Economists say a strong labor market is hurting single jobs
Economists say the expected economic slowdown in 2023 may not translate into growth in “single jobs,” unlike previous recessions when contract work and self-employment rose.
A tightening labor market, combined with a changing labor force and stubborn inflation, will make this recession different from previous ones, they say.
Economist Armine Yalnizyan noted that “This is a combination of factors that we have never seen before.”
While odd jobs may bring to mind app-based work like driving for Uber or finding clients through Fiverr, the phenomenon has been around for much longer. Broadly speaking, this includes contract, part-time and sporadic work.
Yalnizyan noted that this type of business tends to increase during recession.
Economist Sheila Block of the Canadian Center for Policy Alternatives explains that this jump is happening for two main reasons. The first is that recessions are usually characterized by widespread job losses, which means that more unemployed people are looking for work wherever they can find it. The second is that during a recession, employers generally try to cut costs and hire more contract or part-time workers than offer full-time permanent positions.
A different slowdown
According to Statistics Canada, the share of gig economy workers among all workers increased from 5.5% in 2005 to 8.2% in 2016. During this period, there were two major increases, one of which coincided with the Great Recession of 2008-2009.
The federal agency’s data also shows that between October 2008 and October 2009, self-employment in Canada increased by 3.9% — an increase of more than 100,000 self-employed workers, while the number of employed workers fell by nearly half a million.
Of course, the 2023 recession will be the first major recession in which app-based work, such as driving for a rideshare service, is a widely available option, Yalnizayn noted.
In fact, the expected slowdown in 2023 will differ from past recessions in several important ways.
Although there are signs of a slowdown in the economy, the labor market remains tight, Yalnizyan said. The unemployment rate remained low at 5.0% in December, and the market gained 104,000 additional jobs last month.
Employers in many industries are struggling to hire the workers they need. This means that there are more full-time job options available to workers.
Ms. Block noted that those two factors that normally lead to an increase in gig labor during a recession are not present this time compared to previous recessions.
“We did not observe an increase in self-employment this time,” Yalnizyan said.
The baby boomer generation also continues to leave the workforce, leaving more jobs open. This could continue to keep the labor market strong in 2023, he continued.
“As long as this demographic phenomenon continues, we may not see a huge increase in concert business. Even promised immigration growth is unlikely to be a game-changer unless Canada does a better job of quickly matching new immigrants with jobs that match their skills,” he said.
Yalnizyan said that it is not normal to see simultaneous changes in supply and demand in the labor market.
“What will the recession look like?” Well, this won’t be like any recession we’ve ever seen. »
Small jobs that pay less
Higher inflation also means app-based odd jobs will pay less when expenses like gas are factored in, Block said, making it a less attractive option for many.
However, he adds that several elements will depend on the depth of the recession in 2023, which experts predict so far should be relatively mild. If not, the job market could start to look more like previous recessions, with widespread job losses, fewer full-time jobs and an increase in gig work.
But regardless of whether gig jobs increase dramatically in 2023, Canada already has a large number of self-employed workers, many of whom are gig workers with software or other types of work. independent contractors.
And if these people lose hours or income due to the recession, it will be harder than other workers to get back on their feet because of the lack of labor regulations and health insurance protections.
“Regardless of whether there is an increase or not, the lack of protection for these low-wage workers will remain a huge problem,” he said.
