Work hard, make money: British Columbian workers were relatively as well off under both the BC NDP and the BC Liberals

Working hard (Sandcut Beach, Vancouver Island)
* This is the second segment of a four part analysis of BC’s economic performance under the BC NDP government(s) in the 90s and the BC Liberals government(s) since. The summary page can be read here

 

Unemployment 

Because of its immediate relevance to our daily lives, the state of the labour market tends to be how most judge economic performance. Getting into the nitty-gritty of the labour market is can be incredibly difficult, though, especially without good micro-level data. Still, we can get a broad sense of how things have been going by looking at a set of indicators including the unemployment rate, wages, and hours worked.

The unemployment rate only tells us the proportion of people who actively want to work that can’t find a job

BC’s unemployment rate was generally below Canada’s throughout both the BC NDP and the BC Liberals’ time in government

 

The unemployment rate is probably the indicator that most people most follow, so let’s start there (Tables 282-0087 and 051-0001). I compare BC to Canada as a whole to provide some context for each year. In Canada and in BC, for both men and women, unemployment shot up in the early 80s before beginning a long downward trend.

Throughout the 1990s, when the BC NDP was in power, unemployment was relatively high in both Canada and BC. But for males it was lower or about equal in BC over most of the period, and for females over all of it. Keep in mind, though, that all those economic migrants (discussed earlier) were moving to the province until 1997, which almost certainly kept unemployment higher than it would have otherwise been as those new arrivals looked for work.

After the BC Liberals took over, men and women in BC saw three or four years with an unemployment rate above Canada’s as a whole, but then it dropped sharply until the financial crisis hit. It has broadly tracked Canada’s since then, though it may have been slightly better in BC.

So BC’s unemployment rate was generally below Canada’s throughout both the BC NDP and the BC Liberals’ time in government. Some years it was slightly above, other years it’s been slightly below–though men in BC did see two or three relatively great years right before the financial crisis. Looking at just BC over the two periods, unemployment’s generally been lower during the BC Liberals’ reign. But as that’s been true for Canada as a whole, too, it doesn’t really tell us much–especially given the economic migration pre-1998. Relative to the other jurisdictions and accounting for economic migration, unemployment was similar under both parties.

Wages and Hours

Wages are a measure of how much stuff people can buy given each hour of work

Wages, when adjusted for inflation, are one measure of how much ‘stuff’ workers can buy given each hour of work. Hours worked tells us how long people have to work to be able to buy that stuff, and how much time they have for things other than work.

Obviously neither is a perfect way to measure either of these things between two periods (even adjusting for general inflation, we can’t use wages in the 1990s to tell us how affordable a smartphone was, for example, because smartphones didn’t exist then), but together they might give a general indication of well-being.

I use data (Table 282-0225) differentiating full-time (FT) and part-time (PT) workers by whether or not they were covered by a collective bargaining agreement (CBA). The data series only exists from 1997 – 2016, so I can’t look at the whole period under BC NDP rule. Instead, I compare figures from 2001 (the last year of BC NDP rule) to 2016 (the last full year of BC Liberal rule). This essentially allows us to see how much better off workers are today compared to the last year the BC NDP were in power.

Full-timers across Canada saw more wage growth than part-timers, on average, though it was about even for those not covered by a CBA. In BC, though, part-timers saw substantially less wage growth regardless of CBA coverage.

On the other hand, full-timers in BC not covered by a CBA saw wages grow faster than in all of Canada. BUT they were also working the same number of hours in 2016 as in 2001, while those in the rest of Canada were working less.

 

CBA coverage in BC has been falling faster than this elevator would

Worse, while in 2016 British Columbians covered by a CBA made around 15% more than those who weren’t covered, CBA coverage declined by over 21% in BC (while only declining by 7% across Canada as a whole). It’s entirely possible that the relative wage growth of non-CBA full-timers in BC was due to workers who were previously making higher wages in CBA covered firms simply transition out of coverage but keeping their wages constant, boosting the average wages of the non-CBA group.

Fine, but what does all that tell us about how the Province did under the BC NDP? Well, nothing by itself. So let me visualize those data a little differently. This table tells us the earnings of BC workers relative to all of Canada in 2001 (at the end of the BC NDP’s last term in office) and in 2016 (after 16 years under the BC Liberals). You read it by looking at the change in height between 2001 and 2016.

BC Relative Wage
Regional CPI Adjusted Relative Wages, 2001 & 2016.
Data Sourced from Statistics Canada Table 282-0225 (April 17. 2017)

 

With the exception of full-time workers not covered by a CBA, British Columbian workers’ wages were higher relative to the rest of Canada after the BC NDP’s decade in office than they are after 16 years of BC Liberal rule. Ah, you might say, but aren’t most workers full-time, non-covered workers? Then aren’t most British Columbians doing at least slightly relatively better compared to 2001?

Possibly. But also possible is the scenario I mentioned above, with relatively higher wage full-time jobs covered by a CBA having moved into the non-CBA group, boosting the average without actually bringing higher wage growth for workers in industries who weren’t covered by a CBA in 2001.

Also possible, the economic migration to BC from other provinces that ended in 1997 may have depressed wage growth in the short-run because of the increased supply of workers, and increased it in the long-run due to productive complementarities and increased demand once people got settled–so the figures might truly not allow a simple apples to apples comparison like this, even with the caveats I’ve given. This would be consistent with some of the academic literature on economic migration, particularly when it occurs within a country.

British Columbian workers have done well under both parties’ time in government.

.

British Columbian workers were doing better than the average Canadian in 2001, and still are today

 

Regardless, most of the relative movement has been pretty small. British Columbian workers were doing better than the average Canadian in 2001, and relatively are doing about as well today. If the BC Liberals do happen to lose this election, the average BC worker will be about as relatively well-off as he was when the BC NDP left government. But what about the rest of the income distribution? I next look at income inequality.

 

Detailed analysis, Part 3: Income Inequality

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