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Employment Remained Steady in October but Job Quality May Have Declined

Written by Strac Ivanov, MBA, President and Co-Founder of Vicinity Jobs Inc

Economically and politically, October 2013 was a tough month, mired in uncertainty. The US government was shut down for more than half of it, as media was discussing the potential consequences of something most considered unimaginable until only a couple of months ago: A default by the US government. All this uncertainty seemed guaranteed to take its toll on the job market in both Canada and the US: Businesses tend to delay hiring when they are uncertain about where the economy is going.

So it came as a surprise, when the October labour market reports for both Canada and the US revealed number that were … not bad at all. Employment and unemployment levels in Canada remained largely unchanged, with unemployment at its lowest since 2008. The US economy somehow managed to even add 204,000 jobs (notwithstanding the 800,000 government workers that were furloughed for over 2 weeks). What happened?

Some of the answer may be in data from the previous couple of months. The steady November job market might be the result of a spike in hiring demand levels that we at Vicinity Jobs recorded in the late summer weeks – mostly in August, and the beginning of September. Many of those job ads we found then would have resulted in more job than usual being created in October, offsetting the impact of possibly higher-than-usual number of layoffs.

It is also worth looking at the job trends by industry. The goods-producing sectors actually lost 12,200 jobs in October, mainly due to a decline in the number of workers in the Construction and Manufacturing sectors. But those declines were offset by increases in some services sectors: mostly Accommodation and Food Services (a code category for restaurants and hotels), but also health care and public administration (government jobs). It is worth noting that the government jobs “increase” actually only partially compensates for a much more significant decline in the sector since the beginning of the year. So the economy actually lost construction and manufacturing jobs (two industries that tend to pay better and provide better benefits for jobs requiring less education), while replacing them mostly with relatively lower-paying jobs at restaurants, coffee-shops, and hotels. The US labour market survey painted a very similar picture.

So while unemployment and employment remained unchanged, there were structural changes under the surface that most likely left workers worse off. And as for the hiring demand spike from August and September: It has now ended in most regions, and hiring demand is back at or below its previous levels. The US government crisis did not really get resolved last month either: The US government just kicked the can down the road and will be dealing with the same issue in January. For these reasons, I don’t expect a strong job market performance for the remainder of this year.