Yukonomist: The missing 1,100

Yukonomist Keith Halliday

Navigating COVID-19 continues to be like skiing crud with fogged goggles. The latest surprise snowstacle appearing in front of economists is the so-called shortage economy.

When the pandemic hit, many were expecting a major slump across the whole economy. Instead we find ourselves in a world where some businesses, such as tourism outfits, are in deep financial tree wells while others are literally turning away customers.

One of my favourite restaurants in town just announced that, due to staff shortages, they’ll be closing Sundays and holidays. Another only offers medium pizzas. Our server told us messing with small and large just takes too much time for the stretched kitchen staff.

A glance at the Yukon Bureau of Statistics labour force reports gives us some numbers to back up the stories you hear around town about labour shortages.

In January 2020, just before the pandemic arrived, the seasonally adjusted Yukon labour force aged 15 years and older was 24,000. In August of 2021, the latest month available, the figure was 22,900. (The labour force is defined as people who are either working or actively looking for work.)

Our population is up overall during this period. Yet 1,100 fewer Yukoners were in the labour force.

Taking 1,100 workers out of an economy the size of the Yukon’s is a big deal.

Of these 1,100, a disproportionate number are women. The unemployment rate for Yukon women is lower than that for men, but that is partly because more women have left the labour force. You are not counted in unemployment statistics if you are not actively looking for a job.

Youth also seem to have been affected more, but the difference in the statistics by age is not massive and there are large margins of error. With our small population, there is more error in our labour statistics than in a big province.

Nonetheless, it looks clear that our labour force is about 1,000 people smaller than it was before COVID-19.

The big question is why.

Similar phenomena have emerged across North America and have sparked a blizzard of blamestorming. Some have blamed governments for overly generous pandemic support programs, which enable workers to stay home rather than getting jobs. Some have blamed companies for not raising wages enough to compensate for the added risk of going in to work with unvaccinated colleagues and customers. Some have pointed the finger at workers for getting too used to working from home and refusing to take in-person jobs. Others have flagged school systems where unexpected closures and strict rules on keeping the kids home when they have sniffles mean that parents, usually mothers, have to take time off work. Nearly everyone agrees that reduced immigration has hurt the labour supply.

The labour market is one of the complex topics economists study and there is little academic consensus on which of these factors might be the biggest contributor. Especially since it’s a challenge to crunch the data in real time as the pandemic progresses.

Eventually, pandemic data is expected to provide a trove of insights. This year’s Nobel prize went to a trio of labour-market economists whose work includes so-called natural experiments, when sudden policy changes give economists a real-world lab to study cause and effect. The pandemic will provide hundreds of such natural experiments around the world, as governments made changes to employment insurance schemes and employers suddenly became more open to working from home.

Here in the Yukon, as in the rest of Canada, we are about to find out what happens with our labour force when the Canada Recovery Benefit (CRB) ends. The deadline for the last two-week application period is Oct. 23, so the payments will end in mid-November unless Ottawa extends the program.

The original CERB program paid $1,000 every two weeks, while CRB has tapered down to $600 (actually $540 after taxes withheld). That’s the equivalent of $7.50 per hour pre-tax if you worked eight-hour days five days a week, or about half the minimum wage.

Employers with staff shortages are keen to see how many return to the labour force when CRB ends, if it does.

However, remember that long list of contributing factors I mentioned above. With the Delta variant rampant, we shouldn’t expect workers to change their views about the riskiness of working in jobs with unvaccinated colleagues or customers. Childcare issues or reduced immigration flows are not likely to get fixed any time soon. Nor are workers who have decided to hold out for jobs with better work-from-home options likely to instantly become keen on returning to their cubicles.

This means that many of the unexpected changes to our labour market may have some sticking power. Entrepreneurs may have to keep strategizing better ways to attract and retain staff. And customers may have to get used to higher prices, reduced opening hours and medium pizzas.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He is a Ma Murray award-winner for best columnist.