COVID’S LABOUR EFFECT: CRASH, BANG... CALM.

The humidex reading was in the mid-30s as I sat on the front porch this week and read a new study from four of Canada’s leading labour economists about the effects of the pandemic on the Canadian labour market. Scrolling through their various charts and feeling the swelter thicken, the image that came to mind was how COVID had hit the economy like a sudden summer thunderstorm. A severe one, of course, but one that has ultimately followed the thunderstorm pattern: great ferocity, the weather turned upside down, but then … calm, with just a few remaining unsettled pockets.

That’s my image, not theirs. They — Stephen Jones of Mcmaster University, Fabian Lange (Mcgill), Craig Riddell (University of British Columbia) and Casey Warman (Dalhousie) — do their analysis with charts and equations, not metaphors. But their nine key charts are of a piece and suggest severe but temporary disruption.

Each chart shows a different labour market variable using monthly data plotted from January to December. A thin line shows the variable’s average value for 2015-19; a thick line traces its value in 2020. And five dots show its value in the first five months of this year, which is as far as the study goes.

The pattern is basically the same for each variable. The thick 2020 line starts the year more or less where the thin 2015-19 line is and then in March and April suddenly departs drastically from it. That’s COVID blowing in — and blowing everything up. But by the end of 2020 — by the end of summer 2020 in most cases — the 2020 line is back close to the thin 2015-19 line. And the dots for the first five months of this year are also all generally close to the thin line.

That seems to be the pattern. Nothing unusual to start 2020. Bedlam for three or four months. Then a return, more or less, to normalcy (or normality, if you prefer).

What sorts of labour market variables are we talking about?

❚ The employment rate and labour force participation rate, both of which dipped well below normal values last spring and summer but then tracked back up almost all the way to their 2015-19 averages.

❚ The unemployment rate, which went in the opposite direction, soaring in April and May and then dipping back down, though not yet all the way to pre-pandemic levels.

❚ Hours worked, which were remarkably steady for those who both kept their jobs and kept working but, not surprisingly, sagged markedly for those who kept their jobs but were recorded in the Labour Force Survey as “employed-absent.”

❚ The rates at which people moved from one labour force status to another (i.e., from “employed-working” to “employed-absent,” from unemployed to employed and so on), which also jumped or crashed from March to late summer 2020 but which by year’s end were generally much closer, if not essentially identical, to their normal values.

One continuing concern the economists point to is that the percentage of unemployed people categorized as longterm (half a year or more) has risen. Before the pandemic it ran around 15 per cent. This July it was still elevated, at 27.8 per cent.

Offsetting that concern, at least to some extent, is that job postings have been buoyant. You might not automatically trust data from an organization called Burning Glass Technologies (BGT) but the authors check its job-postings data against more traditional sources and find it reliable. BGT’S series bottoms out “at about 50 per cent of the pre-crisis levels in April 2020,” after which it begins to rise again, reaching pre-crisis levels last October and continuing to rise after that.

This recovery in job postings “is broad-based,” the economists write, “not just across provinces, but also across industries and … broad occupation groups.” And they back up that statement with another series of charts that show very little difference in the pattern of sharp collapse then strong recovery across provinces.

In particular, “the decline in postings in Quebec was not noticeably more pronounced during the first wave when COVID case rates in Quebec were significantly higher than in the rest of the country. Likewise, postings in the Atlantic provinces closely followed the national trend despite the fact that these provinces were for a long time spared the worst effect of the pandemic itself.”

The lingering effects of the episode, mainly higher unemployment, are also pretty evenly spread. “Employment declined from pre-pandemic levels among both women and men and for those with and without a child present in the household,” which suggests “the decline in employment observed today (i.e., spring 2021) is not primarily due to childcare responsibilities due to school closures.” Quite the contrary, one group where the share of employed people declined noticeably is those 65 years and older.

The economists don’t actually say much about labour market policy. My own take from reading their study is that, the storm having passed, it’s time to get back to normal.

Now, if only a storm would provide relief from this summer’s soupy heat.

THAT SEEMS TO BE THE PATTERN. NOTHING UNUSUAL TO START 2020. BEDLAM FOR THREE OR FOUR MONTHS. THEN A RETURN … TO NORMALCY.