Wages, Employment and Unemployment

How many people work in BC, and how much are they paid?

There were 2.3 million people employed in BC in 2008. Of these, 1.8 million worked in the service sector, while 502,000 were employed in goods-producing industries.

Hourly wages tend to be higher in goods-producing industries

British Columbia workers earned an average wage of $21.46 per hour in 2008. At that time, those working in the goods industries earned an average hourly wage of $22.92. The typical wage in service industries was $1.83 less, at $21.09 per hour.

Until recently, the wage gap between workers in the goods and service sectors had been declining. In 1997¹¹, the wage difference was $2.04; it had shrunk to just over a dollar by 2005, but since then the gap has begun to expand. This may be related to rising wages in the construction industry, where a shortage of workers helped push up wages in recent years.

Average hourly wages in goods industries are higher than in the service sector

Service sector jobs are not necessarily entry-level positions

The stereotype of a service-sector worker (someone with little training and limited skills who works part-time for minimum wages) is not accurate.

Although there are many entry-level positions and minimum-wage jobs in the service sector, service-sector jobs exist at all levels of training and at all points along the pay scale. Many people who work in service industries—airline pilots, engineers, computer scientists, doctors, lawyers, university professors, to name just a few—are both highly trained and well paid, as are longshore workers, ferry and railway workers, and numerous others who work in this sector.

Workers in the goods sector usually spend more time on the job

Eight out of 10 workers in the province are employed full time. Part-time employment is quite common in the service sector, where nearly a quarter of the workers spend less than 30 hours a week on the job. In the goods industries, relatively few (one in 12) workers are employed part time.

In the service sector, where part-time employment is more common, workers spend an average of 35 hours a week on the job. The average work week in the goods sector is longer (40 hours per week). For all industries, the average work week is 36 hours long.

Part-time work is much more common in the service sector than in goods industries

Seasonal and temporary employment is common in some industries

Employment in the goods sector is quite seasonal: the number of jobs tends to peak in the summer and is lowest at the beginning of the year. In the service sector, employment is more stable, but also shows some seasonal variability. The number of people working in service industries is usually lowest in January.

Seasonal work is most common in the goods sector

On average, about 12% of workers in the province are hired as temporary help¹². Not surprisingly, given the seasonal nature of these industries, temporary employment is most common in agriculture, forestry, fishing & mining, education and construction. Nearly a third of the people employed in agriculture are temporary workers.

Variations in unemployment rates reflect many different factors

Unemployment rates vary significantly among industries. Seasonal variations in the need for workers play a big role in the likelihood of unemployment in some industries. For example, people with jobs in industries such as agriculture, fishing, and construction may only be able to work at certain times of the year.

Field workers are most likely to be employed during the growing season, and at harvest time, but are less likely to have jobs in the winter months. The fisheries are only open at certain times of the year. Some types of logging and mineral activities can only be done during the winter months when the ground is frozen. Ski instructors work during the wintertime, but not during the summer months. Retailers may need extra staff for the pre-Christmas season but require fewer workers at other times of the year. Hotels, golf courses and campgrounds might hire additional help during the busy summer months, but lay these workers off during slower periods.

In other industries, workers won’t face the same likelihood of being jobless on a regular basis because seasonal factors don’t affect their ability to do their job. In industries that produce goods mainly for export to other countries, unemployment rates can be affected by changes in world demand for their products.

For example, most of BC’s wood exports are used in housing construction in the US and overseas. As a result, changes in the housing market or other economic conditions in these regions can affect the demand for BC wood products. This may lead to layoffs and shutdowns, or to job growth and overtime work, depending on what the situation is. Similarly, changes in the state of BC’s housing market will affect the need for workers in residential construction. These are just a few of the many factors that cause unemployment rates to vary among industries.

Unemployment rates are usually highest in the goods sector

Workers in goods-producing industries face a significantly higher likelihood of being unemployed at some point than those with jobs in the service sector. This is especially true during economic downturns, since goods-producing industries tend to cut back on their production when markets are weak.

While some service industries are also affected in this way, many of them provide services (such as health care or education) for which there is a demand even when the economy stalls. In the current economy, the relative strength and size of BC’s service sector has largely offset the effect of a substantial slump in the province’s goods-producing industries.

Unemployment rates are higher, and more volatile, in the goods sector¹³

There is a close relationship between the economic cycle and unemployment in the goods sector. The jobless rate in the goods sector rose sharply during the economic slowdown in 1991 and didn’t fall back to its pre-1991 level until three years later. The incidence of unemployment also increased in the service sector, but not nearly as much.

There was another spike in the unemployment rate in the goods sector in 1998 and again in 2001, when BC’s economy also stalled. That slowdown had only a small effect on the unemployment rate in the service industries.

Until recently, BC’s unemployment rate was on a downward path, as the province’s labour market experienced a long period of steady growth. The jobless rate fell to a 30-year low of 4.0% (seasonally adjusted) in March 2007. The average for the year was just 4.2%.

A jobless rate of about 4%¹⁴ has traditionally been considered the natural rate of unemployment. This is the rate at which the demand for labour is equal to the supply of workers. In other words, people looking for work can find jobs (this does not mean that they could find the work they want to do; only that there are jobs available) and employers can find workers when they need them. There will always be a few people who are unemployed, either because they are temporarily between jobs, or because the industry that they work in is undergoing changes.

The jobless rate began to climb in 2008, although the average for the year (4.6%) was only slightly higher than in 2007. By October 2009¹⁵, it had jumped to 8.3%, its highest level since 2003. Despite this significant and rapid rise, the province’s unemployment rate remains relatively low by historic standards—during most of the 1980s, BC’s jobless rate was well into the double digits.