Ontario’s Economy and You: A Quick Guide for Students

Do you know which city in Ontario has the lowest unemployment rate? In which industry wages are rising or falling? What “economic growth” actually means for you?

If not, you’ve come to the right place.

In this article we’re going to cover four main aspects of Ontario’s economy that are most relevant to students: jobs, wages, inflation, and growth. This is by no means an exhaustive guide to economics or employment, but is merely meant to act as an informative brief that can help you in a pinch, or assist you in making a more informed decision in your studies or career.

Jobs

Let’s start with the labour market. A key indicator of how abundant or scarce jobs are in a given region is its unemployment rate. High unemployment means that an economy is not efficiently using its pool of labour, and more tangibly, that people are looking for work and can’t find it.

In April 2016, unemployment in Ontario rose to 7 per cent from 6.8 per cent in March 2016, which brings it in line with the Canadian average of 7.1 per cent.  Youth unemployment (those aged 15 to 24) in the province stands at 14.8 per cent, which is actually an improvement from a year ago in April 2015, when the youth unemployment rate was 15.3 per cent. Over the same year, the province has added approximately 96,000 jobs to the economy.

Unfortunately, the increase in the amount of part-time jobs (up 2.2%) has outpaced full-time jobs (up 1.2%) since last April. The news is worse for the immediate term, where from March to April 2016, part-time positions increased by 1.6 per cent while the amount of full-time positions in the province actually fell by 0.4 per cent. The reason these numbers aren’t great is because part-time work is considered more precarious and obviously yields less earning potential than does full-time work.

Unemployment applies to cities as well. If you’re mobile this summer, moving for work, even just within Ontario for a few months, could be worthwhile for your resume and future job prospects. In terms of municipalities, here’s a rundown of unemployment rates for select cities in Ontario in April 2016:

Source: Statistics Canada

Peterborough (3.2%) and Guelph (4.8%) currently hold sizeable leads over other Ontario cities in employment while Hamilton (5.4%), Kingston, and Kitchener-Cambridge-Waterloo (both 5.6%) are also experiencing positive unemployment rates. On the other end of the spectrum, Greater Sudbury (8.6%) is facing a bout of unemployment that is significantly above the provincial average of 7 per cent. For reference, economists consider “full employment” for Canada to be 6 per cent. In the United States it is considered to be 5 per cent.

Note that these municipal unemployment rates, like provincial and federal rates, will likely fluctuate throughout the summer months. Many local economies begin to blossom seasonally, and while these economies do well, others may falter during the same seasons for a variety of reasons. For instance, Toronto, as a tourist destination and hotspot for large-scale conferences, festivals, and sporting events could potentially see its unemployment rate improve as the summer moves along and more jobs are created to support the city’s many happenings. On the other hand, cities and towns that may depend on seasonal production or seasonal exports to support their economy might see a spike in their unemployment rate if the summer months constitute their off-season. This is not so much a reflection on the municipality itself but could simply be the nature and reality of that area’s dominant industries.

Wages

Beyond the task of actually finding a job is the matter of your compensation. The good news is that youth wages are rising in Ontario. From April 2015 to April 2016, the hourly wage rate for workers aged 15 to 24 years rose by 3.1 per cent. The caveat here is that Ontario’s government increased the minimum wage last year, therefore directly contributing to the rise in overall wages (not that this a bad thing, but the rise in wages is less attributable to positive market forces than it is to government legislation). As of October 2015, minimum wage increased from $11 to $11.25, and student wages from $10.33 to $10.55. These rates will once again increase come October 2016.

The most pronounced wage increases from April 2015 to April 2016 are in trades, transport, and equipment operator occupations (up 5.9%), natural and applied sciences, and health occupations (both up 4.9%), and in business, finance and administration occupations (up 4.1%).

Wages fell in the following occupations: art, culture, recreation and sport (down 9.8%), sales and service (down 2%), and natural resources and agriculture occupations (down 5.4%). Again, this not an exhaustive list of wages in all industries and these statistics will likely change significantly year-to-year. This information should not be a major determinant in career choice, but is very useful in demonstrating that wages for any job can and will change for better or for worse. Nothing is set in stone in the labour market and that goes doubly for trends in the supply and demand for any profession, in any industry.

Growth and Inflation

Inflation (the rise in the general price of goods and services over time) is currently not a major concern for Ontario or Canada while the country trudges through minimal economic growth and the sharp decline in commodity prices (oil). We are still in a period of both monetary (low interest rates) and fiscal (government spending) stimulus, so Canada’s central powers are doing their best to rev the country’s economic engine. If the stimulus plans are effective in boosting the economy, then we may see higher increases in inflation in the future.

From April 2015 to April 2016 the Consumer Price Index (a basket of goods by which to measure the actual market cost of your purchases, a.k.a inflation) rose by 2.1 per cent. This is slightly higher than the average for Canada, where inflation rose by 1.7 per cent in the same time period. The Bank of Canada’s target inflation rate is 2 per cent, so these numbers are for the most part, on track. In Ontario, the highest increases in prices came from alcoholic beverages and tobacco products (up 3.8%) and food (up 3.6%).

Gross Domestic Product (GDP) in Ontario is projected to see a 2.6 per cent increase in 2016. In 2015, GDP grew by 2.5 per cent. The figure for 2016 is a forecast so take it with a grain of salt, but as we move further away from the effects of the 2008-09 global recession you can tentatively expect Ontario’s economy to grow at a better pace than it did in 2013 when it’s real GDP grew by only 1.3 per cent.

For students, growth will mean more opportunities for academic research as universities are called upon to innovate and lead in the knowledge economy, and crucially, more jobs. As an economy grows, what it is capable of producing (called the Production Possibilities Frontier in economics) grows as well, meaning companies need to hire more employees to expand, innovate, realize their potential, and meet increased demand for their goods and services. Growth is expected to hit 3 per cent in 2017—if this estimate comes to fruition, the good times in Ontario could roll again.

Justin Bedi
Policy & Research Analyst
Ontario Undergraduate Student Alliance

All statistics, unless otherwise noted, were acquired from Statistics Canada