Economy

Philip Cross: Busting a few myths about the gig economy – Financial Post

Published

5 years ago

December 31, 2019

Critics of capitalism have established a narrative that more people, especially youths, are condemned to an underclass of “gig” work, precariously extracting a threadbare existence from freelance work as Uber taxi drivers or TaskRabbit handymen. The counter-narrative is that gig work is the inevitable reaction to excessive government regulation of the workplace. The reality, according to a report from Statistics Canada titled “Measuring the gig economy in Canada using administrative data,” is that gig work is a small part of the economy in which few participants are unwillingly trapped for long.

We should be encouraging people to choose the working arrangements that suit them best, not denigrating their choices

Gig work is hardly new. Construction, trucking, freelance writing and many other professions have always had contingent work. The new and supposedly more menacing era of gig work combines technology and rapacious corporate greed to undermine the traditional employer-employee relationship that provides secure employment as well as job training, pension and health benefits. What’s not explained in the new conventional wisdom is why employers suddenly treat their labour force as a liability to be minimized and not an asset to be maximized.

Estimates of the size of the gig economy have been all over the map, partly because most studies have had serious methodological flaws. One predicted in 2017 that by 2020 fully 50 per cent of U.S. workers would be contractors on digital platforms, let alone people working gigs not arranged online. The Bank of Canada speculated that 30 per cent of Canadians participate in the gig economy, though that estimate was based on the shaky foundation of a small sample conducted online combined with an expansive definition of the gig economy. As StatCan wryly noted, the Bank of Canada’s survey included everyday activities like babysitting, dog walking, lawn mowing and housekeeping that “have always been part of daily life, but are not usually considered labour market activities.”

In its new study, Statistics Canada used tax data (which is more precise than surveys) to measure gig work, which it defines as “unincorporated self-employed workers who enter into various contracts with firms or individuals to complete a specific task or to work for a specific time period.”

Its results show that in 2016 8.2 per cent of workers participated at least a little in the gig economy, up from 5.5 per cent 11 years earlier. It accounts for an even smaller part of GDP, as gig work generated only $4,303 a year per person on average, reflecting the fact that most workers only dabbled in the gig economy for a short time to supplement rather than replace their main source of income.

Gig workers are far from being a permanent underclass struggling to join the mainstream labour force: only one-quarter of them stayed in the sector for three years or more. That represents two per cent of all workers. Though “non-negligible,” in StatCan’s words, this hardly represents a fundamental shift in work arrangements or the labour market. Lots of groups make up two per cent of our labour force while getting only a fraction of the attention given to the gig economy. Nearly two per cent of workers are 70 years or older. Another two per cent work in New Brunswick. Neither drives public perceptions of the economy, however worthy and deserving these groups may be.

Another myth-busting finding concerns the common perception that taxi services such as Uber or Lyft dominate gig work. In fact, the taxi industry accounts for only three per cent of men working in the gig economy. Other urban myths do have a kernel of truth: the arts, entertainment and recreation industry, which coined the word “gig” to describe a one-night musical job, employs the most gig workers, who account for about 16 per cent of their labour force. Female gig workers are especially concentrated in health care and such services as cooks, maids and nannies.

Although push and pull factors doubtless motivate people to join the gig economy, the data simply do not allow for their precise measurement. The push factors include job loss — gig work rose during the 2008-2009 recession — or the struggle, especially among youths and immigrants, to find that first job. On the pull side, gig work attracts parents wanting to work flexible hours or older people looking to stay active without a formal or full-time job.

Not everyone is forced into the gig economy. Many people willingly choose work in the gig economy either to stay busy or top up income from their main job. In fact, people over 65 years of age were twice as likely to have gig work as people 25 and under, which belies the image of a lost generation of youths condemned to living precariously from contract to contract.

So another myth about “late stage” capitalism is found to have little foundation in reality. Despite the stereotype of youths being bullied by corporations into accepting precarious freelance work, a more typical gig person works a few hours a month in select years to top up their income, to allow for flexibility in parenting, or to stay busy in retirement. We should be encouraging people to choose the working arrangements that suit them best, not denigrating their choices.

Philip Cross is a Senior Fellow at the Macdonald-Laurier Institute and former Chief Economic Analyst at Statistics Canada.

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

Published

1 day ago

November 8, 2024

Anne Joseph

OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

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Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

Published

3 days ago

November 6, 2024

Anne Joseph

The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

3 days ago

November 6, 2024

Anne Joseph

As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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