Politics·Analysis

Spin Cycle: Can 1.3 million new jobs be created in 5 years?

The promise of jobs, jobs and more jobs has long been a staple of election campaigns. The NDP is offering a basket of job-creation goodies. The Liberals want to inject $125 billion into infrastructure spending. Now the Conservatives want in on the action — promising 1.3 million new jobs in the next 5 years.

This election has a theme common to almost all others before it: everyone is promising more jobs

Conservative leader Stephen Harper says a re-elected Conservative government would set a goal of creating 1.3 million net new jobs by 2020. 2:20

The promise of jobs, jobs and more jobs has long been a staple of election campaigns.

NDP Leader Tom Mulcair has promised a basket of goodies to help manufacturing and other sectors create jobs, as well as help for young people and veterans to connect with the new jobs.

The Liberals, meanwhile, decided to go big or go home by promising $125 billion in infrastructure spending — even if it means short-term deficits.

Now it seems the Conservatives, not wanting to be outdone, are making a bold promise of their own.

Perhaps channeling Babe Ruth, Conservative Leader Stephen Harper figuratively pointed to the faraway bleachers on Tuesday and promised "1.3 million net new jobs."

The spin

"I would say that there is no reason why we can't have a similar record on that we have now," Harper told reporters on Tuesday.

Harper points out that the economy created 1.3 million new jobs since the "depths of the global recession."

Of course, those jobs were created in large part by the unprecedented stimulus spending the government launched — including the largest deficit in Canadian history.

This time around is quite different. Harper's plan to duplicate the results involves maintaining a balanced budget, reducing employment insurance premiums two years from now and re-introducing the home renovation tax credit.

The counter-spin

"I find that number, to put it mildly, wildly optimistic," Liberal Leader Justin Trudeau said.

Trudeau is dismissing Harper's claim as just another empty campaign promise.

No one is going to campaign against creating more jobs. In fact, as mentioned, everyone in this campaign is promising that. 

The critique, and indeed the test, of Harper's promise is whether it is a realistic goal and, if so, are the measures in place to achieve it.

Economics and demographics

To borrow an old adage, if you asked 12 economists if tax cuts lead to job creation — you are likely to get 13 different opinions.

If one factor were the magic key to unlocking jobs, it would have been turned long ago and politicians would have nothing left to offer on the subject.

A larger influence for employment in the next five years may be demographics.

After years of discussing the effects of the aging population, Statistics Canada seems to believe it is upon us.

According to the agency's population projections, the population aged 15 and over is expected to grow by about one million between now and 2020 — but that figure hides a more troubling forecast.

If the focus is on new full-time jobs in high-wage industries, as Harper has indicated, it's instructive to look at those most likely to fill such jobs — people aged 15 to 64.

Statistics Canada projects that demographic will grow by no more than about 580,000, but could actually shrink slightly.

Statistics Canada also tells us that currently there are 1,306,100 unemployed people in that demographic.

If the population growth is flat, and 1.3 million new jobs are created, the 6,100 people who remain unemployed might start to feel a little left out.

Greater participation

The problem with eliminating the unemployment rolls, economists tell us, is it puts a lot of upward pressure on wages. Which in turn pushes up prices both because companies need to make more to pay their employees and because more people with better paying jobs create more demand and inflation.

Now, the promise of higher wages could lure more people into the labour force.

Today, about 78 per cent of Canadians between the age of 15 and 64 either have a job or are looking for one.

The rest, about 5.2 million people, are not able to or are not interested in working at this time. 

Those not prevented from working because of illness or other uncontrollable factors could be convinced to join the labour force — if the price was right.

If one million of the new jobs came from the ranks of those not currently considered part of the labour force, the participation rate would jump to 82.2 per cent.

That would be the highest in the G7. Among OECD countries, only Iceland — with its population of fewer than 350,000 — would have a higher participation rate for employment.

The rinse

Unlike the instant gratification available to those in the stands in Wrigley Field 83 years ago when The Babe called his shot, this ambitious goal won't be settled with the next pitch, but rather not for another five years and (at least) two more elections, including this one.

Either that many jobs will be created, or they won't.

What the demographics suggest, however, is that Canada's economy is going to look very different in five years.

As more and more people join the rank of the 65-plus and start drawing their hard-earned retirement payments, it will fall on those still working to continue contributing.

While Statistics Canada believes the growth in population of Canadians between 15 and 64 will be flat to slight — it's projecting there will be at least one million more seniors in 2020.

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