Canada lost 88,000 jobs in January, most of them from Ontario

Now some economists are blaming the province’s minimum wage hike

by Vanmala Subramaniam
Feb 9 2018, 3:17pm

After two straight months of stellar employment numbers, Canada’s economy shed 88,000 jobs in January alone, a number that far surpassed economists’ expectations, some of whom had projected a 10,000 increase. The country’s unemployment rate edged up by 0.1 percent, and now stands at 5.9 percent.

The job losses were led by Ontario, which saw a decline of 51,000 mostly part-time jobs, fuelling speculation that the minimum wage hike was to blame.

“The hike in Ontario’s minimum wage to $14 an hour on January 1st, from $11.60, had a devastating impact, with 51,000 part-time jobs lost in the first month alone,” wrote Paul Ashworth, Chief North American Economist at Capital Economics.

"Overall, a mysterious mix of good and bad, with the latter's impact blunted by how strong job gains were in the lead-up to these figures," CIBC chief economist Avery Shenfeld wrote in a morning note.

"January saw an (88,000) drop in employment, reversing about half of the spectacular gains we registered late last year. But the details also looking wonky, with all of the job losses in part-time work," wrote Shenfeld.

But further inspection of Statistics Canada data reveals that there were only marginal losses in the food services and accommodation sectors — an industry that one would expect to be most impacted by any kind of minimum wage hike. The sector shed just 2,200 jobs between January 2017 and January 2018.

“I do not think the minimum wage hike was to blame for January’s job numbers,” James Marple, TD Bank Senior Economist, told VICE Money. “I think you need to take this month’s labour force survey with a grain of salt. We had two straight months of job gains, and today’s numbers are more consistent with our underlying pace of growth.”

In the last 12 months, Canada’s economy has seen a sharp increase in jobs — 288,700 to be exact. Most of the gains came in November and December.

“This is probably a natural pullback from very strong labour market growth in 2017,” Frances Donald, Senior Economist at Manulife Asset Management told the Business News Network this morning.

Ashworth disagrees, arguing that the demographic breakdown of jobs in January clearly shows how minimum wage hikes in Ontario impacted employment numbers — core-aged women and older workers saw a sharp decline in employment. Indeed, the Labour Force Survey shows that employment among core-aged women, that is, those aged between 25 and 54, declined by 54,000 in January. Among people aged 55 and older, employment fell by 24,000.

In early January, the Bank of Canada put out a report estimating that minimum wage hikes across the country would result in 60,000 fewer jobs by 2019. But many experts point out that that doesn’t necessarily mean jobs will be lost, but rather, that 60,000 fewer jobs will be created.

On Thursday, British Columbia announced that it would hike its minimum wage gradually to $15.20 by 2021, from the current rate of $11.35. That timeline, said B.C. Premier John Horgan is aimed at “finding a balance between allowing businesses to predict their needs and giving hope to about 400,000 of the lowest-paid workers in the province.”

The backlash against Ontario’s minimum wage hike was in part, due to the fact that the provincial government raised it very quickly — from $11.60 to $14 within just a year

January's Labour Force Survey showed that permanent employee wage growth accelerated to 3.3% year-over-year in January. "That was probably in part related to a big hike in the minimum wage in Ontario although wages also appeared to accelerate somewhat on balance in other provinces," said Nathan Janzen, Senior Economist at RBC Economics.

"Wage growth did indeed heat up last month, but it did not accelerate to the pace expected, given the implementation of minimum wage legislation in Ontario," was Marple's interpretation of the data. "But more gains may be on the way in the months ahead."

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