The State of Employment in London Ontario

Earlier this week, the City of London released their London Jobs Now Task Force Report, which is available online here [PDF].

I felt a sense of dismay when I read the report. The city seems to lack an understanding of what’s happened over the past two decades, which I’ve been discussing in my manufacturing series (this piece in the series focuses on London).

Before I get to those problems, let’s discuss what the report did well. There is a lot to like here.

Ten Good Things About the “London Jobs Now Task Force Report”

1. It exists. London recognizes it has a problem and is looking to correct it. This is a good thing.
2. “London has a jobs crisis.” We can quibble about the word “crisis”, but they’re not sugar coating it. Also a good thing.
3. “Job reports focus on London’s misleadingly low unemployment rate.” Good that they recognize that the unemployment rate is a less than perfect indicator of local employment conditions.
4. The focus on the employment rate, specifically the employment rate for those ages 25–54. In my piece Expected Jobs vs. Demographics, I give the employment rates in London for six different demographic groups in 2018, relative to the Canadian wide average:

Note that for every single group, London’s employment rate is below the national average. If London were able to bring the age 25–54 rates up to average, there would be an extra 12,000 people employed, assuming no change in migration patterns. Note that in 2001, the other year the piece examines, employment rates for both men and women of that age were higher than the national average.

5. The recognition that the fact that London’s is a regional centre for higher education puts downward pressure on employment rates, since students are employed at lower rates than the general public. It’s a small thing, but it’s nice to see they’ve thought about it.

6. “London’s job crisis is not a regional issue”. Yes and no. There is a lot of truth to the statement, but it’s not the whole truth. In my piece that examined what employment would look like in each CMA if employment in their sectors grew at the Canadian average between 2001–18, I found that London created 36,000 fewer jobs than their sectoral mix would “predict”. This was by far the worst absolute performance of any CMA.

7. “London’s job crisis is not a regional issue”. In my piece on employment growth and demographics, I found that London has 25,000 fewer jobs than demographic changes from 2001–18 would predict. Only Toronto fared worse.

8. The creation of a “reasonable jobs growth target”. London’s had no shortage of jobs growth targets in the past. Remember Joe Fontana and his 10,000 jobs? That said, the goal to increase the employment rate for 25–64-year-olds to the average for Ontario CMAs, which would see employment rise by 13,000 (assuming no changes in migration patterns) is a reasonable one.

9. “Have London’s media hold the City’s feet to the fire for meeting the 13,000 jobs-filled goal”. That’s pretty gutsy, given that whether or not London hits that number has more to do with global economic factors than anything the municipal government does. But it’s fun.

10. The creation of a centralized online Job Board. I can’t see this changing much of anything, but it’s quite inexpensive, so why not try it? Couldn’t hurt.

Four Less Than Good Things About the “London Jobs Now Task Force Report”

1. “London’s job crisis is not a regional issue”. There is a sense in which it is a regional issue. If we look at employment growth since 2001, the 3 Southwestern CMAs that are not proximate to Toronto have all fared particularly poorly.

Windsor has had a nice run the last few years, but it also got hit much harder during and before the recession. Geography matters, and our lack of proximity to Toronto is almost certainly a primary factor in London’s poor performance.

That said, if employment in London CMA grew at the same rate as Guelph did from 2001–18, it would have an extra 34,000 jobs today.

2. The focus on manufacturing, to the exclusion of all other industries. The only recommendation in the report to target a sector is to “get better public transit in place for our south and east industrial areas”. I’m not against this idea, but having it as the sole sectoral strategy shows a clear lack of understanding of what ails London.

Here’s how each sector grew in London and four other SWO CMAs between 2001–18. Note that London’s manufacturing sector did substantially better than the regional average:

Over the past two decades, our municipal government has been absolutely obsessed with manufacturing — our economic growth plans are dominated by industrial land strategies and attracting overseas manufacturing companies. And in one sense, it’s worked — London saw a substantially slower decline in manufacturing jobs than our regional counterparts.

From an egalitarian point of view, this is a worthwhile strategy. Manufacturing workers have had a tough time since 2004, so it’s worth finding jobs to replace those that have been lost. But it’s come at a cost — London is hemorrhaging white collar jobs. Every other CMA is adding finance and insurance jobs. London isn’t. We’ve lost 2200 public administration jobs. Kitchener-Cambridge-Waterloo has added 14,300 professional positions. We’ve added just 2,300. We’ve added fewer jobs in education than any of the other CMAs.

We’re getting absolutely slaughtered in white-collar job growth, in the sectors that are thriving in the 21st century. Yet the city continues to obsess about manufacturing, an industry that it seeing slow-to-no employment growth.

3. “Most [job] openings require only a good work ethic and ability to learn on the job.” No… just, no. This hasn’t been true in decades. Just ask any young person that has applied for a job about the long laundry list of things that employers require. This is particularly tone-deaf when considering London’s white-collar employment issues.

4. “London has a jobs crisis. Not a crisis in creating jobs but in filling them.”

Sorry, but this absolutely ridiculous. The data point the report cites is the 8,695 job vacancies numbers for the London Economic Region (LER). To put that number into context, here’s the time series for the LER and nearby economic regions.

The Windsor-Sarnia and London ERs are of identical size and, not surprisingly, have nearly identical vacancy numbers. The report believes that London has an unusually high vacancy rate because it lacks Windsor’s online job board to match workers-with-jobs. But we’re already tracking Windsor well.

The Kitchener-Waterloo-Barrie and Hamilton-Niagara ERs are twice the size of London, but have more than twice the vacancies.

The London Economic Region has an unusually low number of vacancies, given its size.

There’s always going to be job vacancies; you’ll never get this number to zero. A 25% reduction would be a massive achievement. That would increase employment in the region by 2,100 or so (and some of these would be outside of London CMA, but let’s ignore that). The city’s own goal is 13,000! Dropping the vacancy rate would, at best, get you 15% of the way there. And that 13,000 target is a modest one; by the metrics I’ve posted in my other pieces suggest it should be closer to 30,000.

The report talks about the possibility of losing “skilled talent to other cities”. London has been hemorrhaging talent to other cities for over a decade now and, sadly, I don’t see anything in this report that would fix that.