All posts by daemon

Alberta unemployment myth

Recently there’s a lot of propaganda in the air about unemployment numbers. So the best way to deal with that is to go to the source.

Lets combine population data from Google, Wikipedia and Alberta Government

with Unemployment stats

So according to the sources above we went from 3M people in 2000 to 4.4M people in 2020. So far so good. Now lets apply that to our unemployment stats, shall we? So the lowest unemployment rate I can find is 2006 data – 3.0% at which point population was at 3.4M people. Which produces number of 102000 unemployed people.

At the time of previous elections in 2015 unemployment rate was 5.9% with population of 4.1M which pegs the unemployment at 244500 people.

Now in 2016 we’ve peaked at 9.1% unemployment rate with population of 4.1M which gives us 377149 unemployed people. Couple of notes here – we’re talking 2000-2020 peak. The real peak is in Sep 1984 with 12.4% with population of 2.4M which is 297600 people. So one has to keep perspective on things.

Moving forward however we see that at the time of the last election it was 6.7% with population of 4.4M which puts the number of unemployed at 292900.

Since that time unemployment rose to 7.2% which brings number of unemployed individuals at 314700 today.

At this point we can put to rest claims that NDP government lost AB 100K+ jobs. The proper number is 52900 jobs at the time when province grew about 300000 people.

Now lets add a dimension to this – crude oil prices….

Lets interpose those two (apologies for the messy view):

Unemployment was not really the function of government in Alberta – it was function of Oil prices. Also interesting is the fact that since about 2000 (or probably even 1999) we’ve got direct relation between oil prices and unemployment reversed. Sounds like O&G companies were milking scarse resources without increasing employment. Smells scammy?

Maybe oil production was down?

Nope. Business as usual.

Best guess here is automation of oil extraction/production and elimination of human jobs replaced with machines. While employment is down Alberta is extracting more oil?

So the take-away here is that unemployment rates were fluctuating wildly including while NDP was at the steering wheel however given the slump in oil prices from 2015 to 2018 NDP lost 52900 jobs at the time when province grew 300000 people. Considering low point of oil price at $36.51 depressing the economy that is likely not creating too many new jobs due to all that “extra” workforce laid off by O&G industry. May not be spectacular but lets face it – in 2015 province was in the freefall anyway – thanks to falling oil prices all the way into 2016.

More importantly that dip in employment happens to coincide with reduced oil production and significant drop in oil prices. Hmm…

So lets recap: this province for the last 20 years had number of unemployed people above 100K even when population was much smaller. Employment rate was mostly in-step with oil prices no matter who’s steering and how much “greasing” oil companies get.

If one really wants to get touchy about unemployment one has to look at 1984 (12.4%, 297600 unemployed) and 1993 (10.2%, 275400 unemployed) for real peaks and one can’t blame federal party either as we’ve had Liberals and PC at the helm respectively. The only unifying theme is oil prices.

So why is Alberta government keeps on giving away taxpayer’s money to oil companies with “no strings attached”? Wouldn’t it be more prudent to demand some return on that investment, like protected jobs during oil prices being down? Why should corporate tax be lower than personal? Is it not enough big companies feel no incentive to keep people employed in downturns of economy yet we should deplete government coffers from the social security money as well by not taxing corporations?

This province is being strapped to the oil barrel by each successive conservative government making it impossible to implement anything close to stable economy while oil prices fluctuate.

I’ve collated the data from above into a handy table (highlighted two election points).

YrMoPopUEOPComment
19761.9M
1984Sep2.4M12.4%$72.67Just as conservatives
win the election?
1986Mar2.4M9.4%$24.63Low OP & high UE.
Loonie is at all time low
of $0.70
1998Nov2.9M6.1%$17.59Low point for OP
puncturing the
highest UE of the
section
20003M
2006Oct3.4M3.0%$74.88High OP, low UE
2015May4.1M5.9%$65.24Election time
2016Jan4.1M7.5%$36.51Low OP, higher UE,
but wait…
2016Nov4.1M9.1%$52.70There it is. high UE
catching up to low OP
2018Sep4.3M7.0%$74.64As soon as OP goes up
UE drops.
2019Apr4.4M6.7%$64.29Election, but
mind that figure…
2020Jan4.4M7.2%$63.05so OP the same, UE
up?

Relevant read: Norway vs Alberta model.

Alberta economy & donations

Alberta is leading the nation in donations. Which speaks well of people but screams volumes on the state of our infrastructure/social support.

Favorite topic of corporate supporters is how much those (frequently oil and gas) corporations donate which is somehow a good thing. Yet that doesn’t add up since those same entities dodge taxes and pay low royalties for extracting resources that belong to the people of this province.

Lets dissect the math here. First off, lets shrink population of this province down to 10 people and number of corporations down to 1 to simplify matters.

So, lets assume that 10 people pay $100 in taxes each while corporation pays $10000 in taxes. So far so good – things are simple enough. we get $10100 taxes collected that go to common pool from which services for public are being financed (healthcare, education, infrastructure, police, etc).

Now lets see what happens when corporation donates $1000 to some charity of their choosing. From their donation they get a tax break of around 30% which is $300. What does it mean? It means that while 10 people contributed $1000 in taxes hoping to finance services they wanted, they end up sponsoring $300 of corporate donation. Which means two things:
* total tax pool is now $9800 instead of $10100
* tax dollars have been directed into areas individual tax payers did not choose or voted on.

So what we see that corporate donation just did exactly what free market advocates are arguing against: corporation selected winners and losers in public service.  I.e. the economic process just subverted democratic process.

Now is time to dive deeper: now lets cut corporate taxes and leave everything the same: now our corporate taxes are only half of precious levels and total pool of available tax money is $50100  now with corporate donation even larger percentage of tax money is being diverted towards corporate-defined goals and *not* towards the people’s goals.

Now is the time to re-paint the picture in full: we have more than 1 corporation donation and thus redirecting public funds towards their pick of charities thus starving core services.

Now we have a background for Alberta painted: starved social support network which leads to… more donations! So this re-inforces the cycle of depletion of public funds. Because government doesn’t have enough money for it’s basic functions.

Now let’s re-evaluate situation with corporate donations. If there were no tax breaks *for corporate donations* public would be the one deciding where money is going to either via taxes or donations, while corporations would be free to donate wherever they please without tax exemptions. And with full corp taxation we would have enough money to support core services.

With all that in mind it is good to define the role of taxes and donations: taxes are there to support our common infrastructure and services we *all* rely on. Charity is about supporting causes we have personal biases towards *today* and not necessarily in the future. There is an argument to be made that if enough of us feel strongly about certain causes it should become a core service and be supported as a government program permanently rather that charity du jour.

NY Times seems to have come to similar conclusions:

https://www.nytimes.com/2018/04/03/business/economy/charitable-giving-corporations.html

…except they didn’t follow through the entire logic of it.