Study: Labour markets, business activity and mobility in urban centres

Employment and unemployment rates vary widely from one metropolitan area to another, but the differences narrowed during the past two decades, according to a comprehensive report on economic conditions in 27 urban areas.

Between 1981 and 2001, the employment rates and unemployment rates in most census metropolitan areas converged towards the national average, the report found.

This occurred largely because of improvements in urban areas where labour markets were weakest in 1981, that is, those in which rates of unemployment were relatively high, and employment rates relatively low.

For example, of the six metropolitan centres that had unemployment rates higher than 10% in 1981, only two had rates that high in 2001. At the same time, of the three centres that had unemployment rates of less than 4% in 1981, none still had rates that low in 2001.

At the same time, however, the average unemployment rate for all metropolitan areas combined remained virtually unchanged, as did the average employment rate.

These changes occurred against a backdrop of transformation in business activity within these urban areas. The report found that virtually all metropolitan centres became more services-oriented during the 1990s.

Underlying this shift was a decline in employment in manufacturing combined with a gain in business services industries. Most metropolitan areas also increased their specialization in the communications technology sector, especially in services.

The report also found a kind of "brain drain" affecting some metropolitan areas. Many of the smallest centres lost significant shares of their most educated population to larger urban centres.

Largest urban areas differed widely in strength of labour market

The strength of labour markets varied widely from one urban centre to another in 2001, according to census data.

But while these differences were large, they were not as great as they had been two decades earlier. This indicates a movement towards more labour market equality had occurred among urban centres during this period.

For example, in 1981, the metropolitan area with the lowest employment rate in the nation was Chicoutimi–Jonquière, where only 47.6% of the population aged 15 and older had a job. On the other hand, Calgary had the highest employment rate at 73.2%

Two decades later, Chicoutimi–Jonquière still had the nation's lowest employment rate, but it had improved significantly to just over one-half (51.7%). In contrast, Calgary's rate had in fact dipped to 71.6%.

Likewise, during the 20-year period, Chicoutimi–Jonquière's unemployment rate fell from 15.8% to 12.4%. In contrast, the unempoyment rate in Calgary edged up from 3.2% to 4.9%.

The fact that the unemployment rate in Chicoutimi–Jonquière in 2001 was 2.5 times the rate in Calgary indicated that the labour markets in metropolitan areas at the turn of the millennium were still dominated by differences.

The years 1981 and 2001 represent comparable years in the business cycle, making them ideal for understanding long-term trends.

In addition, according to Statistics Canada's Labour Force Survey, differences in unemployment rates among urban centres changed little between 2001 and 2004.

While the gap among metropolitan areas narrowed in terms of labour force strength during the past 20 years, differences in annual earnings for workers did not. Rather, earnings changed across regional lines.

In 1981, the difference between earnings in the highest and lowest urban centres was $9,900. By 2001, the gap had increased to $11,800 (among workers working full year and full time).

On a regional basis, median earnings fell in all Quebec metropolitan areas, and all urban centres west of Ontario.

Urban areas became more services oriented as manufacturing declined

Almost all metropolitan centres became more services-oriented during the 1990s. At the same time, employment in manufacturing declined in most centres.

This shift in orientation toward more services appeared to have been the result of greater loss of employment in goods industries during the recession. During the rest of the decade, goods and services employment grew at an equal pace.

In 2003, manufacturing comprised on average just 14.1% of employment in the 27 largest urban centres, down from 16.7% in 1989.

At the same time, the proportion of employment in services rose from 74.4% to 78.1%. The professional, scientific and technical services industry increased its employment share from 5.3% in 1989 to 7.8% in 2003.

The six most services-oriented urban centres in the country were government cities: St. John's, Halifax, Québec, Ottawa–Hull, Regina and Victoria. In these centres, services industries employed at least 85% of the work force, mostly the result of large public sectors in these centres.

Between 1989 and 2003, services employment grew faster than goods employment in all but 4 of the 27 urban centres. The share of workers in services employment rose fastest in Hamilton, Oshawa, St. Catharines–Niagara and Kitchener — four of southern Ontario's traditional manufacturing strongholds.

During this time, the goods-producing sector grew most strongly in three western metropolitan centres: Calgary, Edmonton and Abbotsford.

Many of the traditional centres of Canadian manufacturing saw large declines in their manufacturing sectors. In Montréal, for example, manufacturing employment tumbled by an estimated 46,300.

Saint–John, Chicoutimi–Jonquière, Hamilton, St.Catharines–Niagara and Kitchener also lost substantial numbers of manufacturing jobs relative to the size of their labour force.

Nevertheless, many Ontario and Quebec metropolitan areas still had strong manufacturing bases in 2003. The largest shares were in Sherbrooke, Hamilton, Kitchener and Windsor, where more than one in five workers were employed in manufacturing in 2003.

Brain drain: Many small urban centres lost university graduates

A substantial number of people move among urban centres during a five-year period. Compared to other migrants, university educated migrants may contribute more to the local labour supply of high skilled workers, making them highly desirable for metropolitan areas.

Between 1996 and 2001, many urban centres lost more university educated migrants to other census metropolitan areas than they gained back in return. The net losses tended to be incurred by smaller urban centres.

In other words, these smaller centres encountered a "brain drain", exporting university graduates.

During this five-year period, all metropolitan areas in Quebec and the Atlantic provinces lost university graduates to other centres, as did urban centres in northern Ontario, Manitoba and Saskatchewan.

Regina, Sudbury and Saskatoon topped the list that lost the largest share of their university educated population. Regina lost 1,300 more university graduates to other urban centres than it gained in return. This amounted to 7.0% of Regina's 2001 university educated population.

Definitions, data sources and methods: survey numbers, including related surveys, 3701 and 3901.

The sixth research paper in the new series Trends and Conditions in Census Metropolitan Areas entitled Labour Markets, Business Activity and Population Growth and Mobility in Canadian Census Metropolitan Areas (89-613-MIE2005006, free) is now available online. To access the series, from our home page, select Studies on the left sidebar, then under Browse periodical and series, choose Free and for sale.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Andrew Heisz (613-951-3748; andrew.heisz@statcan.ca) or Sébastien LaRochelle-Côté (613-951-0803; sebastien.larochelle-cote@statcan.ca), Business and Labour Market Analysis.