Labour participation rates have fallen fast in Northumberland

Understanding the local economic impacts demand that our Elected Representatives act.

Several noted Economists have been sounding the alarm bells over the declining Labour Participation forecasts coming from organizations such as Statistics Canada. While I don’t consider myself an Economist, I instruct university-level business courses that demand some basic understanding of the subject. The simple definition of Labour Force participants means that those 15 years and over who are employed full-time, part-time or unemployed but looking for work. The simple benchmark for worry in Labour Participation is when rates fall near or below 60%.

On a national basis the labour participation rates peaked in 2008 at 68% and have been in steady decline since. I think most Canadians are conscious of the aging of our population as the so called Boomer generation reaches retirement age. The current national rate is closer to 65%. There is a multiplier effect when someone leaves the workforce; not only is revenue and productivity lost, but a social expense is created. Unlike those who might experience unemployment, they don’t usually return. Ever.

The forecasts are suggesting that Canada could face some serious economic challenges when in 15 years (2036) our national levels of labour participation fall to 60%. At these rates, all levels of government will have difficulty maintaining basic service levels and face budgetary strains like they have never seen before. Printing money won’t help. Public demand for shrinking supply: 1 in 4 people in the workforce will be over 55 years old; 2 citizens will be working for every person over 65 etc. It will be worse in certain regions of the country. Much worse. Less people working in support of those who are unable or choose not to.

While all of those national forecasts seem a long way off, closer examination of Eastern Ontario & Northumberland County suggest that the forecasts for 2036 are happening for us right now.

In the decade, 2008 to 2018, the following has happened in Eastern Ontario (Northumberland to Lanark)

• Population of citizens 55+ has increased by 261,000
• Population of citizens 15-55 has decreased by 86,000

A Ryerson Study of the Golden Horseshoe indicated that Northumberland was one of only two Counties in Ontario with negative job growth for the period of 1996-2018. When you think about it, you have to try hard not to grow. What became more startling was beginning to understand that the Municipality has historically been using a Provincial Job growth model for their Planning and Development budgets. In other words, our local salaried and elected officials growing their staffing & expenditures for decades using a Job Growth assumption for jobs that never materialized. So taxes and government were growing, but the local working tax base never was. Generally speaking, in Cobourg, roughly 300 people moved in every year and 300 people moved out or passed on and the population base remained relatively unchanged. Unless I am wrong, this age-old broken system still exists (at our peril).

I really thought like most, at the time, that it was a demand-side issue: if companies like Kraft re-opened here, or if the World Largest Cannabis production facility opened or if Fleming College restored its activity of a decade ago; or if any of our level of Government Economic Development staff did their job, we could get back to even. Walmart was here. Kelly’s was still open. How bad could bad be in the ‘Feel Good Town’?

The trend numbers told me I was wrong. The current data said the opposite was true. Today, I think I know that it’s a supply-side issue: if Kraft came back, they couldn’t find anyone to work; if Fleming re-opened they might not find anyone locally to pay to attend class.

In 2008, 41% of our citizens were over 55. In 2018, half were over 55. Across Eastern Ontario from Newcastle to Lanark, a third of today’s Labour force is over 55 and there are literally thousands of job vacancies. Trade and technology have reduced demand for less skilled labour and our biggest local cohort of labour non-participants are male, lacking High school equivalency. Further, of non-participating males in prime employment age, one-third admit to a disability. That amounts to thousands. So the dire consequences predicted for Canada in 2036 are playing out in our community right now as Labour participation rates fall below 60%. The symptoms play out in our streets and the drums beat louder from those in need.

Of course, employment isn’t the only metric. Inflation? Sure. Housing bubble? Absolutely. It’s not the Municipality’s fault people aren’t working, but it is our absolute responsibility to understand the conditions of free-falling labour participation and its impact. That’s where we are.

So the short-term solution is to understand and accept that this is where we are. That maybe we can’t afford to continually lose a million $ annually with the CCC. That the municipal service divisions that have expense lines dominated by wages, salaries and benefits can no longer get routinely increased by the Town or the County. That our assumptions of the past were wrong and they are wrong today. That real growth and development of a prosperous community requires that residents live here, work here, get educated here and invest here and that’s simply not happening.

The necessary next step is to stop spending.

So, that is my message to any Councilors seeking re-election in 2022: stop spending. Say no to a tax increase. Say no to a seven-figure re-organization plan of our Town’s biggest expense. Take a real look at the big spending staffing line items and give the aging ratepayers a little breathing room. They are the ones still making what we have in this town work.

Thank you
David Blakely

David Blakely is a Cobourg resident and Adjunct Faculty at Trent University, School of Business. He used to do other stuff. He believes in cognitive testing for elected officials.