rate below 6 per cent — and in both cases, the rate was above-average for the time. No government over that time has been defeated when the unemployment rate has dropped more than a point between election years.
Since the 2015 election that brought the Liberals to power, the unemployment rate has dropped 1.1 points.
Last week, Conservative Leader Andrew Scheer called for Morneau's resignation. But if the finance minister can hold on to his job — and the unemployment rate stays low — he stands a good chance of remaining employed on Parliament Hill beyond 2019.