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State of the Labour Market

June Labour Force Survey Preview: Share of Canadians Age 25-54 Employed At All-time High

The employment rate for women of prime working age is near record levels, while the rate for men hasn’t been higher since 1989

Canada’s unemployment rate plunged to 5.4% in May, its lowest level since the data was introduced in its current form in 1976. However, the unemployment rate — the labour market measure that always makes the news headlines — can be deceptive. It can fall not only because work is more plentiful, but also because fewer people are searching for jobs, resulting in a lower share of the population actively participating in the labour force.

So then, what alternative measures of the labour market’s near-term strength are useful? One valuable indicator is the prime-age employment rate — the share of people 25-54 with a job. Unlike the total employment rate, which applies to everyone 15 or older, the prime-age employment rate focuses precisely on those people most likely to participate in the labour market. What’s more, it isn’t substantially affected by population aging. As a result, it has become one of the most closely tracked labour market measures among economists in the US, and by some in Canada too

In May, the Canadian prime-age employment rate hit an all-time high of 83.5%, a full percentage point above where it was in May 2008, its peak during the previous economic cycle.

This record-high employment rate is in large part due to an elevated employment rate among prime-age women, which hit 80.3% — its highest level ever — in February. This strength reflects not only today’s solid labour market conditions, but also the culmination of decades-long trends of growing employment opportunities and full-time careers for women.

The prime-age male employment rate is also in solid shape, at least compared with recent history. After jumping last month, it now stands at 87%, matching its level between March and May 2008, the highest of the previous economic cycle. Impressively, the prime-age male employment rate hasn’t exceeded its current level since 1989. Still, a noticeable gap remains between where it is now and the roughly 90% rate that prevailed during the late 1970s.  

Still room for improvement?

With male employment rates still below pre-recession levels in certain provinces, including Alberta and Ontario, further progress towards the levels reached in the late 1980s is possible, though that will depend on the strength of the overall economy. Broader economic conditions will also be key in determining how high employment rates of women go. However, other factors may also be at work, such as whether the share of dual-income households with children rises further. Continuation of recent positive trends among underrepresented groups, such as recent university-educated immigrants and First Nations men, could also drive employment rates higher.   

In the near term, we’ll be tracking whether recent employment rate increases among several demographic groups persist in the face of the volatility of Canada’s job numbers. The monthly ups and downs of the Labour Force Survey are well known — what’s key is that gains in the good months outstrip losses in the bad ones.