What started out as an exploration of comparing recent job market numbers, turned out to be a question on the adequacy of the country's pension system .
Canada’s unemployment rate dipped in March to a historic low. In fact, both Canada and the US added more jobs than anticipated last month. I was curious to see how our employment rates were doing compared to our neighbours to the south (Statistics Canada's recent LFS Daily does a nice job of raising data comparison issues).
In the 25 to 54 cohort, the employment rate for women continues to lag behind men in both countries with the gap in the US nearly double that of Canada’s. But, Canadian employment rates for those aged 25-54 outperform their US counterparts (considerably so for women).
Employment rates of workers aged 55 to 64 in Canada trail those of the US
It’s a different story among those aged 55 to 64. US rates are marginally higher for both men and women, confirming, as outlined in a previous post that Canadian workers in this age group have not been benefiting from employment gains in recent months to the same degree (even though the headlines in Canada show that our labour market is firing on all cylinders). Indeed, until very recently the employment rates among this group were higher in Canada than in the US.
Last month alone employment among women aged 55 to 59 declined by 15,000 (a decline of 30,000 year over year). Men are faring a little better, but the challenge is among the group 60-64 where employment fell last month by 9,000 (and nearly 15,000 compared to March 2021).
As we continue to monitor the health of the job market, we need to be mindful of how headline numbers can mask the realities and understate the challenges that certain groups are facing to finding meaningful employment (and income). Moreover, with inflation remaining higher and for longer than most anticipated, what is the impact on pensions and work decisions for those nearing retirement? Recent articles in the Globe and Mail by Linda Nazareth and Frederick Vetteseraise important questions about the career choices of older workers and the extent to which inflation may be eroding retirement income for those without inflation-protected defined benefit schemes (including myself). In fact, less than 1 in 4 workers in Canada have access to a defined-benefit plan. As if managing savings for retirement for those other 3 in 4 workers wasn’t enough, now we have to worry about inflation.
Policy and research considerations
I have doubts that Canada's recent Budget 2022’s announcement of the Career Extension Tax Credit will help much in this regard. As we balance labour market needs with adequate retirement supports:
We need better and more frequent data on the motivations and aspirations of workers approaching retirement age.
We need an independent assessment of whether our pension system and supports (non-financial such as how to manage a TFSA) are adequate to address the realities of a 21st century job market.