The Broadbent Blog

Falling participation rate a sign of a soft job market


A close look at today's labour force numbers indicates that fewer Canadians in all age groups are either working or are unemployed and actively seeking work.

While it is influenced by demographic trends such as an aging population, a falling participation rate is generally a sign that people have given up looking for jobs due to a low level of hiring by employers.

The overall participation rate in March was 66.2%, well down from 66.6% in March, 2013.

This very significant decline was mainly experienced among so-called core age workers age 25 to 54. For men in this age group the participation rate fell slightly from 90.5% to 90.4%, while for women in this age group the rate fell from 82.7%% to 82.3%.

Meanwhile, the youth participation rate fell only slightly over the past year, from 64.1% to 64.0%. The participation rate of older workers aged 55 and over was also almost unchanged, rising from 37.2% to 37.3%

A falling participation rate among core age workers is definitely a sign that the recovery over the past year has been extremely soft. The recent rend among core age women is particularly unusual.

To put this issue in a longer term perspective, the youth (age 15 to 24) participation rate has fallen sharply compared to the period before the Great Recession. It was just 63.8% in 2013 compared to 67.5% in 2008.

Many young people still cannot find jobs, or are remaining in school longer in the hope of finding a better job.

For core working age men age 25 to 54, the participation rate in 2013 was 90.7%, still down from 91.5% in 2008.

For core age women, the participation rate was 82.5% in 2013, up a bit from 81.9% in 2008. While this looks good, the participation rate has more or less remained stuck after years of steady increase in the 1980s and 1990s.

Unusually given a recession and slow recovery, the participation rate of older workers (age 55 and over) has risen among men, from 40.7% in 2008 to 43.3% in 2013. For women in this age group it has jumped even more, from 28.6% to 32.0%.

A major impact of the soft job market since the Great Recession has been to delay retirement and to make it much harder for young people to enter the job market. It looks like there may now be a trend towards declining participation among core age women.

(Data from Statistics Canada Cat. 71-001-X and CANSIM Table 282-0002.)

Photo: perspective. Used under a Creative Commons BY-SA 2.0 licence.