Are we headed for an Unemployment Crisis?
Unemployment this year reached its peak level since 1939 but the Government doesn’t want people to talk about it. What are the facts? Here’s an analysis of the situation to date
LAST FEBRUARY the CBC planned a television show on unemployment. It was mostly films of textile towns and Unemployment Insurance Commission pay lines, but the Minister of Labor, Hon. Milton Gregg, VC, was asked to contribute a brief statement.
Nobody was surprised when the invitation was declined. What did astonish the CBC was a Government, request to drop the unemployment program altogether. The pressure was resisted and the show went on, but not until the CBC had held a lop-level policy conference and decided to stick to its guns.
This is not the only recent sign that the Government would rather people didn’t talk about unemployment.
In March, National Employment Service branch managers were told not to give any more information to visiting reporters. They could talk to the local press as usual, but “national publications” were to be referred to Ottawa. Photographers were not allowed to take pictures inside Unemployment Insurance Commission premises.
When Conservatives in parliament offered a mildly worded motion for a committee enquiry into unemployment, Liberals proclaimed it an issue of confidence—i.e., a motion which if carried would defeat the Government and firing on another election. fit needn’t have been.) After some days of debate the resolution was defeated by 101 Liberals against a combined opposition of 63.
There’s more than politics behind this reticence, though. The Government is worried lest too much public attention to unemployment should frighten investors into curtailing plans for expansion.
“There’s a real danger that we might talk
ourselves into a depression,” one cabinet minister said.
Many municipal authorities feel the same. They regard talk about local unemployment as “bad publicity.”
Twice last winter the textile town of Magog, Que., was used as a gloomy example in articles on unemployment. Magog was floating a bond issue at the time. Mayor, council and chamber of commerce descended in fury on Dominion Textile Company officials and exacted a promise: No more talking to the press about the local industry’s troubles.
Whether this silence is the right or wrong way to deal with the problem, it contributes to one undesirable result: Nobody knows how much
real unemployment there is in Canada.
One set of official figures shows 570,000 Canadians unemployed at the peak this spring, a full third more than the previous postwar record in 1950. Another set, equally official, shows little more than half that many out of work. According to it, 1954 and 1950 reached approximately the same unemployment high, not much above 300,000.
One official figure indicates unemployment this year was 42 percent worse than last year. The other shows a rise over 1953 of 74 percent. The Government publishes both sets of figures each month in the same news release, without making or suggesting any choice between them.
Who are these unemployed Canadians, who seem to number something between one-third and two-thirds of a million?
One is Joe Weatherby of Westville, N.S., a mining town whose two remaining coal pits lose money and may close. If they do, Weatherby will have to move away and sell the house he’s been buying ever since he left the army in 1945j
He’s within $200 of having it paid for, hut who’ll buy a house in a ghost town? And for that matter, where can he go? Weatherby’s skills were learned in a coal mine, and coal’s a sick industry all over Canada. Meanwhile Weatherby supports a wife and six children on unemployment insurance of $24 a week, half what he earned in the pit.
But another unemployed Canadian is the genial garrulous old hitchhiker I picked up one day near Ottawa. He looked about 65, a semi-skilled laborer and odd-job man. We talked about automobiles—he’d bought a 1941 model last spring, he said, but sold it in the fall because it was too much trouble in cold weather.
“I’ve been on unemployment insurance all winter,” he went on, “but my benefits run out next Monday.”
What did he propose to do then?
“I guess I’ll get a job,” he said cheerfully. “I’ve a bit of money put by, but I hate to take any of it out of the bank.”
Between these extremes is Stanley Blazosek of Calgary, a railway telegrapher who found himself jobless in January for the first time since he started working in 1943 at the age of fifteen.
“It put me in a spot for a while,” he said. “Just married six months, paying $50 a month on my house and $87 on the car. The finance company was going to repossess the car but my dad helped me out with a loan. Then I got a job as bartender and I have three other possibilities lined up. There are still plenty of jobs around if you want them.”
In a town like Almonte, in the Ottawra Valley, where two woolen mills are out of business and a third Continued column one, next page operates intermittently from hand to mouth, there are no longer “plenty of jobs around.” Almonte is badly worried not only its own n ill* but. a dozen more within commuting distance are threatened with extinction. But Almonte has yet to feel acute distress.
Are we headed for an unemployment crisis?
Dave Lorimer and bis wife were out of work most of the winter. They live in a tidy house on a good street, and Mrs. Lorimer had a hard time making ends meet on their unemployment insurance (since they bad both been working, each collected a single person’s benefit of $15 a week, the second-highest rate payable). They could “no more than exist” on that money.
But it did cover those. The Lorimers hadn’t to do anything drastic like putting a mortgage on the house or even selling their little old car. Almonte’s little Thorburn Mill had just reopened with an order that would keep it going for two mont hsand I )ave Lorimer was back at work. He and bis wife were anxious about the future but not discouraged.
Whose Counting Is Correct?
Everyone knows we have all these different kinds of unemployment in Canada. But without more facts, which the Government has chosen not to collect, nobody can tell how much we have of each kind or what, if anything, we should be doing about it.
The two unrelated sets of official figures are not much help.
The high one is the National Employment Service total of unplaced applicants for work — 570,000 in the third week of March. The low one, which hasn’t yet gone far above its 1950 record of 308,000, is the estimate of “persons without jobs and seeking work” in the monthly Labor Force Survey of the Dominion Bureau of Statistics.
These two figures are a subject of continuous argument between two Government departments. Each is hotly defended by the civil servants who make it up as the best available index of unemployment. The argument is conducted somewhat at cross purposes since neither set of figures has any connection with the other, but here is a summary of it:
The DBS Labor Force Survey is not an actual count of heads. As its critics point out, it’s based on a one percent sample. Each month 500 enumerators in 120 survey districts call on 30,000 families with an employment questionnaire. The results are projected into estimates for the whole population.
In December the estimate of “persons without jobs and seeking work” was about 200,000. By March, the peak of unemployment in any Canadian year, it was well over 300,000. Everyone accepts this as at least the minimum of real unemployment in Canada.
To the Labor Department and the National Employment Service it looks absurdly low.
Their figures, they point out, represent real people 570,000 Canadians actually registered as jobless and wanting work. The reason the Labor Force Survey shows only 55 percent of that number, they say, is that the DBS sample doesn’t give enough weight to rural unemployment. Also, critics say, it doesn’t pick up such “pockets” of unemployment as Marysville, N.B., where the town’s sole industry, a textile mill, closed and threw everybody out of work.
Labor Department spokesmen recall, with some glee, that when Continued on page 95 the United States expanded a similar survey from 68 to more than 200 survey districts, it picked up 700.000 new unemployed who’d been missed by the previous survey.
Are We Headed for an Unemployment Crisis?
CONTINUED FROM PAGE 10
On the other hand, even the Labor Department admits that not all of the 570.000 unplaced applicants are energetically “seeking work.” Some are pensioners entitled to draw uni employment insurance if they are willing to accept “suitable” employ: ment. Some are housewives whose idea of suitable employment is strictly limited. Some are problem cases who never seem to hold a job for long, in good t ¡mes or bad.
But. says the Labor Department, these doubtful types are more than offset by the unemployed who never register with the National Employment Service (one quarter of all Canadian workers are not covered by unemployment insurance). The two biggest trade-union groups, the Trades and Labor Congress of Canada and the Canadian Congress of Labor, heartily endorse that view. They contend the true figure of unemployment is even higher than the total of unplaced applicants -may run close to 600.000 persons.
Pockets of Unemployment
To all this, the Bureau of Statistics and its partisans in parliament have a short answer: “Nonsense.”
“Our sample is accurate,” they say.
I he reason it shows less rural unemployment than the Employment Service is simple. If a farmer spends the winter idle on the farm, we count him as out of the labor force for the time being. But if he worked a few months on the roads or in the woods during the fall, he’s entitled to unemployment insurance—so he counts as an unplaced applicant.
“As for the pockets of unemployment. we pick up our share of them. If all our sample towns were like Marysville, the estimate would be thrown off in the other direction.” Where, then, are the quarter of a million people shown as unemployed by the Employment Service but not by the Labor Force Survey?
Some had jobs but didn’t work during the survey week—they were laid off or kept idle by had weather or some similar cause. They weren’t exactly “seeking work” hut they were “willing and able to accept suitable employment,” so they were entitled to unemployment insurance and quite properly counted among the unplaced applicants. Each Labor Force Survey through the winter has shown about 50,000 in this category.
The rest are matter for argument. Some may get jobs without notifying the Employment Service—it would take a call to each man each week to keep the files up-to-date. The rest are either “milking the Unemployment Insurance Fund,” as critics of Labor Department figures believe, or they are people whom the Labor Force Survey missed, as the Labor Department believes. Take your choice.
Had the Government allowed a parliamentary enquiry there might be some evidence to show which side is right. Meanwhile, the fis-tain’t argument has somewhat obscured the fact that whatever yardstick you use unemployment this spring has been the highest since the war.
Even the Labor Force Survey shows eleven percent of all Canadian workers doing less work than they are able and willing to do. Six percent are totally unemployed. Five percent, or 265,000, are partially unemployed through short-time work, temporary layoff or some other cause.
These are average figures for the whole country. For certain regions, where local industries have been hard hit by foreign competition, they are gross understatements. In some textile towns of Quebec and eastern Ontario, a third of the entire working force is drawing unemployment insurance.
Economists agree that in prosperous times, unemployment runs between three and five percent of the labor force. A higher rate isa had sign. Even the lowest figure for Canadian unj employment is over six percent and the highest is eleven percent. To some people this proves we are headed for a i depression, or that we’re in one now j and don’t know it, and that the Government ought to take immediate I and drast ie action.
I hey’re not so clear about what the action should be. Unemployment in (’añada is of several kinds, arising from several causes, and presumably calling I or different treatment in each case.
I’ ¡rsf of all, there’s the purely seasonal unemployment which we always have had and shall always have in t his climate.
Why Seasonal Unemployment?
More than a quarter of all unplaced applicants are construction workers. I'hey are by far the largest group among the unemployed. ín March, when the latest available figures were compiled, these men were still without jobs. Almost certainly, most of them are already at work by now. All signs point to another boom year in construction. Planned capital expenditure for 1954 is $5.8 billions, three percent higher than the all-time record set in 1953.
But Canada always has the same seasons; why do we have such fluctuations in seasonal unemployment? Why were 150,000 construction workers jobless in 1954, compared to only 83,000 in 1953?
Part of the answer may be that demand for building, though still strong, is not as urgent as it was in the immediate postwar period or during the Korean War. Then, people were willing to pay the extra cost of building out of season; now, they’d rather wait. In any case construction workers have always counted on seasonal layoffs in normal times—that’s the argument for high hourly wage rates in the building trades. A drop in winter construction doesn’t necessarily mean an economic recession, but it does aggravate the seasonal bulge in unemployment.
Another aggravation of a different sort appears in the lumber industry. Forty-seven thousand loggers and other woodworkers drew unemployment insurance last winter, nearly twice as many as the year before.
The industry as a whole was not unduly depressed. The Maritimes had lost their market for pit props, and higher freight rates made competition difficult both there and in British Columbia. But the pulp and paper industry was thriving, lumber markets were fairly steady at somewhat lower price levels, and the general outlook was regarded as reasonably bright .
What, then, caused the drop in winter employment in the woods?
It was partly weather, partly the ample stock of pulpwood most companies had accumulated. But to some extent the employment picture in the lumber camps has changed permanently. Operations have become
mechanized in the last few years as never before and this cuts down employment in two ways. Fewer men are needed to cut a given quantity and the tendency is toward year-round operation with a permanent working force. Lumber camps no longer play their traditional role of sponge to soak up seasonal unemployment in winter.
Fishing is another primary industry which employs fewer men nowadays. Newfoundland’s Federation of Fishermen est ¡mates that the number actively employed has fallen in the last few years from 22.000 to 10,000. The Lunenburg, N.S.. fishing fleet has dwindled from 80 ships to 17.
This is not depression. Fewer men can catch more fish with less discomfort from steam trawlers than from schooners and dories, and perhaps eventually earn a better living than the $950 apiece that Newfoundland fishermen earned in 1953. Hon. James Sinclair, Minister of Fisheries, says the 1954 market for fresh and frozen fish is considerably better than it was last year. 1 he problem is not to keep more men fishing but to find new occupations for some ex-fishermen who are no longer needed.
Some other basically healthy industries have had difficulty of late. One is farm implements, which last winter was one of the dark spots in the employment picture. Canadian farm implements are famous all over the world. They are sold at competitive prices in the U. S., South America, Europe and Asia. Last year was a fairly normal one in their home market but export trade fell off sharply. One cause was drought in I exas and Oklahoma, where manv potential customers were ruined. Another was shortage of dollars in South American and other countries.
For all these reasons, employment in the farm implement industry fell about thirty percent below the 1951 peak.
Management has no serious fear for the industry’s future. Unless the bottom falls out of agricultural markets, it will be back to normal operation before long. However, “normal” doesn’t necessarily mean the record level of employment of the past few years.
Even the temporary depression of last winter brought the number of workers in the farm implement industry down only to the 1947 level. At the time 1947 seemed a prosperous year. When farm implement workers sent a delegation to Ottawa to ask Government help, Right Hon. C. I). Howe told them bluntly, “The time has come when some people in this country are going to have to move.”
Some farm implement workers have done* so already. One big company laid off a lot of men in January and started calling them back a month later. By the first of March they hadn’t got back all of their December payroll but they had re-hired every one of the men who still wanted to come. The rest were working elsewhere.
But it’s one thing to suggest a move to a superfluous percentage of workers who are no longer needed in a basically healthy industry. It’s quite another thing to contemplate a whole community knocked flat by the collapse of one or two local plants.
The industries really hard hit, whose troubles are not seasonal, are those which cannot meet foreign competition.
In boom times, with prices high and everything scarce, they get on very well with existing tariff protection. But now the buyer is regaining his advantage, and prices abroad are being cut. Canadian buyers can get what they want, pay duty and freight, and still beat the prices of Canadian producers.
Many Canadian industries arc squeezed by this competition. One is “consumer durables”—stoves, refrigerators. electric appliances. Another is machinery. Thirty thousand unplaced applicants are metal workers, the largest single group after construction.
Coal mining is even worse off because coal is threatened by competitors at home as well as abroad. Oil, gas and electric power have shrunk the market for coal while in Nova Scotia at least mining itself becomes more expensive and difficult as the coal face under the Gulf o: St. Lawrence recedes farther and farther from the pit head. Most of Cape Breton’s six thousand unplaced applicants are miners. Decreased consumption of coal in private homes and on the railways has hit Alberta’s coal industry hard. Early this spring 500 miners were thrown out of work by the closing of mines at Brazeau, southwest of' Edmonton, and at Coleman, in the Crowsnest.
But of all Canadian producers the one whose troubles have had the most publicity is the textile industry. Mills have been closed, some of them permanently, in about two dozen towns of Ontario, Quebec and the Maritimes. Twenty-seven thousand textile workers were unemployed at the latest count, out of more than a hundred thousand enployed at the postwar peak. Probably as many more are working only three days a week and drawing shorttime unemployment insurance for two days.
Textile companies say that only a drastic increase in protection, such as a rigid quota on imports, or else some method of subsidy can keep a large fraction of the industry operating. Budget Day has come and gone without any sign that the Government intends any such rescue operation. Presumably, therefore, a great many of the displaced workers will have to find something else to do.
Catastrophe For a Town
Like coal mining, textile mills are often the sole major employers in their communities. Their closing is an immediate catastrophe for the town—or would have been, in the circumstances of the last depression. This time the catastrophe has been cushioned.
1 n Almonte, a town of 2,500, all t bree textile mills were closed most of the winter and the two largest are probably closed permanently. Almonte has no major employer left except a dairy. Yet Almonte in the spring hasn’t felt the full impact of calamity by any means.
Almonte is the birthplace of Dr. James Naismith, the man who invented basketball, and a campaign has been launched for a $500,000 memorial hospital in the town asa monument to him. Seventy-two thousand dollars in cash and pledges have been collected in Almonte alone during the past winter.
Grocer Karl Paupst, president of the Almonte Chamber of Commerce, estimates that his business is running about twenty percent below last year; also, it s less profitable business because people are buying staple necessities on which the profit margin is lower than on luxury foods. But they’re still Paying cash for the most part not many compassionate charge accounts. Carson Johnson’s clothing business is off by about a quarter. Church collections have not fallen off yet. Real estate sales are few but prices haven’t dropped. You see more men on the street in midafternoon on a weekday than is usual in more prosperous towns, hut there’s no panhandling, no obvious concentration of idle men.
1 his is partly because people are so much more mobile now than they used to be. Almonte citizens can and do commute to work as far away as Smiths Falls and even Kingston (seventy miles) in one direction, and as far as Ottawa in the other. More than a hundred civil servants live in Almonte and drive the thirty miles to Ottawa every morning.
But the big cushion, the thing that has saved dozens of Canadian communities from real calamity this past winter, is unemployment insurance. Anyone who has been working full time for the last five years has accumulated enough benefits to carry him through a whole year of total unemployment, or (more commonly) through the hard seasons of several years.
Fach worker gets one day’s insurance benefit for every five days’ contribution made in the past five years. Contributions run from three to nine cents a day depending on earnings; benefits from a low of $4.20 a week, for a single worker earning Jess than nine dollars, up to $24 for ii worker with dependents who’d been earning $48 or more.
When a man loses his job after contributing for five years he is entitled to a full year of insurance benefits without a break. A married man in the top earning bracket, laid off last Jan. 1, could draw $24 each week until Jan. 1, 1955.
He would then be entitled to “supplementary benefits,” a device introduced to meet the unemployment crisis of 1950. It’s a handout with little or no relation to contributions and it applies mainly to people who have exhausted their regular benefits without finding work. To tide them over the difficult season, Jan. 1 to April 15, they get an extra allowance based on the number of regular benefits they were entitled to draw during the previous year.
Since our hypothetical worker is entitled, to regular benefits for the whole of 1954, he could draw supplementary benefits for the entire period Jan. 1-April 15, 1955.
At this point he must find work for at least 45 days before he can draw any more unemployment insurance. When his 45 days are up, though, he can go back on regular benefits for another long hitch. He has not, as you might think, exhausted his entitlement from contributions of the past five years. He need deduct only one-third of the days for which he drew benefits the previous year; the other two-thirds may be counted over again.
So by June 1955, when he again, becomes eligible for unemployment insurance, he’s entitled to another 149 days. That carries him to Dec. 1. Then if he can look after himself somehow for a month, on Jan. 1, 1956, he goes back on supplementary benefits until April 15.
This time he must work nearly six months before he’s eligible again but he still hasn’t quite used up his backlog of contributions. By mid-October he would be entitled to fifty days’ regular benefit, and therefore another fifty days’ supplementary benefit after Jan. 1. Not until mid-March 1957 will he have to start over again from scratch.
By that time he will have drawn a total of $2,808 in return for a total contribution of $151.20. (It’s true he might have contributed more than that without becoming entitled to any more benefits — contributions are only counted for the five years before he puts in his claim. But even if he’d been contributing steadily from July 1941, when the act came into force, his total contribution would still be no more than one-eighth of what he gets back in benefits. )
What happens to a man who has exhausted all his insurance benefits and still can’t find work? The only source of help, other than private charity, is the welfare bureau of his city or town.
Most provinces pay half of municipal relief to the so-called “unemployables,” but they won’t pay a cent toward relief for the employable unemployed.
In April 75,000 Canadians were drawing supplementary benefits. In some cities and towns, the end of supplementary benefits is expected to start a rush for the municipal welfare bureau. So far, though, the rush has not taken place. Cities and towns have not had to appeal to Ottawa for emergency help. No central collection of figures has been made but the total demand for municipal relief to unemployables seems to have been negligible. Hamilton spent something like $2,000 last year—in the Thirties its annual relief bill was nearly a million dollars. Victoria, the only city in Canada to produce a detailed investigation of employable applicants for relief, had only 36 during two winter months—and not one had a good employment record. All were problem cases of one kind or another.
One way the cities and towns have staved off direct relief is by “helping” people to get back on unemployment insurance. In Sherbrooke, Que., for instance, about fifty men are on the city payroll as laborers until, and only until, they put in enough days to make them eligible again for insurance benefits. Then they are laid off and other men taken on whose benefits have been temporarily exhausted.
Thirty Millions a Month
Presumably these city employ ees don’t do much indispensable work, but it’s cheaper to hire them for thirty or forty days apiece than to start paying municipal direct relief. What cities will do when and if the men needing help run into hundreds or thousands, we have yet to see.
Supplementary benefits could be extended, of course, if the Government decides that’s the best course. The Unemployment Insurance Fund could stand a heavy drain for a long time.
Last December it stood at $921 millions. It paid out thirty millions a month in benefits during February and March but it took in seventeen millions each month in contributions and investment income, so the net loss in each of the year’s worst months was only thirteen millions. At that rate it would take 72 years to exhaust the fund.
Should we then increase the benefit rates?
Labor federations, social welfare organizations and some politicians say yes, we should. They point out, quite rightly, that it’s hard to house, feed and clothe a family on $24 a week, which at most is only half what the breadwinner has been earning. Welfare workers speak of “heart-breaking” cases which have to be turned away for lack of money to help them.
Other people argue—and so far, this seems to be the majority view—that it has to be hard to get along on unemployment insurance. If it’s easy, too many people would rather draw insurance benefits than work. They won’t go far or look hard for a job.
“You can have as much unemployment as you’re willing to pay for,” was the cynical remark of one civil servant who’s had a lot to do with unemployment insurance.
“The reason 85,000 immigrants can come to Canada and find jobs,” said an official in Quebec, “is that the immigrant will work long hours for $35 a week. Our unplaced applicants would rather get $24 for doing nothing than $35 for working hard. They want work, sure—but at not less than a dollar an hour.”
Of course this doesn’t apply to the really distressed areas. No jobs are going begging in Marysville or Milltown, N.B., or in the minefields of Nova Scotia. But there, a desperate situation has to be met by something better than a dole.
Hon. Milton Gregg, who besides being Minister of Labor is also Marysville’s local MP, is trying to get some other industry into the big ramshackle plant that Canadian Cottons vacated. Recently a German industrialist came out to survey the possibilities of setting up a plant in Canada. He had British Columbia in mind; Gregg met him at Dorval Airport to try to persuade him to New Brunswick instead.
Meanwhile vocational schools are teaching new skills to the younger textile workers thrown out of employment. About half are young enough for retraining; another group are old enough to retire on the pensions they earned with Canadian Cottons. Only 150 of the 550 workers are in the difficult age group of 45 to 65—too old to learn new trades and too young to retire.
Unemployment insurance provides time for steps like these to be taken. It keeps families going, on hard close rations but above subsistence level, until some way out of their difficulties can be planned.
Last winter’s experience seems to indicate that our unemployment insurance system is adequate to meet a fairly heavy impact, provided the burden doesn’t remain too widespread for too long. There is no longer any difference of opinion, in towns where unemployment has been acute, as to whether the insurance scheme is a good thing-rich and poor, management and labor acclaim it as a lifesaver.
If the optimists among our economists turn out to be right and the spring upturn brings prosperity back, unemployment insurance will have been enough. The optimists were right in 1950—by June 3, before the Korean War broke out, the Labor Force Survey found a return to normal employment levels. Already there is one bright sign for this year. British Columbia, the only province which has spring in February, reached its unemployment peak in the first week of that, month and has been dropping ever since. It was the one province in Canada showing a sharp reduction in the March figures, which are always the year’s highest for the country as a whole.
If the spring upturn doesn’t come, or doesn’t have enough effect—that is, if unemployment begins to snowball— then we’ll need other measures besides unemployment insurance and undoubtedly we shall think they’re being taken too late. The policy of the Government in the event of a depression was laid down nine years ago, in an often-forgotten White Paper. It outlined the other side of “cyclical budgeting”—large-scale public investment in strategic locations, paid for out of deficits while taxes are cut to help business get back on its feet.
Ina speech last month C. D. Howe flatly rejected suggestions that these steps be taken now, though he reaffirmed that the 1945 White Paper is still an accurate outline of employment policy. “This year’s unemployment increase,” he said, “took place largely in ‘overexpanded industries’ which must adjust themselves to more competitive conditions.”
If that diagnosis is right it may be cold comfort for several hundred thousand jobless Canadians, but it does contain this much encouragement for the rest of us: it means we have time to tackle the problem on a pilot-plant scale. Maybe if a real depression comes, we shall have learned some new skills for dealing with it. if