NCPA - National Center for Policy Analysis

Measuring Labor Markets in Canada and the United States: 2012 Edition

September 6, 2012

A new study examines the performance of labor markets in Canada and the United States based on a number of factors that help identify healthy, high- performing labor markets, say Nachum Gabler, Amela Karabegovic and Niels Veldhuis of the Fraser Institute.

The first section, an index of labor market performance, measures the 60 jurisdictions across five indicators from 2007 to 2011: average total employment growth, average private-sector employment growth, average unemployment rate, average duration of unemployment and average labor productivity. These five indicators yield an overall score for labor-market performance.

  • Alberta ranked first on the labor-market performance index with an overall score of 8.9 out of 10, owing to its top score on employment growth, second- place score on private-sector employment growth, and top-10 placement in average unemployment rate, duration of unemployment, and labor productivity.
  • Three Canadian provinces besides Alberta are in the top 10: Saskatchewan (2nd overall, score of 8.3), Manitoba (5th, score of 7.2), and British Columbia (7th, score of 6.7). While Canada's two largest provinces, Quebec (11th, overall score 5.9) and Ontario (16th, overall score 5.6), rank in the top 20, they continue to grapple with sluggish labor markets.

The second section of the study, labor-market characteristics and regulation, examines four key aspects of labor markets that contribute to their performance: public-sector employment levels, minimum wages, unionization levels and labor-relations laws.

  • Public-sector employment in Canadian provinces is markedly higher than in most U.S. states.
  • Alberta was the highest-ranked Canadian province, ranking 32nd.
  • Seven of the bottom 10 jurisdictions -- including Newfoundland and Labrador in last place -- were Canadian provinces.
  • Canadian provinces also fare poorly compared to U.S. states on the measure of minimum wages.
  • Nine of the 10 Canadian provinces occupy the bottom 10 rankings overall.
  • On the unionization measure, the top-ranked Canadian province was Alberta (24.2 percent).
  • There is a stark divide between Canada -- average total unionization rate of 31.4 percent -- and the United States -- average total unionization rate of 13.3 percent.

The high rate of unionization among Canadian provinces is the result of biased, overly prescriptive labor-relations laws that favor one group over another and inhibit flexibility.

Source: Nachum Gabler, Amela Karabegovic and Niels Veldhuis, "Measuring Labor Markets in Canada and the United States: 2012 Edition," Fraser Institute, August 30, 2012.


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