Happy New Year

Sometimes I have a grand vision of this blog but I just can't be motivated to do the research and write it. Research requires time, and with a young family and a change in jobs, time is something of a premium. I wanted to look at Alberta's labour market from the past decade but unfortunately I did not get around to the research to fully back up my claims. So instead, I'm going to provide a quick overview of the past decade, breaking the last decade into 3 periods. It is not going to be as complete as I initially envisioned, but at least it is something.

At the end 90's, thing were looking good in Alberta. Oil prices were rising and there were some major construction projects underway. This continued as we entered the new millennium. The new millennium brought a lot of global turmoil though. There was 9/11, the tech bubble burst and the invasion of Iraq and Afghanistan. But thanks to the major construction projects, low interest rates and the high price for natural resources, Alberta weathered this. I think because we weathered this period of international unrest, Albertans got a little cocky. People were still moving into Alberta in droves, incomes were going up and everyone was predicting labour shortages.

In 2002 I was working as an employment consultant for a non-profit in Red Deer. The newspaper was still one of the better ways to look for work at the time and so I looked at the newspaper daily. Escort agencies were advertising in the classified ads. I was already saying then that there was going to be a labour shortage. My dad was working construction in both Red Deer and Fort McMurray and they had to fly in trades people from across Canada in order to meet the demand of these mega-projects.

As we moved further into the first decade of this millennium, the labour shortage became more acute as commodity prices rose and all sectors across Canada were firing on all cylinders. Enter 'the boom'. For me, a key feature of the boom was how easy it was for semi-skilled workers (with high school education or less) to find high paying jobs over $20/hour. The semi-skilled flocked to Alberta to make their fortune while the skilled workers stayed in their home provinces because they were already making comparable wages where they lived.

Even during the boom there were 'winners' and 'losers'. Some people did very well for themselves in Alberta. Others did not. People with disabilities struggled particularly hard as the red hot economy did not have the time to give people who need a little extra help an extra hand. As the Canadian born semi-skilled moved into higher paying jobs, the jobs that traditionally relied on these workers struggled. Tim Horton's were printing job ads right on their cups. So with a shortage of workers in the service industry, we saw the entry of temporary foreign workers.

No one in Alberta saw the the crash coming in October 2008. The housing bubble had already burst a year earlier in the United States and manufacturing in Ontario was also reeling. Albertans thought it would probably be sheltered from it like it was sheltered from the turmoil at the early part of this decade. But Alberta could not escape the effects of plummeting energy prices. A very wide swath of Albertans were laid off. From skilled engineers working in the office towers of Calgary to heavy equipment operators working the pits in Fort McMurray, pink slips were being handed out to a record number of Albertans and the Employment Insurance(EI) rolls skyrocketed. People who had never been on EI before found themselves asking for government assistance. I've said this before, but I think the 'the crash' was more of a correction. Alberta could not sustain a boom that relied on a bubble in commodity prices.

The 'recovery' we are seeing is thanks to low interest rates. Homes are being bought because interest rates are low. People are buying cars because they can get a great deal. We're seeing some increase in construction because they can get the financing and the labour is available. The Bank of Canada is going to continue these low interest rates until they feel that inflation is increasing. I know some people are hoping we'll be returning to a boom in the next couple of years, but this unrealistic. I think we'll see some growth, but it will be much slower and it will rely much more on skilled labour. Government needs to invest in retraining, particularly in the trades. The baby boomers are still going to retire. I think skilled workers are going to see an endemic labour shortage as a large portion of those in our labour market leave it and create a skills gap.

I had originally envisioned this post to be better researched with labour stats and quotes from the experts. Instead you got my opinion on what happened this past decade. I plan on continuing this blog about Alberta's labour market. This is a fun topic and I do enjoy discussing it. Thanks to everyone who has taken the time to read my blog !

establishing the new status quo

The latest unemployment stats came out on Friday. These stats track the unemployment rate in through this country. Canada saw an increase of .2% to 8.6%. Alberta saw a change from 7.1% to 7.5%. CBC was saying that this increase was unexpected given the previous two months saw decreases in the unemployment rate.

There is a lot of debate as to whether or not we are on the road to recovery or the worst is yet to come. Personally, I think we're seeing the establishment of the new status quo. It's still a little too early to see it graphically, but I think we're seeing an evening out of the unemployment rate in both Alberta and Canada. We're not going to see much more in the way of increases, but I don't think we'll see any dramatic decreases either. Alberta seems to be staying around 7.0% while Canada is going to remain around 8.5%. As with any monthly statistics, there well be ebbs and flows (as we did this month), but I think for the next while, we'll see things remain around this level.

So what does this look like? This is going to be particularly hard for Albertans to adjust to I think. We got so used to (in such a short time I might add) to jobs being a dime a dozen, that now that the job market is much tighter, Albertans don't know what to do when they have trouble finding work. Employment and unemployment is going to cyclical for many people, particularly for those with lower levels of education. Alberta has always had a high drop out rate. Kids did the bare minimum in school and then quit because they could make $18 an hour (or higher) on the rigs and other such occupations. With rig jobs much more competitive, those that did drop out (or did graduate but didn't go on to any other post-secondary) are going to find the jobs now available pay much less than what they expect them to.

This is also going to affect professionals though, be it engineers or trades people, especially those tied to natural resources and construction. Professionals are going to have to adjust and prepare for the cyclical nature of their work. This may mean buying a cheaper vehicle or downsizing their homes to make sure they can make their bills during a layoff period. They will have to stop buying so much on credit.

I have several other concerns. TFW's were brought in during the boom to fill labour shortages, typically in the food and hospitality sectors where Canadians would not work in favour of higher paying jobs. Employers have become addicted to these workers as they do a better job and take the position much more seriously than a born Canadian ever did. But the problem is that there are a lot of Canadians unemployed and we need to make sure that they get jobs first, even if it is for $9/hr.

We need to make sure our education policy is balanced and we educate an equal portion of tradespeople, technical personnel and University graduates. Boom times may not return soon but we still need to make sure we have a balanced labour market.

People are still going to have jobs. It's just that jobs will be harder to find. Government services will need to realign to help Albertans find these jobs and make sure Albertans are prepared for the job search. We also have to remember that we have an aging population, and some people will retire, but some won't. We are going to need replacements for these workers, particularly in the professional fields. So we need a robust and responsive immigration system. One that focuses on bringing new people with the skills we need.

I still see a lot of people expecting us to climb out of this 'recession' and return in a year or two to glory days of the boom. This is unrealistic. Instead, we need to adapt and expect that higher unemployment rates are not an aberration. It is certainly something to work on lowering, but it is unrealistic to expect that we'll return to unemployment rates like 3.5%. Besides, even those who were making big money during the boom had to admit - the boom was unsustainable. Now is the time to correct the problems we saw manifest themselves and prepare our structures to become more responsive to the ebbs and flows of the labour market.

Temporary Foriegn Workers in Alberta - an opinion

During 'The Boom' (yea, I think it has become so legendary now I think it deserves to be a proper noun) Alberta decided to fill it's labour shortages with international workers. Some companies claimed it was because they couldn't find skilled labour form overseas but to honest, they wanted to bring workers to fill the semi-skilled jobs that no Albertan wanted to take. Why would a high school student work at McD's for $9 bucks an hour when they could drop out of school and work the rigs (or whatever else they could find) for $20? So a whole lot of people from around the world came to work in our fast food restaurants, kitchens and hotels.

Part of this is because the government relaxed the rules for the Federal Temporary Foriegn Worker (TFW) program and allowed TFW's to stay in Canada for up to 2 years. They also streamlined the approval process. The number of TFW's in Alberta doubled in a year. Now the program was always intended as a temporary solution - after all these people had to go home after working in Canada for two years. For those who worked in skilled jobs there was an opportunity to apply for permanent residence but it seems that most TFW's did not fall into that category. Even the provincial nominee program had limited allowances to sponsor semi-skilled workers. The TFW's were supposed to go home. The problem was, that most of the TFW's who took jobs came with the intention that this would be a backdoor for them to immigrate here.

Most TFW's came from developing countries - most notably the Phillipines, Mexico and India. They wanted to leave their country and go for something better in one fo the richest countries in the world. Now a lot of their two year visa's are running out and many are scrambling for an opportunity to stay. A lot lost their jobs when the economy 'corrected' itself. Some ended up with exploitative employers. The problem is, the system is set up to dash their dreams of immigrating to Canada. It doesn't want these people to move here. They were temporary workers for a temporary problem. Alberta now has a 7.1% unemployment rate, can Albertans take those jobs now?

For me, the TFW program fails to live up what I expect from out immigration system. Canada has a very proud tradition of welcoming people to come to Canada and then contribute to the nation as a whole. Now in some cases temporary workers do have their place, but I disagree with allowing such a large amount into our country as disposable labour. We are setting people up to be abused and we are setting people up to fail. A lot of the TFW's who do come to Canada have a University education and end up working in jobs meant for people without high school. We are taking advantage of people who are willing to give up a successful career in their home country on the small chance that they may be able to immigrate to Canada.

Canada is a nation built largely by immigrants. We need immigration as a nation to survive. As a nation we want people who will contribute to our nation. We can't pick those who are born here, but we should definitely reserve the right to pick those who move here. In a competitive world, we need to compete as a nation. The streamlined process of the TFW program does not take this into account. Some people are doing jobs that they were not trained to do. Others are doing jobs that they are overqualified for. This system is unjust and I really think it should be abandoned. I can see the purpose of limited TFW program for seasonal labour and international experts. But I really don't see any need for TFW's to work in a fast food restaurant.

We as Canadians have to keep in perspective that $20/hr jobs do not come to people without a high school education. If we don't fill the positions at Timmies then maybe those 7.1% who are unemployed will start to apply. Instead, we are letting the companies take the easy way out by bringing people over who will do just about anything to immigrate to Canada. I think it's time for the feds to stop providing the permissions to hire at fast food restaurants and the like and instead encourage employers to find the jobs internally.

Throughout my travels I saw a lot of migrant workers. Taiwan in particular brought in workers from poorer parts of Asia to work in its factories. These workers lived in substandard conditions and came over only for the opportunity to make money. This is not a road I think Canada should go down. We should pursue an immigration policy that brings in the best people to grow our economy and our nation. This of course involves the growth of one's personal wealth. But I do not want a revolving door immigration system that provides workers no protection. Instead we need to encourage more permanent residents to come and make Canada their home.

September's labour stats

The Alberta unemployment rate finally came down, after 11 months of increase. For the Alberta perspective, go here. It wasn't a large decrease and it happened for 2 reasons - a slight increase in jobs and a decrease in Alberta's working population. Last month the unemployment rate was 7.4%, this month it is 7.1%.

I was hoping that the rate would start going down before now. This rate would indicate that the economy is not really getting worse, but it's not getting any better. I really think we've hit a plateau and this is where we are going to be for a while - maybe even a few years.

The bulk of Alberta's natural resource activity is actually in natural gas. And the price for natural gas is depressed right now. I anticipate that the oil sands are going to see some construction for the next few years, but it won't be at a frantic pace like it was 2 years ago. This will allow for some job creation (in construction) but it will be slower than before. With prices still low in natural gas we won't see as much activity in the gas sector for a while.

The economists are calling our labour market 'balanced'. I agree with this. It's harder for people to find work but it's still possible for those who have the skills and keep their expectations realistic. A high school drop out is going to have trouble making over $15/hour. Someone with just high school really needs to be flexible and should really look at further training. And individuals who are looking for training should look at keep their education general, as specialization may paint one into a corner if a particular company no longer needs that set of skills. Specialization is often inevitable, but if one has to specialize, specialize in more than one thing.

Alberta is still a great place. We'll have some challenges ahead of us, but I think these challenges are no worse than what we saw in the early 90's. For me, I just think it's important not to get too arrogant and keep things in perspective. We're always going to need oil and gas, but we need to keep it sustainable. This is an opportunity for Alberta to slow down and take stock make some appropriate investments. Then these investments will pay off in a few years when the economy starts to pick up again.

Chasing the Gold Rush

We all want to accummalte some volume of wealth. Each of us have our goals and this is a personal decision. The thing that gets me is that so many people think that getting rich is somehow easy. Every day I get phone calls from people wanting to start a business, find work or get training and it surprises me how many people think that financial independence is something that is handed to them and not worked for.

Edmonton and indeed most of Canada owes its existance to people who set out onto the frontier in search of a new life and fortune. The history of North America is littered with gold rushes, some person who finds a treasure in the wilderness and then the masses flock seeking their own mass of gold nuggets. But anything in history goes much deeper than that. The original prospector probably looked for years in that area before he struck it rich. Most of the people who flocked to the site of gold strike left empty handed.

For Canadians, Alberta in the last 10 years was the new gold rush. And there was certainly money to be made. Alberta had an unemployment rate around 3-6% and the Atlantic provinces had a rate in the teens. Whole towns from down east flocked over here to work in the oilfield, oil sands and petro-chemical plants. At first a lot of the work was temporary, the workers could work for a few months, make some cash and go home. I remember this back in 1998 when my dad got me a summer job working at a plant turn around (shut down) at his old employer. I was one of the few guys who lived in Red Deer. I remember how awesome it felt to make $14/hr, a lot of money for a young University student. As our economy grew the demand for workers grew. Alberta became even more of a destination and the wages only went up.

There was certainly some demand for semi-skilled workers. But the real shortage was for skilled trades, something the province neglected to train people for from the last crash in the early 80's to the new development in later 90's. Alberta until last year was an awesome place for skilled tradesperson to make some money. But to be a skilled tradesperson takes 3-4 years of training through the apprenticeship system. A lot of people didn't bother, taking $20-25/hr now rather waiting 3-4 years to make $35-40/hr.

When the housing bust hit the United States in 2007, Alberta thought it would be immune to it. After all oil was reaching record heights and development in the oil sands was going full speed ahead. The oil sands were huge construction projects employing 2-3000 workers at a time. This employed people in all areas. By 2008 the construction projects at several sites were starting to wind down, but not to worry - the companies promised that more projects were just around the corner and ready to break ground. Then October happened. Oil dropped from $140 a barrel to $40. Those projects on the drawing board stayed there. And a lot of people were out of work. Some of the skilled trades moved into maintenance. Others skilled trades took a break. But the hardest hit were those who had little training. They were the first to get the boot and had the hardest time finding anything else. After all, why would a company hire a heavy equipment operator with 5 years experience when they had 5 guys applying for the position with 15+ years driving a heavy machine.

Before October I had many people from Ontario and the maritimes asking how to get a job in Fort McMurray (the site of the oil sands construction). Those that were calling me had no training in the trades. They thought they could just show up and, boom, get a 25-30/hr job without trying. Even during the boom, this seldom happened unless you knew someone. I had a hair dresser from Toronto insisting that his buddy got off the plane in Fort McMurray and was working before he got to his housing. He was asking me how his buddy did that. I told him to ask his buddy. Of course his buddy wasn't telling any secrets.

Whole families showed up from across Canada hoping to strike it rich here. Now, if they had the training, they may have been able to secure a position during the boom. But it was much harder if they didn't have a skilled trade. Fort McMurray was particularly a very hard place to settle because there was no housing unless you got a camp job - and most camp jobs were reserved for the skilled trades. But the rents across Alberta were skyrocketing until 2007 as well, and those who got jobs in the semi-skilled jobs found it difficult to make ends meet.

After October, I got few requests about jobs in Fort McMurray or much of anything from inter-provincial migrants. (Although I got a call the other day from someone asking if he could get a job in a manufacturing plant out here, but the news always travels slow for some people). Now people want training. The provincial and federal governments offer up to 2 years of training (plus the possibility of high school upgrading, if required on top of that) at a technical, private vocational or community college, if you can find a spot. This is not a new program, regardless what the Tories want to tell you. They opened up the requirements somewhat, but the program has been in place for as long as I know. But what are the two most popular requests I get for training? For men -Heavy equipment operator and truck driver. For women - administrative assitant or something in health care. Usually short courses, and something that doesn't require a whole lot of study. The thing is, there are a lot of truck drivers and administrative assistants unemployed. Heavy equipment operators don't even need any training - although there are schools that are willing to take your money. The demand for the skilled trades are greatly diminished (although I don't get a lot of calls from journey people, a lot are still working) and if you're looking to get apprenticed you're probably SOL. What a change from a year ago when the employers couldn't find anyone wanting to start as a first year apprentice.

A lot of people have been hurt because of this bust. But the thing is I think some people could have prevented the damage they caused themselves if they would have remembered this - making money is never easy.

I have a 4 year degree. My dad is a journeyman pipefitter. All the people in my life I would consider successful all follow these simple steps- if you want to make money it requires you to dig in, get trained, start at the bottom and work your way up in your career. But I see so many people who would rather skip the hard work and go straight for the money. They would rather gamble it all on striking gold rather than having some patience and make some money in the next 20 years rather than trying to make it all in 5.

I have no interest in making a million bucks. I am interested in making a comfortable living for my family and hopefully when I'm 50 or 60 I don't have to panic when my kids hit me up for some money to go to school. Yep, times are a little tough right now. But my wife and I are willing to make some sacrifices and I know that if I work hard, develop my skills and keep honest with my employers that I will move up. Is it easy, no. But will it be worth it? If I've learnt anything from my parents and their peers, I truly believe it will be.

mmm labour stats

The latest labour force statistics (better known as the unemployment rate) for May came out yesterday. Check them here. Both Canada and Alberta saw very small increase in the unemployment rate in May, which is really no surprise. The stats for May confirm what I've been thinking about for 3 months now. The Alberta economy has finished its correction and the new status quo is taking hold.

Gone are the days where a kid can drop out of school and land a $25 job playing in the mud. Gone are the days that if your employer wasn't paying you enough you just went next door for an extra 2 bucks an hour. Gone are the days of quitting your job on Friday and having a new one Monday morning.

The new reality is that we need workers with skills and education. If you're not pulling your weight at the job, you may find yourself looking for a new one. Employers are not looking for workers who just have a pulse, they're looking for workers who will do the best they can for the business.

The downturn did hurt a lot of people. But it could have been a lot worse. People still have jobs and Alberta still has the largest labour participation rate in Canada. People are still buying Wal-mart, going out for dinner at The Keg and having fun at Rundle Park. Some people say the worst is still to come. Myself, I think what we just saw was a correction. We couldn't sustain the boom we saw from 2004 to 2008. But the world still needs fossil fuels. And Alberta still has them.

What puts Alberta in a tough position is that we're still getting a lot of inter-provincial migrants who think that just anyone can come and secure a good paying job here. But the thing is that there is a lot less demand for lower skilled positions now. If you want a job as a heavy equipment operator you need to get in line with 30 other guys applying for the same position. Don't have any experience working on the rigs? Well, there are lots of guys applying for those jobs who DO have the experience. There are still plenty of jobs in the service sector though, but they are expecting that you'll stick around for more than 2 weeks. If they don't think you will, don't expect a call back.

I foresee that Alberta could stay at this plateau for a number of years. If oil prices remain around $60 bucks a barrel, the companies will still be working, but working less. This isn't a bad thing. The break neck pace of the last 4 years was ridiculous. Instead, let the economy develop in a sustainable fashion. Instead of 4 2-3000 person construction projects happening at one time, lets have one. Once that project is done, move onto the next one. This allows Alberta to fulfill its labour obligations and still develop its economy. It also keeps the kids that should be in school, in school. It ensures that drunk people aren't driving 5 story heavy haulers. And it keeps the line up at Tim Hortons manageable.