June Labour Force Survey Preview: Taking Stock of Canada’s Aging Population
Unlike among the total population, the share of working-age Canadians with a job is near an all-time high.
Canada’s June employment numbers come out Friday, and analysts will be watching closely for signs of returning momentum after a pause over the past few months. Already though, the current 5.8% Canadian unemployment rate is at a multi-decade low, down 0.7 percentage point from May 2017 and nearly three percentage points below its peak during the 2008-2009 recession. Nonetheless, the share of the population with a job–the employment rate–has hardly budged since the end of the financial crisis. What could explain this disconnect?
The answer is population aging. Between 2008 and 2017, the share of all adults age 65 and older rose from 16% to 20%, primarily at the expense of those in their 40s. While older Canadians are more likely to work than ever before, their labour market participation remains far below that of their middle-aged counterparts. As a result, even as unemployed Canadians are finding work, the rising number of retirees has kept the overall employment rate more or less unchanged.
The impact of population aging is particularly evident when comparing the total employment rate (that of those 15 or older) with the working-age rate (those 15 to 64). The total employment rate has hovered around its current 61.5% level since the end of the recession, suggesting little job market improvement. However, the working-age employment rate, which excludes people 65 and older, rebounded to an all-time high of 74.1% in December. While it has eased back more recently to 73.5%, progress has remained substantial.
This divergence highlights a key point: The rising share of older Canadians is putting downward pressure on the overall labour force participation rate. As a result, judging the labour market by the total employment rate–and by extension, the pace of job growth relative to population growth–can understate its health from a job seeker’s perspective. Opportunities for work might still be plentiful even if job creation isn’t particularly fast by historical standards.
The effects of population aging aren’t readily apparent in the month-to-month jobs numbers. However, when taking stock of recent developments, the ongoing shift in the population toward retirement age remains important context for assessing the health of the Canadian labour market. Conditions facing job seekers might be stronger than some headline numbers suggest. Understanding the labour market experiences of older Canadians will also become more important as their share of the workforce rises.