As bad as city’s job report looks, it’s even worse than that

We’ve underestimated economy’s damage as a result of the COVID-19 shutdown

When the official jobless rate soared to 13 per cent in April for the country and touched just 6.9 per cent in the National Capital Region, you can be forgiven for thinking we got off lucky in the age of COVID-19.

We didn’t. Nearly all of the divergence is a statistical quirk. The region’s jobless rate in April was somewhere between 10 per cent and 11 per cent of the workforce, meaning more than 80,000 were unemployed — not the 54,000 tally provided Friday by Statistics Canada.

And even this measure excludes thousands who didn’t see the point of job-hunting in a locked-down economy, and so weren’t counted as part of the labour force. Nationally, StatCan calculated that the jobless rate would have been 17.8 per cent had these discouraged former workers been included.

Now, about that quirk. Midmonth, StatCan surveys about 56,000 households across the country to determine the state of the job market. The sample for Ottawa-Gatineau includes just 1,700 households, which produces a relatively large margin of error. To smooth things out, the government agency averages it out over three months.

The latest total for Ottawa-Gatineau added April’s data and tossed out the numbers for January.

In normal times, this is perfectly acceptable. But the impact of COVID -19 on the economy has been devastatingly fast, thanks to government-imposed shutdowns of many industries starting around mid-March. The result is April’s official jobless tally for the capital region — 6.9 per cent — is a 50-50 blend of COVID-19 and pre-virus economies. Which is to say, not very illuminating.

However, there’s a way to roughly estimate the capital region’s job market in

April alone. StatCan provides April-only data for the country’s three largest metropolitan areas — Toronto, Montreal and Vancouver — as well as three-month rolling averages. Comparing the two measures offers some insight into what happened in OttawaGatineau.

Using the three-month average, for instance, StatCan estimated metropolitan Toronto’s April jobless rate at 7.9 per cent. But for April alone, the city had an unemployment rate of 11.1 per cent.

For Montreal, the divergence was even more extreme: its April jobless rate was either 10.5 per cent or 18 per cent depending on which measure you use.

In Vancouver, the three-month average produced an April jobless rate of 7.2 per cent, which surged to 10.6 per cent for April alone.

If we assume the jobless rate in Ottawa-Gatineau was slightly below that of Toronto and Vancouver — as it had been preCOVID -19 — that would place the April-only rate at around 10.5 per cent. Now further assume that employment levels and the labour force shrank roughly in line with the experience of the three biggest cities.

This would mean our local economy has shed somewhere in the vicinity of 120,000 jobs since February when employment levels topped 776,000. Ordinarily, this would have produced an even worse jobless rate, but some 40,000 people simply left the labour force in the past two months so they weren’t counted among the unemployed.

StatCan’s regular April survey offered some insight into the uneven impact of the economic shutdown. Nationally, for instance, the hardest-hit sectors since February have been wholesale/retail (615,000 jobs lost, down 22 per cent) and hotels and restaurants (583,000 jobs displaced, down 44 per cent).

While the capital region’s economy has been poleaxed nearly as much as the rest of the country, it does have a few things in its favour, the StatCan data suggests.

For one thing, relatively fewer workers here depend on the weakest sectors of the economy. Fewer than 13 per cent of the workforce had jobs in wholesale and retail in February compared to nearly 17 per cent in the rest of the country. And just six per cent were employed in hotels and restaurants compared to eight per cent across the country.

At the same time, the capital region relies disproportionately on sectors that have some immunity from job losses. Nearly one in four jobs is in public administration compared to less than seven per cent in the rest of the country. And professional services make up nearly 10 per cent of the local workforce versus six per cent nationally.

The StatCan April survey noted that the latter sectors have the considerable advantage of allowing employees to work from home. Nationally, three-quarters of those specializing in professional services worked at home in April, along with 63 per cent of government workers.

This is in sharp contrast with hotels and restaurants (8.4 per cent working from home) and wholesale and retail jobs (21 per cent could telecommute in April).

So how did Ottawa-Gatineau do overall in April compared to the country’s 10 largest cities? We had the lowest jobless rate (6.9 per cent), slightly better than Victoria’s 7.2 per cent and significantly ahead of Calgary, where a deep oil industry slump pushed the jobless rate to nearly 11 per cent. All of these numbers are based on a three-month moving average.

And all underestimate just how much damage the COVID-19inspired shutdown has hurt the economy.