Job creation is no longer a top priority

One of the strangest things about public debates about economic policy is how one-dimensional they are: almost every measure is viewed through the lens of job creation. This is puzzling, because most economic policy discussions aren’t about jobs. Proposals such as free trade, carbon taxes, GST/HST harmonization and changes to corporate tax rates are routinely discussed in terms of their effect on employment, but the actual effect of these measures on total employment is approximately zero. They may alter the composition of employment and wages, but not the level of total employment.

It’s not hard to come up with explanations for this preoccupation with employment growth. The labour force  grew extraordinarily rapidly the past few decades as the baby boom generation reached working age and as women’s participation rates increased. Finding jobs for all those new workers was, quite rightly, a high priority for policy.

Those days are over: women’s participation rates have leveled off (or will soon do so), and the recession ended four years ago. The problem will no longer be creating jobs for a fast-growing workforce, it will be figuring out how to generate high incomes as the share of the population that is of working age shrinks. This chart graphs the share of the population aged 15-64; the red and blue lines are the bounds of Statistics Canada’s population projection scenarios in Cansim Table 052-0005:

Population aging has already begun. The workers of the future will have little trouble finding jobs; the challenge will be to make sure that the jobs they find generate the most value.