Forgotten people and forgotten places: Canada’s economic performance in the age of populism

Populism Economic indicators Labour force participation Income distribution Weather Politics Canada

Donald Trump’s surprising election has been characterized as an expression of the so-called “forgotten” (Bradlee Jr. 2018). The basic idea is that American politics and policy had come to neglect working-class people and places. The 2016 presidential election has thus become characterized as their “revenge” (Rodríguez-Pose 2017).

The controversial outcome has galvanized important rethinking in policy circles. Why did it happen? What is the source of working-class disillusionment? How can policy-makers constructively respond? What is an agenda for inclusive growth and broad-based opportunity?

The Macdonald-Laurier Institute (MLI)’s work on these questions pre-dates Mr. Trump. But his election and the rise of populism elsewhere have assuredly intensified our efforts. As part of this ongoing work, MLI has launched a multi-year project, Real Jobs for Real People, to develop and advance policy reforms that better respond to the concerns, interests, and needs of working-class Canadians. Think of it as a blueprint for inclusive growth rooted in work and opportunity.

This first paper aims to establish an empirical foundation for this ongoing work. One of the lessons from elsewhere is that we cannot judge the health of our labour markets simply by examining the headline data. We need to drill down to discern “who” and “where” are at risk of falling behind.

The paper therefore delves into the data to identify different experiences and outcomes across the country. The goal is to better understand where the overall picture may be obscuring challenges for certain industries, communities, or individuals. In so doing we can gain a clearer picture of the opportunities and threats in our economy and ensure that our politics and public policy are more responsive.

Main findings:

  • Canada’s strong labour market performance in recent years conceals significant differentiation among regions, genders, and working-age Canadians with different levels of educational attainment.
  • The challenges are most acute for working-age men without post-secondary qualifications, whose labour market outcomes outside of the oil-producing provinces have for some time resembled some of the poor outcomes observed in parts of the United States. This cohort seems to be facing a series of secular headwinds that threaten their inclusion in broader labour market gains.
  • Much of Canada’s labour market strength (including employment, full-time employment growth, labour force participation, and income growth) has been driven by women with post-secondary qualifications. They have outperformed men with post-secondary experience and degrees and markedly outperformed non-educated men and women for the past 20 to 30 years.
  • Income growth has been driven in large part by rising government transfers rather than increases in market income. This is most marked for men who experienced essentially flat growth in median market income from 2000 to 2017 and a nearly 10 percent rise, on average, in government transfers over this period.
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