It’s practically official: Alberta’s economy is slowing. Few economic indicators have started to reveal it yet, but that’s not surprising since most of them—the unemployment rate, wage growth, retail sales—are lagging indicators. They tell the story of what’s been. The story of what’s yet to come in 2013 will be one of a softer economy, prompted by lower resource prices.
There’s certain to be a lot of moaning and groaning about this, especially if layoffs pick up. But here are 10 reasons why a slowdown in Alberta isn’t such a bad thing:
#10: Wage pressures should ease up. Of course, not everyone’s wages are through the roof, and, indeed, poverty is still a pressing issue. But weekly earnings in Alberta are 19 per cent higher than the Canadian average and outpacing inflation by a good measure. That’s not good for the long-term health of the economy, especially if we want businesses to relocate to the province.
#9: Not all Gen Ys have a bloated sense of entitlement, but some of them do. So do some 50-year-olds, for that matter. A slowdown in the job market would be a reminder to every Albertan—young, middle-aged, or old—that the world doesn’t owe us anything.
#8: The softer job market will temper—but not halt—the inflow of inter-provincial migration. We want and need more people in Alberta, but when the inflow turns into an in rush that outpaces our ability to provide affordable housing and services, the imbalances outweigh the benefits.
#7: It could promote more economic diversity. One of the reasons why Alberta suffers a lack of diverse industries is that a dominant oil and gas sector sucks up skilled workers, financial capital, and even office space. Some cooling in the energy patch could allow other sectors to gain a foothold in Alberta.
#6: Leaner profits help companies become more cost-conscious. It’s difficult for companied to keep a lid on costs during boom times. When business is brisk, firms will often pay anything to secure the services and supplies they need. But a downturn imposes new discipline on companies to find efficiencies, innovations and creative ways to wrestle costs lower. And it paves the way for better profits when the economy picks up.
#5: A slowdown is better than a recession. And 2013 will not be a recession.
#4: Layoffs in the oilpatch will plant seeds of entrepreneurialism. It’s why a good fire is essential to the life cycle of a forest: the fire’s heat forces open the pine cones, which spreads seeds and gives rise to the next generation of trees. This has been a pattern for years in Alberta. Some energy company workers will get the pink slip, take their knowledge and a few laid-off co-workers, and start their own tiny company. They’ll form the next crop of junior and mid-sized players in 20 years.
#3: It’s good for national unity. Not everyone will agree with this assessment (especially those who’d willingly relinquish their Canadian passport for one issued by the Republic of Alberta). But when one province grows at a rate too far out of line with the others, national unity is strained. With a softer economy in Alberta, the gap between what we pay to Ottawa and the amount we receive will drop.
#2: It makes it easier to negotiate with B.C. (or others) on the need for pipelines to tidewater. It’s difficult for Alberta to plead poverty with 4 per cent unemployment, high wages, zero debt, and (until recently) embarrassing surpluses. Sure, the oil industry does benefit the whole country, but let’s be honest, it benefits Alberta most of all. An economic slowdown may be just enough to solicit some cooperation in building a pipeline to the west coast.
#1: It will reduce workplace stress. For the vast majority of Albertans, a slowdown won’t lead to a lay off, but it may lead to fewer overtime hours, less stress, and less rat race. Albertans already work the longest work week (including overtime) of anywhere in Canada. Enough already. Life is too short for that dubious honour.
The Great Moderation of 2013 will be just that—a moderation. Unemployment may rise, but we’re starting from a level already below full employment. This will be nothing like 1982, or even 2009. It will feel a bit sluggish, but bring it on! Faster is not always better. And the occasional soft years always make the boom years feel that much better.