Canada’s slowing employment recovery is expected to disproportionately affect low-wage earners and young people, a report from CIBC Economics says.
Economists Benjamin Tal and Katherine Judge estimate that low-paying jobs account for 80% of the total lost since February.
“Following four months of a strong recovery, hours worked for those that earn less than $16 per hour is still 20% below its pre-recession level,” they wrote. “And the number of those who earn over $40 per hour, in fact, has risen since the beginning of the crisis.”
The 15-to-24 age group only represented about one-tenth of the pre-Covid labour market, but that segment accounts for 35% of the jobs lost since February, the report stated.
The divide between outcomes for high- and low-wage earners helps to explain the increase in household savings during the pandemic, the authors noted, as those with high, stable incomes reduced spending. Statistics Canada reported that the amount Canadians owe relative to their incomes fell in the second quarter.
“That asymmetric performance also goes a long way in explaining the strong recovery in the housing market, since many of the low-income workers [who] lost their jobs were renters,” the CIBC report said.
Almost two-thirds of the three million jobs lost between February and April have been recovered, but the pace of recovery is expected to slow to about 50,000 jobs per month, compared to an average of 477,000 per month since April, the authors wrote. That means it will take until 2022 for a full recovery.
“With the fear factor regaining momentum in the fall and reaching zenith in the winter, future employment gains will be limited,” the report said.
Last month, a report from TD Economics found that the job gains have been concentrated in certain industries. That report also predicted the next phase of employment recovery would be bumpier.
Statistics Canada will release its labour force survey for September on Thursday.