Hope shines in tragedy

Ever since I heard about the evacuation of Slave Lake on Twitter on Sunday night, I've been keeping a close eye on this incident. I can't imagine what the residents of Slave Lake might be feeling right now. It must be horrible, especially if your house was in the 40% of the town that burned down. But not only did many residents lose their homes, much of the town's institutions and businesses were also destroyed. For Alberta, I have never seen such a large portion of such a large town destroyed. Slave Lake is the major centre for a large area in Northern Alberta, the large scale destruction in the area is going to have wide ranging economic effects for this region.

I want to give credit where credit is due. Over 7000 people were evacuated in a very short period of time with no fatalities or injuries. This fact makes me very proud to be Albertan. Our emergency response plan works. Now, I'm sure the evacuation was chaotic and better decisions could have been made in the moment, but given the sure speed of the fire and the prevailing weather conditions, the fact that so many people got in such a short period of time is a major accomplishment on the part of our emergency services personnell. When they finish fighting the fires and everything else that needs to be done in order to make the town even semi-habital - take off your hats and take a bow. You make this province proud.

Albertans have opened their hearts. This doesn't come as a surprise, Albertans (and by extension Canadians, and indeed human beings) always give what they can in disasters. Since the disaster is so close to home opens up their hearts and wallets even further. Emergency centres have asked people to hold off on their in-kind donations until they can better assess what Albertans need. Already major fundraising drives are being undertaken by radio stations and the internet.

To lose everything must be very hard. Fortunately, many people did have insurance and the province is already talking about compensation for those that don't. It won't be quite the same as before the fire, but at least there will be something. It will take time for these things to put in place of course, but you can count on the generosity of Albertans and the best efforts of politicians and bureacrats to ensure that the money is flowing as quick as it can.

I don't think Alberta has seen such devastation in its modern history, but large scale fires are fairly common in human history. Humans have a tenacity that drives them to rebuild bigger and better. As human beings, we unite in tragedy. I hope the immediate needs of Slave Lake residents are met, and then when everything is ready, we can work together to rebuild Slave Lake.

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.

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.

What do you mean by a 'labour market'?

For some, a labour market might be considered a fairly technical term, but I am using a straight forward definition. For me the labour market is the people behind the economy. It's the jobs that are created, the migrants who move looking for a better life, the decisions that are made and everything else behind the economic numbers that everyone seems to take so much stock in. The labour market is much more than the rise and fall of stocks on what ever street you are following. It's about people. And that's why I am so interested in it.

Alberta's labour market has always been an active place. This past decade has seen incredible growth and that saw a very sudden decline last October. August 2008 Alberta saw an unemployment rate of 3.5%. In August 2009 it was 7.4% (source). There are so many stories behind those numbers. Everyone has questions. Will this high unemployment stick? Why were so many jobs lost so suddenly? How does something in New York affect what happened in Fort McMurray? Are we going to see more health care cuts? All these questions are related to the labour market.

Now, I have no crystal ball. I only have an interest in this area. I have some close connections to the 'front lines' and an interest in writing about Alberta. I am no academic but I am no dummy either. I am able to listen and learn, if someone has something interesting to say.

And so the discourse begins...

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.