Why Calgary's and Edmonton's job markets are so different

A curious thing is happening in Alberta's job market: While the province as a whole is suffering, with an unemployment rate of 8.5 per cent,Calgary and Edmonton are seeing their fortunes diverge, with Calgary taking the brunt of the downturn.

Two years ago, the two cities had similar unemployment rates of roughly five per cent. Last month, Calgary's rate hit 10.2 per cent, a multi-decade high, while Edmonton is sittingpretty (relatively speaking), with a jobless rate of 6.9 per cent just below thenational average.

So what is going on?

Public sector jobs

Let's start with the obvious.

Although both Edmonton and Calgary depend on the energy industry for employment, Edmonton is also the seat of the provincial government.

According to John Rose, the chief economist for the City of Edmonton, between 20 and 25 per cent of the workforce has a job in the public sector. That's not just direct employment by the provincial government, but also jobs in health care and education.

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"Those sectors loom relatively large in the Edmontoneconomy, particularly the city of Edmonton proper,"saidRose. "And so they have provided a little bit of a foundation."

Rose said that health-care hiring in the Edmonton region the past year hastotalled7,000, with public administration hiring coming in justunder 7,000. That helps to offset the 15,000 job losses in construction that Edmonton has seen in the past year as housing starts slowed dramatically.

Rose said he's grateful the provincial government didn't cut jobs in the face of the deficit.

"They've been a major contributor to maintain a reasonably healthy employmentmarketin theEdmontonregion."

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Head office jobs

Calgary does not have that backstop tothe same degree. There are fewer people working in public administration and health care in Calgary now than there were a year ago, while there are more working in education.

Calgary's specialty is professional and head office jobs, which are great-paying jobs in theupswing, but they began to disappear within weeks of the oil pricedecline in 2014.

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"We do know that the oil and gas sector in Calgary tends to be the head office jobs, more of the ones around the planning of new projects," said Todd Hirsch, chief economist at ATB Financial.

"And it's those projects that have been cancelled.Edmonton has a vibrant oil and gas sectoras well, but it tends to more focused on current production, not planning of new projects. And despite the fact that oil prices have dropped, we're still producing the same volume of oil, so those operations still need to be serviced," Hirsch said.

Are people leaving Edmonton?

One reason for the divergence last month between Calgary and Edmontonhad to do with the size of the workforce. In Edmonton, 6,600 people simply stopped looking for work. In Calgary, nearly 10,000 more people started looking for work.

So while Calgary has created jobs in recent months and Edmonton has lostthem, the unemployment rates are still heading in different directions.

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That could be a quirk of the Statistics Canada data, which is based on a survey, while Hirsch suggests it could meanpeople are leaving Edmonton, either for Calgary or for another province.

Out-migration from Alberta began at the end of 2015. We've now had three quarters in a row of people leaving the province, although so far it has been a trickle of around 6,000 people.

"When you look at the fact that the labour force in Edmonton is falling, to me that says this is where we're seeing some of the out-migration from Alberta.It's coming out of Edmonton," said Hirsch.

Does Calgary need help?

As of last month, there were 91,000 people looking for work in Calgary, more than a tenth of the workforce. That figure is just under 56,000 in Edmonton. It raises the question of whether Calgary needs an extra boost from the province, which has both directly and indirectly supported the Edmonton job market.

With its jobs plan, the provincial government says it is on pace to spend a record amount on infrastructure this year as 367 major capital projects were underway at the end of August.

"The province has been saying for quite a while now that they see increased infrastructure investment as a form of economic stimulus to deal with the economic conditions that we're facing now,"said Justin Smith, director of policy with the Calgary Chamber of Commerce.

"I would strongly encourage the provincial government to look to prioritize wherever it can, projects and activity in Calgary," he said.