The Lies My Mommy Told Me, Part II

In Ontar-I-Owe we showed how the Ontario government deliberately misstated the provincial debt--they lied (A false statement deliberately presented as being true; a falsehood.). We had been meaning to take a look at Ontario job creation numbers for quite a while. So, when we saw the article in today's Ottawa Citizen, Ontario Liberals defend poor December job numbers, we thought it would be worth a chuckle if nothing else to examine what the Government had to say.

How Economists Lie--Oops--Make Up Numbers

A favourite adjustment economists make to real data is called a seasonal adjustment. With our emphasis added, as Wikipedia describes it:

Seasonal adjustment is a statistical method for removing the seasonal component of a time series that is used when analyzing non-seasonal trends. It is normal to report seasonally adjusted data for unemployment rates to reveal the underlying trends in labor markets.

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And as Statistics Canada describes it:

Fluctuations in economic time series are caused by seasonal, cyclical and irregular movements. A seasonally adjusted series is one from which seasonal movements have been eliminated. Seasonal movements are defined as those which are caused by regular annual events such as climate, holidays, vacation periods and cycles related to crops, production and retail sales associated with Christmas and Easter. It should be noted that the seasonally adjusted series contain irregular as well as longer-term cyclical fluctuations. The seasonal adjustment program is a complicated computer program which differentiates between these seasonal, cyclical and irregular movements in a series over a number of years and, on the basis of past movements, estimates appropriate seasonal factors for current data. On an annual basis, the historic series of seasonally adjusted data are revised in light of the most recent information on changes in seasonality.

In short, seasonally adjusted numbers are real numbers with lipstick applied to make a pig more palatable to data analysis. They are made up numbers. Most honest data brokers will provide both seasonally adjusted and non-seasonally adjusted numbers. Statistics Canada is one such broker and the only real source of much economic data in Canada, particularly employment-related data. They have recently made their data available for free to the public through an online front-end to their data base. We look at two tables, CANSIM table2820087, Labour force survey estimates (LFS), by sex and age group, seasonally adjusted and unadjusted, and CANSIM 2820088, Labour force survey estimates (LFS), employment by North American Industry Classification System (NAICS), seasonally adjusted and unadjusted.

The Employment Numbers

First we went looking for the claim of 435,000 jobs created since June of 2009, the depth of the [last] recession [The Citizen]. And we found it in CANSIM table 2820087. This is a 6.5% increase in 4.5 years. And with a population increase 5.5% over the same period, this number sounds positive. It looks even better when we see that although there were 5.4 thousand part-time jobs lost over this period, there were 440.8 thousand full-time jobs created. Turning part-time jobs into full-time jobs is very good! Alas, these are seasonally adjusted numbers. People are either employed or they are unemployed. They don't have some kind of seasonally adjusted job that in a period of time has them employed for a while and then unemployed for a while to reflect the seasonal adjustment of the labour force. So let's look at the non-seasonally adjusted numbers in CANSIM 2820087. When we do we see that the actual numbers of jobs created is 305.9 thousand and the composition is only 249.8 full-time and 55.6 part-time. This is not as rosy a picture as the made-up--pardon, seasonally adjusted--numbers portray.

What Kind of Jobs Have Been Created?

CANSIM 2820088 provides employment data by major industrial classification. First we look at seasonally adjusted data in two broad categories. There were 45 thousand jobs created in the goods-producing sector of the economy. These include jobs in manufacturing, agriculture, natural resources and construction--mostly higher paying jobs. In contrast, there were 390.4 thousand jobs created in the service-producing sector. This sector includes high paying professional services but all the minimum wage services in the food and hospitality industries. As we have discussed many times, this transformation of the economy from an industrial base to a service economy is negative in its impacts. Looking at the non-seasonally adjusted data however, the picture is worse. CANSIM 2820088 shows 314.7 thousand service sector jobs created but a net loss of 9.2 thousand jobs in the goods producing sector with 8.5 thousand of these in manufacturing.

Make That Pig Sing!

As you should know see, the management of the Ontario economy by the liberal government has been a disaster. Indeed, Ontario with an unemployment rate of 7.9% is only marginally better than the Atlantic provinces that have always been economically depressed. The steady increase in taxes both direct and indirect in the form of “revenue tools” as the current government likes to euphemize them, and the colossal mismanagement of the electrical system in Ontario has made it the province not to do business in. The job numbers reflect this. And in closing you might reflect on this conundrum: how many hamburger flippers can flip on a steadily impoverished consumer base?