This article by Jane Gerster, which was published on March 4th, 2014 in thestar.com, indicates that Toronto had doubled the 2013 number of jobs in 2014 but still struggled with an alarmingly high rate of unemployment. The article further notifies that slightly more than 120,000 new jobs were formed in the city. Surprisingly, the high unemployment percentage of 8.4% was still much higher as compared to the various Canadian metropolitan cities. Montreal followed in the rate of unemployment in this region of Canada with a staggering 8% all year round in 2013. A TD economic enthusiast and analyst, Sonny Scarfone, explains that this phenomenon is not dramatic. He asserts that the unemployment rate normally melts with shrinking labor force. In this case, it happened that the labor force was expanding rapidly and so was the rate of unemployment in the city.
It is difficult to assess the reasons why unemployment rate would increase with an increase in jobs. This is absurd only if one focuses on one edge of the economy. As a result, the comprehension of this scenario needs articulate and sane economic minds. This is because coming to a comprehensive conclusion on the drivers of this unlikely economic trend needs incorporation of other economic parameters like population. It is also important to note that a clear analysis of this scenario must involve an analysis of key pillars of the economy.
The article by Jane further talks about the growth of population in not only Toronto but also other western towns like Calgary, Saskatoon Ottawa, Montreal and Edmonton. In most occasions, population growth is always an indicator of increased rate of unemployment in any economy. Owing to the fact that Toronto was leading in the growth of population, the high rate of unemployment in this town can be attributed to the increase in population growth and job increase played an insignificant role in trying to neutralize the situation.
Scarfone noted that the market was ‘overbuilt’ in the sense that housing start percentage was deteriorating steadily with time. These values were down in 2013 at 30% and were forecasted to reduce further to 20% in 2014 and much less in 2015. With these developments, the revival of housing manufacturing industry that was in the verge of collapsing due to the city being ‘overbuilt’ will be key to managing both increase in population and rate of unemployment. Housing is a key component of an economy and must be accorded close monitoring especially with an increase in population. That notwithstanding, development in housing will obviously lead to creation of job opportunities that will not only reduce the rate of unemployment is the city but also create accommodation for the increased population. The market will need to take up the supply and therefore a pullback in the construction industry is imperative.
As noted in the article, increased job opportunities for an economy are not direct indicators of reduced rate of unemployment. It is important to note that there are quite a number of factors that influence rate of unemployment including population distribution amongst others. In Toronto, for instance, the increase in job opportunities in 2014 was insignificant to reducing the high rate of unemployment due to the high increase in population. Similarly, the dying housing industry in this city would play a significant role in alleviating unemployment in the event that it is revived.
Jane Gerster. “Toronto struggles with unemployment despite the boom in jobs: report.” thestar.com. Toronto Star Newspaper LTD, Tuesday 04th March, 2014. Web. Accessed on 07th March 2014 from http://www.thestar.com/business/economy/2014/03/04/ toronto_struggling_with_unemplo yment_despite_boom_in_jobs_report.html#