Employment Insurance Levels on the Rise- this is more than a “technical recession”!

caneiThe latest GDP numbers have confirmed that Canada has officially entered into its second recession in less than 10 years. Without much but denial from the federal government- many questions remain on the nature and extent of this new recession. How long will this recession last? How will it impact different sectors and regions? How many workers and families will it affect? As with most economic questions – we must look deeper into the data for clues to make such predictions. One such measure is the Employment Insurance (EI) claims data. The Employment Insurance statistics are an administrative data source.  The level of EI claims are a very sensitive indicator on the health of the labour market. The Conference Board of Canada uses EI claims as one of the single inputs of the labour market into their modelling of a  leading indicator index on the economy. The EI data is far from perfect and excludes many of the unemployed especially those in short term unemployment- but it can provide a strong timely indicator of the functioning of the economy. Given it is administrative data, it goes beyond the data quality of unemployment numbers estimated by the Labour Force Survey which are subject to large sampling errors. The data looks at EI claimants rather than those actually receiving benefits.  The waiting  and processing period of EI can delay the statistical outcome of being counted as a person collecting benefits for up to a four months. Therefore focusing on claimants provides a timelier look at the economy.

(Employment Insurance Claimants are defined as those that have filed a claim and are awaiting a decision to determine their eligibility. The waiting period attached to this process can range from 4-8 weeks. Claimants have a high probability of eventually becoming beneficiaries – for more information on this table see the notes for CANSIM table 276-0004)

Analysis of the Employment Insurance data provides the following summary highlights:

1) The number of EI claims have risen 17% in a year over year change from June 2014 to June 2015, and notably 14% over the first 6 months of this year (latest data available is June 2015). With many new more stringent Employment Insurance eligibility requirements- as compared to previous periods- this has undoubtedly biased the number of claimants downwards. So one must take the 17% as an underestimate when comparing to earlier recessionary periods in our recent economic history.

 

2) A regional breakdown of the EI Claims shows that several provinces have experienced a rise in the number of claimants. This indicates the recession is digging a wider hole in the economy beyond that of the oil sector and Alberta. Year over year change from June of 2014 to June of 2015 in EI claims have risen in Alberta 42.3%, Saskatchewan 12.6% and Ontario 9.2%. (using data from CANSIM table 276-0004 in which are Statistics Canada seasonally adjusted counts). Given the newer rules of EI eligibility, especially those relating to seasonal workers, it will be difficult to fully assess the regional aspects of EI levels as compared over time, as we know some areas have higher concentrations of seasonal workers such as in Eastern provinces, and Northern areas of the country . However a more complete analysis of the data focusing on the level of seasonality of the data from these provinces could provide some evidence. Such a task is beyond the scope of this short article.

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3) The third summary point that arises from the data focuses on the trend in EI claimants as compared to past recessions. As mentioned in the last point, the EI data contains a large seasonal component making it difficult assess the raw data. In making the analysis somewhat clearer, the trend or signal in the monthly EI time series was extracted (blue line in graphs). The data reveals that the relative economic impact compared to previous recessions is beyond a technical recession that pundits have labelled. The evidence is quite clear- that so far in this early stage of the recession, at least according to the growth in EI, this current recession is larger than the 2002 recession that was the result of the Dot.com meltdown. However it is not as great as that witnessed during the Great recession of 2008. As can be seen in the trend line- the acceleration has not changed from its upward trajectory and therefore we are definitely not at the end of this recession. So it is difficult to compare given this recession has just started. The message is fairly obvious from the trend line- this is much more than a technical recession. (The blue trend line or signal was extracted using the raw non-seasonally adjusted data from CANSIM table 276-0004. The algorithm to extract the trend was the STL with LOESS seasonal decomposition method which used localized polynomial regression combined with a moving average function. This algorithm is similar to the ARIMA method- but is less susceptible to outliers. However it can be more difficult to obtain the greater sensitivity of the ARIMA method. Given the task was to merely create a visual display the STL was chosen.)

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4) The coverage rate of Employment Insurance Beneficiaries as a proportion of the unemployed is the last measure that was calculated. This measure is quite important in determining the overall effectiveness of the EI program in reaching its functional goals in providing relief to those experiencing job loss. As can be seen in the last chart, the coverage rate has declined substantively from the past levels and reached a low point of 38% in 2011.(calculated using Employment Insurance Regular Beneficiaries over the total unemployment using data from CANSIM tables 276-0040 and 282-0087) This due to the continued dismantling of the program, where now less than 2 of 5 unemployed workers actually qualify for this job loss insurance- a tragic outcome for workers. These lows in EI benefit payouts occurring during the longest economic stagnation and recession prone times in the history of Canada. The coverage rate has increased a small amount in the past year- but this is mainly due to the uptick in unemployment- and not due to any new more worker friendly policy.

 

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Summary- Employment Insurance claims have shown a dramatic rise in response to the recessionary period that Canada entered in the first half of the 2015. Given the new more stringent eligibility rules for collecting EI benefits, the rise in the number of claimants is under representing the extent of job loss when compared to previous recessionary periods. This is contrary to what many have concluded- that the Canadian economic recession was merely- a “technical recession”. The question that many ask- why has the unemployment rate not spiked in a traditional manner when entering this recession. The historical linkage and loss of protective power in EI benefits may actually be part of the reason. That is, as benefits have been cut back in terms of benefits paid, as well as the much tighter eligibility rules- the lack of insurance benefits forces many who face job loss- to find some income protection in jobs that are low paying, part-time, self-employment and other necessary non-traditional employment transition and workforce adjustment mechanisms. In the short term- such ad hoc work force adjustment may be less costly in terms of short term outlays- however the longer term inefficiencies and social outcomes measured from a skill development, training, and many related social outcomes to job loss much more costly to the economy and society.  Wider labour market measures- seem to suggest that this is the new trend within the process of workforce adjustment and transition mechanisms. The EI claim data also point to a much wider recession across more sectors and regions of the economy- wider than the oil sector, and more decentralized than Alberta as many economists have suggested. Lastly- the data in terms of trend predicts that the job loss and EI claims associated with it, will remain high for at least the next several months.

A Handy Guide to Building A Progressive Economy in Canada

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Piketty’s new book “Capital in the 21st Century” is all the rage amongst an economic world that rarely mentions inequality, let alone read something on it. This acceptance into such a diverse political terrain is a sign that we could be at the dawn of a new era politically, economically, socially, environmentally and  technologically or so the causal chain goes. (This is not quite what the  post-modernists had in mind- but potentially modernity reborn and rebuilt?)  In many parts of Canada there has  been little recovery since the great recession, instead a slow decline and stagnation for most workers and their families.  Similar to other times in history of economic depression that have lasted this long- the political space has changed and political parties have transformed. The right  has essentially transformed into the radical right led by the likes of Harper and his collaborators such as Brad Wall in Saskatchewan. The centering Liberals are hard to pin down- traditionally wavering to popular appeal. The NDP under Tom Mulcair has found a direction  and the heading is being crafted. Given these openings and the potential for change this is an opportune time for progressives in Canada to further develop and extend a progressive functional economic plan. With the decline of the economy, frustrations mount amongst the population making new ideas more easily transmitted and embedded. A potential unlike any other we have witnessed since the post war era of the forties. Ideas that can carve out new political space that propose solutions to these economic impasses. However to achieve such objectives,  ideas, vision and  leadership are needed.  We need to think about change and  innovation, but we must also stay connected and centered on the past foundations. There is the reality of a globalized economic world, however the popularity surrounding the Piketty book opens up some new potential.  Progressives have choices to make- and  much work needs to be done.  In that process- the following guide was developed to help those contemplate building of a new economy based on progressive principles.

An interesting dichotomy set itself upon me today and I think it is a good point to start this guide to building a progressive economy in Canada.  Today I read an article on the cost of razing parts of Detroit- large parts of the city have been abandoned,  de-industrialization has been  hollowing out the auto sector, off-shoring, mechanization, and foreign competition have witnessed the decline of the big three Detroit automakers. Together, with the great recession and the housing meltdown, these forces have taken a destructive toll on the people of  Detroit. Recall that not even fifty years ago, Detroit was the pride of Capitalism- basking in profits for the wealthy, the center of the automobile world,  filled with hundreds of thousands of workers making middle class pay. A rising living standard based on an egg shape distribution to wealth rather than the hour glass of today.Tax rates on the wealthy and the corporations were substantially higher and the collective good was paid for by all. Contrast it to Detroit today-with its population in serious decline it will have to pay over $1 billion dollars to raze large parts of its abandoned city. In fact in those abandoned parts of the city, one of the dangers lurking are  hordes of wild dogs who number in the thousands. With cut backs there are  no dog catchers or humane societies to keep the wild dog population in check and they have multiplied and become a real danger in those areas. Yet in this article the debate within the media was about how many jobs razing the city would create!!!

Reading about Detroit  brought the contrast to the study of China I have been performing for over a year now, focusing on parts of its economy, history and workers.

China is undergoing a massive transformation- most likely the biggest in all its very long history.  It has become the world manufacturing center and with that a  massive level of economic development has been ongoing  in China for the last two decades. At first experimenting with markets forces- (letting corporations make the rules of exchange) then having some level of success they expanded these market forces and now have allocated almost half of the economy to corporate control somewhat beyond the State Owned Enterprises (SOE) – the boundaries of power relations are still somewhat blurry. However, there has been some transfer of economic decision making outside of the party and its SOEs.

China is embarking on a new form of capitalism- a state centered  command capitalism.  Its development has been very questionably uneven and unequal on many fronts. The results are undeniable- as it has been pulling hundreds of millions out of a traditional rural economic culture into a much different apparently wealthier mass production based economy. It is new in some ways but very old in others- surely not one that I would dare claim worker friendly as it was mainly built on the backs of 400 million workers who migrate from the 800 million rural folk- trying to supplement their family income back in their rural homes by working in the urban centers for questionable wages and working conditions for many. But a  new burgeoning middle class of 300 million has been built and  many new cities in China have grew from this massive economic development. The built form of the landscape reflects this sudden massive surge where long historical tradition is plowed under to make way for new skyscrapers. Take the pearl river delta north of Hong Kong. Just 20 or so years ago, a small fishing village of Shenzhen has a population in the thousand. Today, 20 some years later it has become the heart of the global electronics industry. It is a world leader in manufacturing, and now making headway in design and automation. This small fishing village has grown to a mega city with a population of more than 10 million- with several adjoining cities of similar size. It is uncanny.  And  of course these new journeys of wealth under a mix of capital and state direction discover new and old challenges of social cohesion, environmental degradation, and social injustice. China still is considered a developing country and there is no doubt about its extremes in wealth- a whole lot of extreme poverty and now a middle class to go along with those inside the Party.

The comparison and contrast between these two countries is amazing- very similar yet also different in key areas from leadership down to the shop floor. Change and at different points in historical processes and space. So many people making it and so many people left behind.

I am not flag waving here for China- in fact far from it, as my point- China is struggling and so to is the USA. They have both taken different paths to development- but ultimately they seem to be leading into the same space. A plutocracy leading both countries- and a political ideology filled with more propaganda than truth all to engage the necessary social cohesion to produce value and surplus. The question for progressives- how can we change such outcomes as we see with China and USA – which both started at extreme ends of the political and economic spectrum and now both seem to be meeting in the middle of political and economic power. How does one build a foundation of theory and develop a vision for a future social and economic when both systems have come forward and failed to deliver some of the most basic ideals that founded their history and culture upon.

Where will the practical ideas on progressive visions for Canada come from and where will they lead us.

For me a functional approach to economics is the starting point of this debate. Many countries are embarking on questioning the  future of their  economic base, as the global recession still has a hold on many economies. Some countries are being proactive- some are content with the status quo and- some are being driven to them. At the core of most failing economies in this great recessionary period and its stagnation, is the question of declining demand. It was the central thesis of the Keynesian economics solve the demand problems and one will have taken a large step in sorting out the rest of the economy.

Keysian economics when compared to other economic attempts at organizing capital and labour was moderately successful. At least temporarily, as it climbed the developed worlds summits after the second world war to the pinnacle of the commanding heights. And had  a glimpse.  It was a point in economic development unlike any other in our modern history under capitalism. Wealth and power were redistributed, not equally  shared- but the state was much more independent and somewhat empowered with the ability to tax and spend. Workers had stronger representation in unions, and through the machination of the state. social security was on the rise for all. It was a heady time- still filled with many problems but at least wealth and power were starting to be shared- and in many cases it was through collective action and state regulatory actions that power and corporate interests were  somewhat contained.

So as Piketty suggests or maybe he is asking-  do we go back to seeking that compromise in the form of a new deal like strategy and try it all again. Some on the left have questioned the logic on that strategy- as many point to the issue that the ink was not even dry  as the wealthy and the corporations signed onto the new deal-of  the Keynesian compromise- and they fought behind the scenes to dismantle it. It took them 30 some years to the mid-70’s to destroy Keynesian economics- and maybe it imploded a bit itself but ultimately they had the power to  destroy it. Therefore some economists ask why rewind history and recreate conditions for similar outcomes. It is a good question that many are starting to ask Piketty followers.

In practical terms what can progressives do- to follow up on a platform for functional progressive change. I only intend to outline some ideas below- they are not dealing with the entire transformation of the political- but mainly focus on some  economic possibilities and realities of a global connected economy inside a politically empowered state and an effectively enhanced worker voice.

If we can convince capital to come out of the financial markets, the low wage value adding strategies of off shoring to China, the deep US south and Mexico, then we could will see some change. The good news is with the Piketty fascination comes a sign that we are starting to see at least a small question mark  on the neo-conservative economic reality and vision of today. To me that means behind the scenes there must be some real trouble brewing.

 

So here is a partial and incomplete listing that I will be expanding as we move forward in time. I am hoping it helps frame some ideas for left progressive. I have to come clean- nothing here is revolutionary and nothing here is something that you have not probably heard before. However- it is my attempt at fitting many ideas together to start exploring them further.

1)wealth creation and investment- we need a financial system that builds value from a future that is sustainable and equality based. Not the current destructive machinations from the global financial markets and derivative vehicles of speculative bubble based at the center of ones economy.  We have had our dot.com bubble, our housing bubbles and these are not a sustainable nor a value creating approach to building an economy that will survive the challenges of present and  future. All the dead money we speak about is actually caught up in short term investment vehicles, interest rate swaps, repos of varying lengths and types, and also credit default swap. The stock market in the traditional sense is merely the type of the derivative iceberg. Re-regulating finance is not enough we need to ensure the state is empowered enough to press for substantive change. We need a new SEC, we need to reduce tax haven, ensure our banking system has more of the public interest than profit motives in mind. With Canadian banks increasingly involved in these global markets we must ensure liquidity rates for banks and leverage ratios are sustainable. We need more information on the operations of the CMHC, and its relationships with the banks. We have been impacted greatly by the US financial meltdown both directly and indirectly.

2) We  need to transform the energy sector- the carbon bubble is building- and most fossil fuel assets are currently being environmentally  challenged by first nations leaders and the global environmental movement, especially the tar sands, coal and oil. These energy extraction assets will be faced with a growing global push back and divestment pressure. It is at best a very short term base to our economy that is clearly not something any developed economy of the future will continue to rely upon as a core economic base. Resources are a gift that we have in this quite physically large and geographically diverse country. However- we must also be a caretaker first and extractor second we need to slow the rate of extraction and eventually transform to alternative energy.  Economically, our country’s vast resources enable us to deliver onto the world just about any mineral, wood, or energy product we desire and plenty of food crops as well. The future success of the nation as in the past and present with the auto sector- relies on value adding to these resources. We need to  get away from our staples economy past. We need to leverage these resources to allow the country to become a leader amongst the most developed economies in the world by producing outputs higher up in the increasingly global value chain. The world needs us to serve in a leadership role in this complex world – not more pillaging and destruction of the land and people. Resource extraction is something any country can do- but what one does with those resources separates standards of living. We are falling fast back  down the staples economy trap- becoming more and more a source for resource exploitation- governed by those who would prefer to allow foreign corporations to lower tax rates and relax environmental standards to basically take our resources, destroy our natural environment  and value add back in home countries.

3)   We need to engage the future now, of a production process that is undergoin the most massive changes since the industrial revolution. The digital economy-  will accelerate the amount information and transcend its current capacity to  will become just as important as capital and labour as an input into the traditional production process. It has been growing for 20 years and still maturing, but lately with the focus on big data and smarter machine learning these forces will continue both in terms of an  increase in productivity through diversifying the abstract production of value and also the direct more concrete aspects of value adding. The globalized production process with it’s lower wages of manual production will continue to prove to be a disincentive to innovate into these processes,  but eventually  productivity combined with workers who can work with this data and these new machines will over come the low wage strategy that other countries compete on. There will be smart automation that takes the worker as a cost to be minimized. However the more successful designs in this process of integrating  this information into the production process that is worker centric and not machine centric. We will have a shift away from the black box approach to smarter machines, and there  will be a race to see who can capture this production process and its large gains to productive outputs. From robotics, to AI, to building and integrating this information into all aspects of production- the information revolution is real. It will take a lot more time to mature and Big Data is just another step in this longer term process. As big data is the first realization that informating the digital world actually produced massive amounts of data, and inside that data there is  a new found value that will allow machines and workers to act in the value adding process in ways and means that will be compared to that which history refers to the invention of the steam engine. We are still only a couple of decades into the digital economy- and its transformations of the traditional economy- within this 20 – 30 year space have been all encompassing.

4) We need to ensure rewards and safety nets are at levels that allow people and families to gain access and participation in the middle class. Providing a good job is part of that-and allowing workers to unionize and a right to collective representation empowers workers and their union representatives to builds good jobs. It is increasingly more difficult within the globalized economy to ensure good jobs are protected and grow. Much of the job growth over the past years has been in low waged- lower value adding jobs. Investment capital is more portable- service and products can now be designed, produced and sold in many regions of the world. This allows companies an upper hand to whipsaw workers from many countries in a race to the bottom. However it does not have to be that way. Investment needs workers and it needs infrastructure. Both of which Canada has comparative advantages in. For a small open economy such as Canada’s with its massive geographic  that sits on the border of the wealthiest country in the world- we have a lot of unrealized potential. The goal must be to build a high wage, high productivity economy that we can build a more equality based society. It will take skillsets for the new value chain that will be demanded of a modern successful economy. Information and application of these new tools will be necessary. Education, training infrastructure and a cultural process to support such efforts are the new causal forces behind enabling the ecosystem of a highly innovative sustainable economy. We have a highly trained workforce now- with a good foundation to adapt and change as the technology and organizational inputs will demand such skills, experience and worker and management expertise. This will focus on all levels of value adding.

 

5) Public sector plays a massive role in building all the above- and also ensure the middle class and access to the middle class are healthy, one way,  regenerative and robust. Education, healthcare, transportation and urban infrastructure, telecommunication are keys to building social cohesion and labour and capital productivity to increase  standards of living. We need to ensure those workers that fall outside the higher productivity wage gains- are included in this growth and increasing wealth. We need to have higher minimums in terms of wages and benefits and more effective social policy to ensure gains are shared across all occupations. When labour markets fail we need a new set of social protections to come into place- whether they be guaranteed income floor, a whole new training culture for all, or a reduced working time for the same pay- many options need to be considered and regulated by the state. However these cannot just be regulated, they must become a part of the cultural process- where society never gives up and casts anybody out of opportunities and achievements.

6) The green revolution- what is there to say- green energy, conservation and a focus on accepting the externalities that the current system takes for granted in its cost equations need a rebuilding. We will need a lot of innovation and change in this space- the good news is, we have a whole lot of spare capacity in employment and investment to take this on. A lot of technology already ready and waiting to take this on- can markets do with effectively or will this be a public good effort. Market have failed so far to penetrate the solution space. There are a lot of good best practices and some quite astounding projects out there, but still have a long way to go to meet the challenges of these necessities for sustainability. It seems like energy conversion is the new focus.  Profits are what the markets look for- however- will this ever be something the state can transform successfully in such a manner.

 

7) Diversity and inclusiveness- women, racialized workers, disabled,  and other minorities entering within the workforce  require equal opportunity and access to work, training, education, healthcare and other benefits that a equality focused society strives to fulfill.

8) First nations- our history books are still based on many lies- can we start with at least affordable food! See my food price study on the link above for the north.

9) Social safety nets and the great society restored-rebuilding a social security system goping backward to get ahead- with growth in jobs and taxation- the much starved social programs over the past 30 years, can be rebuilt and updated to reflect current needs. From training, and education needs, unemployment protection, pensions, child care, regional equalization- so much can be accomplished by building a more equal, and productive society.

One thing for sure a Hudak win on June the 12th will accelerate Ontario and the rest of  Canada on it’s trajectory to an actually existing Detroit.

 

The Limits of Women’s Work or Did Women just lose 400,000 Jobs- Employment Rates and the Great Recession

New Explorations into the Canadian Workforce

As part of a larger research project being coordinated by the Canadian Center for Policy Alternatives, entitled Working Across Canada, I have been volunteering my time researching various dimensions of labour markets in Canada with the intention of creating a new measure to evaluate the nature of employment quality- or as some call it at the International Labour Organization and elsewhere – a Good Jobs Index (I am not sure what to call it).  As I work through this project I thought it would be constructive to write up some of the more interesting findings that are uncovered along the way. I also thought it might be constructive to evaluate some new web based software that allow users to interact and explore data in which was loaded up for this project. This interactive aspect will hopefully allow readers a chance to dig deeper into the research and explore the data, slicing, dicing, rolling up and segmenting with ease and adventure. Just click on the included link below to interact with the data chart. (you can use the software online CLICK HERE, or you can download the reader here and use it offline.) Mainly I want to bring light to some of the data artifacts that are uncovered and try and fit some reasoning and limited analysis to the facts.

Part 1- The Limits of Women’s Work or Did Women just lose 400,000 Jobs- The Great Recession and Employment Rates in Canada

Employment, or having access to a means of the production is the key to a person’s survival and well-being within a market based economy. For women in many developed nations, the past thirty years have served as an unprecedented period of entry into the waged workforce of the formal economy. It has been heralded by some as the great exodus out of the chains of the informal economy into the “freedom” of the waged workforce- as one artist famously put it in the ‘70s, moving away from “being a slave of a slave”.

Examining chart 1 and comparing the employment rate of women over the past thirty years verifies that this transformation has been ongoing in a substantive and hurried process. Only briefly interrupted by two recessions the upwards rate of women workers into the formal economy marched steadily onward from less than 50% in the 70’s to an employment rate that has women workers now approaching that of men. After nearly thirty years of steady and consistent employment rate growth, the great recession of 2008 ravaged the economy and the velocity of change in women employment rates for prime age women aged 25-54, came to a very sudden halt. Upon hitting the employment wall- the rate has stalled for the last 6 years at a historic (non-war time) high of 77%. These past six years of stagnation has been the longest period of non- growth in the employment rate of women in more than 30 years. As we move through this unprecedented period, the question must be asked- are we witnessing a historical maximum for women’s employment in the Canadian workforce? Have we reached an upper bound of women workers in waged work?

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If we are not at this upper bound, then much of what has been written about the great recession has to be rewritten as the pundits have forgot to mention the 400,000 plus jobs that women have lost during this period. Indeed if one is to run the trend for women workers using the employment rate and its robust growth rate over the past 15 years, then we can estimate with econometric forecasting that women have lost over 400,000 jobs during the past 6 years of stagnation. (See graph and calculations using an additive model of exponential smoothing to forecast an average expected Women’s Employment Rate of 83% which equate to roughly 400,000 jobs in 2014)  Suddenly the great recession seems much more traumatic for women and turns the popular notion of a “he-session”  coined by media depicting this great recession as being more difficult for men- on its head. (to explore this data visually click here)

The debate of who lost more, is of course a loaded question chalk full of the political dimensions of bias and would simply result in the divide and conquer mentality. So rather than focus on a gender divisive debate, given the numbers, one can conclude both genders have suffered greatly but differently. As can be seen in chart 1 women’s employment rate has been growing at a much higher rate over the past 30 years than men, as women entered into the waged workforce in droves.  The employment rate for men on the other hand has slowly declined over this period in a very awkward but evidently painful recession induced jagged downward trend. Each of the three major recessions over the past thirty years has been quite painful for both genders but for men it has meant a permanent adjustment to a lack of waged work for an increasingly larger proportion of the workforce.

Starting in the 70’s the employment rate of prime aged males was averaging above 91% – then after a massive carnage of job loss  in the early 80’s recession due to high interest rates and the beginning of the neo-con assault on workers, recovered to stabilize around 87% for much of the 80’s. After which the early 90’s recession took its toll and again male workers dropped off and recovered to stabilize at a lower 85% employment rate. Facing the great recession of 2008, males were hit quite suddenly with substantive jobless and they seem to have recovered ever so slightly to stabilize again at a lower rate at 83%. Obviously, given these are prime aged workers, many have to adjust to life without employment, as either discouraged workers or in some other activity (training, house husbands, return to school, early retirement). The focal point for men has been a three decade long adjustment to a lower and lower equilibrium of life without waged work.

Considering this 30 year linear climb for women, the velocity and scale of such growth over is historic and an impressive display of the market’s ability to find such space for waged workers during a neo-liberal era of uneven economic growth. Recall in retrospect that we are witnessing an almost doubling of the labour force for women in just 30 years- yet we have still maintained an unemployment rate of below ten percent (outside of the recessions and depending on how you measure unemployment). Of course as impressive as that sounds it says very little about the quality of a high proportion of jobs that were and continue to be created for women- more on that in another paper.

Since the end of the early 90’s recession, women have been entering into waged work at somewhat slower velocity then previous periods, however the acceleration is still positive and consistent up until the great recession hit in 2008 and then it flat lined. So the logic is clearly evident, we are either at a maximum of women’s grand entry into employment- or alternatively women have suffered massive loss of forgone jobs through the recession. This does not mean women actually lost all 400,0000 jobs, as in the case of men who actually did experience plenty of job loss, but it does mean that for women the pain of the recession was in terms of lost actual and potential jobs and was differently realized then men. That is women, were not hired, but most likely would have been, given the strength of the underlying historical trend in growth of women’s employment. And that loss actually does count as a dead weight loss to society given the strength of the relationship prior to the slowdown. In summary, we need to be mindful that lost opportunities must be factored into the damage the recession unleashed. Oddly enough if we look at the participation rate of women it is does not quite reflect this notion, in terms of proportion, or fluidity. As one would have expected a large increase in unemployment to match this employment flattening trend. However unemployment falls short of that which we would have expected and is only partially made up for in the pattern that was witnessed in the participation rate. So what does that mean- it means a whole lot of women workers either left the labour market in discouragement or indeed we have reached the height of women’s entry into the workforce? It is actually a very odd finding given the timing.

So what is going on?

Given the ongoing stagnation in the economy and recessionary winds it would be premature to say that women’s historical employment rate has peaked at 77%, a full five plus points below men. So that begs the question should we expect a difference between women and men employment rates?  Is there some systemic discriminatory disincentive to waged work operating independently or dependently on gender to explain such a difference?  One could suggest differences in job quality, pay rates, precarious work, career opportunity, and/or unwaged labour demands are all undoubtedly some factors.

You can explore the data yourself. Have a look and compare different age groups, participation rates, or other aspects of the labour force and see how these measures reacted in previous recessions. Of course the employment rate is different from that of the participation rate that is often used to measure waged workers participation into the workforce. Employment rate includes discouraged workers who fall into the numerator. Also recall that we are referring to relative increases, and as the population increases we will see more women enter into employment, but given the flatness over the past six years means that employment for women is constant with the total amount of people employed.

This is indeed a very big question and only the future holds clarity for outcomes, but if this current employment rate of 77% is to become a permanent fixture of the labour market for women and we have reached a maximum, then it will unleash some very massive changes in other areas of the labour market and society. All of which have been affected by the almost constant rate of increase in women’s commodification into the waged labour of the market, and the dynamics that are intricately woven through the fabric of society.  It will mean a lot of change on many other connected issues, and will have a significant slowdown in everything from day care to food items in the grocery store. We have become so accustomed to this  large ongoing change of the women into employment, that without that growth much will have to adjust to the  relative stability of natural population growth.

If we are not at this point, then we must reconsider and rewrite that the recession had a massive impact on the employment loss for women workers, and rather than being the “he-cession” that many labelled this last recession- it will mean over 400,000 jobs will have been lost by women workers- as that is what the trend would have predicted.

(Note- the employment rates above are measured for prime aged workers, between the ages of 25-54.  Other segments of the population are not considered, but you can explore them with the data software and compare click here. Other age groups over such long historical periods have flows out of the stock of employment that produces a greater variance due to retirement, returning to school, retraining, etc. The segment of the population aged 25-54 has the highest probability to be part of the waged workforce and therefore was used to guide the exploration process. This is not to discount the experiences of other aged workers, but simply to clarify the trends and bring more focus to a labour market in transition)

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Great Recession’s Lack of Investment Takes it Toll as Business Innovation in Canada Drops

The continuing stagnation of investment that set in during the great recession is catching up to Canadian business as innovation by Canadian  companies in 2012 has fallen dramatically.  Statistics Canada recently released the results of the Survey of Innovation and Business Strategy and its ominous headline indicates that Innovation in Canadian businesses has fallen off by a whopping 17 percent in 2012 to a mere 60 percent of surveyed companies indicating a level of measured innovation. This lack of investment is creating an  ecosystem  of reduced innovation within the value adding infrastructure of the Canadian business sector.This inevitably leads to lower productivity as more than 1 in 5 Canadian firms between 2009 and 2012 reduced their level of innovative activity. Ultimately this translates into an increasing downward pressure on  standards of living for Canadians.  The study reads like a dark shadow falling over the whole idea of building  a higher value adding/ high wage/ high innovation  economy that many developed countries are pursuing out of this great recession.decline

Developed countries like the USA, are highly focused on reversing the off shoring trend that was the focal point of corporate strategy for two decades, and “on-shoring”- high waged jobs back inwards is the goal. This of course will mean higher degrees of innovation, new business strategies and the like. However the results of this extensive survey suggest that Canada’s corporate leaders are not only just sitting on their hands, when it comes to investment, but the most critical area of investment into innovation is being cut back. The ongoing lack of focus on innovative investment by Canadian businesses is coming home to roost and it will mean more jobs lost, more decline and lower standards of living.

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The question of where has all the investment gone has reached a crisis point for the Canadian economy and it is not for want of funds.  The investment conundrum famously defined by former bank of Canada governor Carney when he coined the term “dead money” was outlined  to Canada’s corporate leaders as he ridiculed them for sitting on mountains of cash. However what he failed to mention to the Canadians is much of this cash is not dead and as he full well knows, the cash sitting on corporate balance sheets is more  likely financialized into off balance sheet derivative trading. It is difficult to allocate just how much of an affect the finacialization of the economy is having on corporate investment decisions, but the  negative impact on the brick and mortar economy is real.  This due to much of the book keeping for these assets is  off balance sheet and  end up in what is known as the shadow banking sector of the economy. Not many statistics are kept on this portion of the economy, and as such not much in the way of regulation exists in the globalized casino however as the Bank of International Settlement (BIS) ,makes clear on the statistical reports the amount dollars involved in derivative vehicles is estimated at over $640 trillion dollars globally. This is up dramatically from the $400 trillion that was reported by the BIS before the finanical crisis of 2008 . So the question remains, how does the economy come out of this recessionary stagnation in terms of growth and declining worker outcomes, when investment seems to be caught up in other profitable and apparently less risky assets within the financial circuits of the economy.

A few key points should be underlined from the survey that add some qualitative and quantitative into the lack of investment question.

1) Innovation as defined and measured by the survey was significantly down from the ’07-’09 in to the ’10-’12 period by over 16% to 60.1% of firms signifying some form of innovation. Broadly speaking, this slow down in terms of innovation translates into further evidence of a slow down in investment- and most likely the most vital type of investment, when considering productivity and competitiveness which in the key areas of higher value adding. This also reflects the decline of the higher innovative  industries found in manufacturing and a continued expansion in lower innovative resource extraction industries.

2) Many progressive economists have praised such concepts as industrial strategy over the past several years for getting a foothold to climb out of this economic recession. One policy option that is critical in the formation of industrial strategy and is highly effective within a high value adding/high wage economy is targeted investment in the form of tax credits. In this study on Innovation,  firms surveyed indicated that the most critical of all government programs to support innovation are tax credits. Despite Canada’s Mr. Flaherty’s constant ideological stance of very low tax credits and as pontificated not wanting to “pick winners and losers” (which is quite a simplistic and destructive stance) it quite obvious that businesses feel this a required policy with over half of all respondents indicating that tax credits are an important determinant of innovation. Notably this is up from 34.9 percent in the previous survey period- which is highly significant as we stagger through this elongated slump.

3) Thirdly it  was quite enlightening as this survey sees through this whole notion that the Harper government has allocated a substantive amount of tax money on priming the pump on  skills shortages. However businesses reported that only a mere 7% felt that government help on training was necessary for innovation and this actually fell during this period from 19%. If indeed we were suffering through a massive skills shortage that the Tories claim, than I would imagine businesses would be ranking Training a lot higher than 7%.

Wow that last point is a zinger! How can the tories stake their entire human resource strategy on the country that there is a skills shortage when only 7% of businesses feel it is an issue. I have to say this empirical evidence surely must make the tories look again at the whole skills shortage argument it is indeed the straw man.

4) Lastly this survey again debunks the claim of small business being agile, innovative and bleeding edge as Large enterprises indicated a much higher innovation rate than small business.

Some very interesting findings.

When will this survey get cancelled??

http://www.statcan.gc.ca/daily-quotidien/140214/dq140214b-eng.htm

This business survey is the highly cut back- business enhanced/ worker and labour content subtracted version of the workplace and employee survey (WES- long live WES! It was a survey to trump all surveys and take policy to the eternal fountain of truth of higher productivity and worker outcomes! Now a shadow of itself and look at our economy since WES was cancelled in 2009). We can now call it the productivity survey for sure.

A Canoe Trip With Mel Watkins

Welcome to my first blog post and as such I would like to dedicate this post to one of my favourite economists, Mel Watkins (right up there with Karl Polanyi, Colin Leys, and Pat Armstrong). It is difficult to encapsulate the labour process of learning and how one takes in the social construction and manifestations of the prevailing learned.  Being a student of political economy for many years and attempting to engage the workings of the global economy, it was through such work and teachings of  Mel Watkins that made this journey easier.

Mel’s important contributions to the Staples theory and later his work on foreign ownership and Canada’s growing reliance on foreign direct investment were of  great comfort and guidance for me. It is much easier running the rapids with a skilled canoeist in the boat. Too often in other areas one finds themselves in the cold, dark, shark infested waters. The great asset of the staples theory for me is its ability to examine linkages that are demarcated by the boundary of the firm and follow the value chain of productive processes. It is an approximate extension, and necessary outline of the circuitry of capital. Recently I finished reading Capital Volume II and what I took away was a greater appreciation of the flows of capital as Marx provides a fairly detailed outline to the circuitry of capital – yet it was frozen in terms of technology. So there is plenty of work to be done to understand how this circuitry has changed over time. I found the Staple’s theory to be a start into that process.  The necessity due to an increasingly complicated and diversified process of value adding- in terms of product design, division of labour,  and geographical location. The Staples theory allows a simplified and focused theory to  situate power relations, inputs and outputs within the totality of the production process. It indeed at first glance seems to be focused on resource extraction and inputs, but it’s actual extension into the deeper reaches of the production process allow a more synthesized perspective in the face of an increasingly complicated value chain of the production process.
It is in that fashion that one does indeed have to give Mel a lot of credit for seeing through this and providing the necessary work to bring Innis and the Staple’s theory back into the main discourse for understanding this process as globalization was beginning to make its comeback. Mel is still at it, looking into the linkages and how they actually do potentially inadvertently propagate newer technologies and industries that build up from those original industrial linkages and  technologies. As Mel stated recently in a blog post-

“Following Hirschman’s insight, focus on a dialetical relationship, a shifting symbiosis, between an emerging mode of industrial capitalism and an emerging industry. Add, as it seems to me, that as the mode forms more fully, it then facilitates the emergence of other industries – the most powerful of linkages, the exemplary case of what some writers have come to call “lateral linkage.””

That is quite a deep insight into the functioning of the circuitry, and given the nature of the complexity in  causality, and the lack of data to explore such causality and outcomes, it takes a real economist to interrogate such depth of  analysis. This leads me in many ways, to remind myself that people such as Mel in this field of economics, reminds me of the great artist, Tom Thompwa_a3_k2_thomlismerincanoeson. Yes an artist-  after much debate, reading, research, math, and age, I do find the study of economics and the political space it is embedded within very much an art.  There is very little science in Economics, very little in the theoretical space and much less in the praxis of real life where real people need to eat, work and survive. Indeed there is math and some notions of science, but  given the dimensions of power in the field and the fact that it  is applied with external force for specific ends, how could these means be considered as striving for minimal subjectivity.

Consider the inputs, the process and the  outputs of the current state of the field of economic study. Given the outcomes how could economics in its current form be anything but some-kind of crazy art.  Indeed the  current variety of capitalism is an art form based on the notion of haphazardly designed misery. As we increasingly move into the Risk Society,  billions in the “developing” countries have been left out and more are continually pushed out. How could an field of study be considered a science when it ignores so much of the life world. The new equations of economics need to expand, it’s not just the sharing of the rewards, we also have sharing of the risks. Yet the “sciences”  within  the economics subject matter guided under the quite visible hands of the  orthodoxy of neo-classsical economics and the rest of it, rarely make any space for the risks it creates. From the environmental collapse and the accelerating CO2, the instability of the economy, the lack of adequate food and security for billions, is an equation without enough parameters. But plenty  of mathematical weight for the thin veneer of the shiny flashy objects of the commodity fetishism and the ego stroking keep the profits maximized and the human experience as an externalized- I am imagining that is the basis for Marx’s focus on alienation and they are more relevant than ever.

These thoughts never stray far from me and reading through Travis Fast’s dissertation on the Varieties of Capitalism reminded just how artistic the neo classical- Orthodoxy has been and will always be under the current power relations. (great work Travis)

It is precisely this space of assumed science- that prevented the Staples theory from becoming part of the orthodoxy- and that is indeed problematic- given the truth behind the prime movers of knowledge construction. There are indeed hints that Staples theory makes a splash in the main stream teachings- but typically it is cast out as some historical artifact of a bygone era. It is in fact a theory that could be applied across many developing and developed countries and is ripe for research and informating capacity.

Thinking more about the relationship between art and economics- I realize now that potentially Tom Thompson reminds me more of Mel Watkins than the reversal. One could claim that indeed Tom Thompson was an early proponent of Staples theory in his own way. One of his famous works of art entitled “The Jack Pine” has been interpreted much differently than many believe. Instead of  the majestic massive Jack Pine on the shback copyores of Canoe Lake in Algonquin park, where Thompson painted it, some have stated (and you can actually see what seems like stumps  in the painting itself and the whole lone pine without a friend), it is a portrait of critical analysis, of the very few Jack Pines that remained in Algonquin park. It is well known Thompson was highly critical of the clear cutting and logging operations that were ongoing throughout the park during his stay. It was his love and the park which he treasured was being assaulted. So potentially Thompson helped out early economists like Innis form up the Staple’s theory. I like it and endorse it fully.

In Canada we are fortunate to have that great bastion of Canadian Political Economy to embrace, and guide us through the layers of the  economic terrain laid down. Mel has and always will be a pillar within that space. The recent Tar sands debate within Canada is proof positive that our resources aplenty economy will necessitate its survival. The Staples theory indeed has global appeal in potential and  a  necessary perspective to grasp the foundations in which understand the structure of the Canadian economy. The history and future of our economy will gyrate somewhat into higher value adding but always at the base our economy will unfold like a Staples economy glove, form fitted and never getting free, sometimes feelings its fists of  velvety sting and other times regional prosperity will keep us debating the merits of sharing. From the tar sands to big data and its computational high performance GPU farms cooled in the cold airs of the north- staples theory  touches the lives of millions of gainfully employed workers in its boom and bust resource based flows of output through the productive circuits of capital.

Mel and a cast of several, created and  built what is now defined as Canadian Political Economy- from the founding work of Innis it has grown and evolved. It is difficult to affix  labels to define the makeup of Canadian Political economy but if one had to it would start with a mix of  heterodox economics from the realms of  Keynesian economics,  Marxian economics,  and the post-Keynesians. It also infuses larges amounts of sociology, history, feminist theory in a uniquely interdisciplinary mixture. Indeed Canadian Political Economy is a mongrel- but at its root, it is home grown and started with the seeds of the Innis’s Staples theory to economic development. Mix in its blend of  qualitative and quantitative uniqueness and you have one very robust yet flexible base of knowledge, theory and empiricism. It is what fuels  the progressive movement in Canada that helps power up the debates and greater social awareness that pervades Canadian economics and society.

Over at the Progressive Economic Blog, they have paid tribute to Mel Watkins and his work through a series of guest articles from several academics, labour economists and activists. The series of article shows just how deep the Staples theory runs, as the articles focus on applying and nurturing an understanding in a variety of fields. It has been over seven  years that I have been involved with the Progressive Economics Forum through commentary and guest blogs and this tribute to Mel  made possible by the collective efforts of the fine collective at the blog is another wonderful adventure into defining and breathing in this new terrain for collaboration and debate.

My recent studies in machine learning and natural language processing combined with political economy brought me to an idea to add in my own celebration of Mel’s work. Unfortunately for Mel he will have to be my lab partner in this experiment.  I have combined all texts submitted to the “Staples at 50” project that are in honour of Mel’s work. With this large file I  applied some new standardized machine learning algorithms within the natural language processing field producing a word cloud. It is a bit of a simplistic approach but it tries to extract some nuances with the aim of introducing these thoughts to the social networks, twitter verse and the rest of the online world. Word clouds based upon sentiment extraction are a new tool to analyze text, and I am currently research a method to automate a process to rate and maybe create a typology of economic texts based upon the political aspects of the textual content.

For the word cloud below I added a few stop words to the algorithm as they were so over whelming or redundant. For example I excluded Canada and Canadian, which given the potential of the long run outcome of Staple’s theory- might actually be foreshadowing. I will follow this up soon with another version of a word cloud and this time using Mel’s own original article to feed into the machine learning algorithm  and compare the two.mel