Special to The Globe and Mail
Published Friday, Apr. 22, 2016


Those who have never spent much time in either Edmonton or Calgary could be forgiven if they think the two cities have identical characters. After all, on the surface they are much the same: young cities of just more than one million, fuelled by oil, rodeos, hockey and pickup trucks. (Although don’t get stuck in stereotypes. Both are also home to superb universities, arts and culture, and culinary excellence.)
But after that, the Edmonton-Calgary comparisons end and the stark contrasts appear. Once you start peeling back the layers, there are more differences than similarities. And none of this is more evident than in the recent changes in each city’s labour market.

Between March, 2012, and March, 2016, Edmonton’s unemployment rate rose from 5.6 per cent to 6.9 per cent – an increase of a little more than one percentage point and still below the national average.
Over the same period, however, Calgary’s unemployment rate jumped from 5.1 per cent to 8.6 per cent – an increase of three-and-a-half percentage points. It now has the highest unemployment rate of any large city in the country, and is closing in on Nova Scotia’s provincial rate of 8.9 per cent. Even Windsor, Ont., and Saint John – cities that have famously struggled with weak job markets – currently have lower rates of unemployment at 7 per cent and 8.3 per cent, respectively. (All rates quoted are for March, 2016, three-month moving averages, adjusted for seasonality).

What accounts for the difference in joblessness between Alberta’s two major cities?

The major factor is economic diversity. Edmonton is relatively more diversified, home to proportionately more jobs in the public sector, health care and education. And unlike the approach taken by previous provincial governments in times of economic downturn, Alberta’s current government has emphasized that it is not going to reduce employment in the public sector.

Calgary also has these sectors, to be sure, but petroleum head-office jobs account for a greater share of employment. Calgary’s total labour force is almost 5 per cent larger than Edmonton’s, but the latter has the larger university and is the centre of Alberta’s public sector.

The other difference is the type of energy sector jobs in each city. Edmonton is also an oil town, but jobs in the region tend to be more closely connected to the servicing and manufacturing of current oil production. Oil prices may have dropped, but the volume of oil being produced and refined in the province has not wavered significantly. That means jobs servicing existing production have been affected less severely.
Head-office jobs in Calgary, on the other hand, tend to focus on the planning, engineering and financing of future oil-patch investments. With many of these projects being shelved or cancelled, disproportionately more employees have lost their jobs.

The fact that Calgary’s jobless rate has jumped higher and more quickly than Edmonton’s has handed the federal government a conundrum. To address the deterioration in the petroleum sector, Ottawa has extended a few more weeks of employment-insurance eligibility to certain regions in Alberta and Saskatchewan. The program is formula-based, depending on the increase in the rate of unemployment in the region.

But because Edmonton’s rate has risen less than Calgary’s, unemployed workers in the provincial capital are not afforded the same number of weeks as their jobless counterparts in Calgary. That, Edmonton’s business and labour leaders claim, is unfair.

And unfair it is – especially to those unemployed Edmontonians in the petroleum sector. The fact that Edmonton has more government and quasi-public sector jobs than Calgary is cold comfort to a laid-off oil-field worker.

Although both cities are suffering from energy-sector woes, they both, fortunately, remain strongly entrepreneurial. This will spur new industries, new products and new services – even if the nature of these seems a bit elusive and difficult to pinpoint at the moment. The good old days of $100 (U.S.) oil are gone, and they may never return. But new days will come, better than before, anchored in a new and more diversified energy sector.
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Todd Hirsch is the Calgary-based chief economist of ATB Financial and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.

Contributed to The Globe and Mail
Published Friday, Apr. 08, 2016

Economists love offering policy solutions. A tax cut here, an infrastructure program there – all well intended and mostly intelligent advice to politicians who are desperate to boost the real GDP. But it’s all built on a very shaky foundation. If citizens are excluded from meaningful involvement in their economic systems, none of it matters.

Donald Trump has tapped into a vein of discontent that isn’t going away, whether he wins the White House or not. Those disenfranchised from mainstream politics are connecting with Mr. Trump’s messages. They are hearing, possibly for the first time, a powerful person say things that resonate with them. And they are resonating not because they are terrible people, but rather because they’ve been left behind in America’s 21st-century economy.

Similarly, the Occupy Wall Street movement of 2011 struck a chord with another group of outsiders who felt the system was stacked against them. Because it lacked focus and organization, the protest has mostly petered out. But the discontent hasn’t. In 2016, some of those disenfranchised 99 per cent are finding their message in Bernie Sanders.

On this side of the border, the Idle No More movement of a few years ago attempted to bring aboriginal discontent to the forefront. While it did have flashes of effectiveness, it too lost momentum. But aboriginal Canadians remain largely marginalized and forgotten. Recent steps by Ottawa – mostly in reaction to the tragedies in La Loche, Sask., and the Pikangikum First Nation – are politically expedient responses. But anyone who is close to the challenges knows that simply throwing money at the problem isn’t going to solve it.
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The issues are complex, but at their root is a common thread: people are excluded from the mainstream economic and political systems that run the country. Finding ways to more fully engage marginalized people is more than just doing the morally correct thing. If extending kindness and love is not reason enough, there is a compelling economic reason for greater inclusion of those who’ve been pushed to the edges of the system.

Social and political stability are the basic building blocks on which a successful economy is built. This is a lesson that troubled nations like Venezuela and Brazil are currently learning. If people lose faith in governments, if they become so hopeless about finding a way to achieve and succeed in the system, the system itself will start to collapse.

And following that will be an outflow of capital investment, entrepreneurial energy and intellectual might. Money, businesses and educated people – if they start pouring out, the economy doesn’t stand a chance.
While Canadians have just elected a Prime Minister who shares virtually nothing with Mr. Trump, we cannot be smug. We face challenges of exclusion as well. Aboriginals are the most obvious, but they are not the only ones. Canadians ensnared in poverty and homelessness also struggle within a system that, at times, makes no sense. How can they get a job or a bank account or a cellphone – things most of us take for granted – if they have no physical address?

The economics of inclusion is complicated. It’s glib to suggest that, if we are all just a bit nicer to each other, all will be well. The reasons for political and economic exclusion are sometimes generations old, and they won’t be solved overnight. Nor is it possible to offer practical solutions in the confines of this column.

Regardless of who wins the White House, the United States ignores at its peril the festering rage of those who’ve been pushed aside and trampled by The American Dream. A loss for Donald Trump won’t make the rage go away (in fact, it could make it worse). And in Canada, throwing cash at the plight of our own discouraged and excluded citizens does nothing to get at the root of the problems.

Making our education, social and economic systems more inclusive is not easy work. And it’s more than about being big, kind-hearted Canadians. It’s an economic imperative. Our American friends are in some trouble – now, more than ever, Canada needs to show leadership in how it’s done.

Todd Hirsch is the Calgary-based chief economist of ATB Financial and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.