U.S. beats Canada on job creation but it's still playing catchup amid Omicron

To Canadians critical of provincial Omicron lockdowns, it may seem obvious why Friday's jobs data showed a glaring contrast between job creation here and in the U.S. where there are fewer COVID restrictions.

The U.S. economy created 467,000 jobs in January, while Statistics Canada reported a worse than expected loss of 200,000, despite the fact that the U.S. has about 10 times more people.

But according to economists who study employment in both countries, the idea that provincial government schemes to slow the virus mean Canada is losing out on job creation is simply wrong.

Despite the fact that the States had few restrictions during the latest Omicron wave, the U.S. is still playing catchup with Canada on jobs.

"The U.S. labour market is basically catching up to where Canada is," said Bank of Montreal economist Sal Guatieri in a phone interview. "We've recovered all the lost jobs from the pandemic."

"Unfortunately we made a big dent in that net gain in January, but we're still up 33,000 from 2020 levels," he said. "In the U.S. they're still down almost three million jobs from pre-virus levels."

While U.S. employers continued to hire right through the January outbreak, the U.S. economy was still suffering. Despite the lack of mandated lockdowns, workers and business patrons have been staying away, Guatieri said, and businesses are so anxious to get and keep employees that they did not dare lay people off.

"The problem is not lack of demand for their products," said Guatieri. "The problem is they can't find enough workers or enough staff to meet that demand."

Other data has shown that the U.S. economy is ahead of Canada overall but U.S. fatality rates per capita are about three times Canada's, said the BMO economist.

"We're just not seeing the uptake in labour force participation in the U.S. that we saw in Canada," he said. "And I think one of the reasons is that American workers ... were a little more reluctant because of the increased risk of catching COVID and dying from COVID."

In that way, he says, Canadian lockdowns, mask mandates and high vaccination rates mean that Canadians have been more willing to go back to work. Also Canadians have much better access to daycare, a bigger problem in the U.S. when children were required to stay home from school, making caregivers reluctant to return to the workforce.

Of course, part of that Canadian worker confidence depends on the very lockdowns that lead to a temporary job loss of the kind we saw in Friday's data.

But according to TD economist Leslie Preston there is another significant reason for the contrast between jobs data north and south of the border: the two statistics are collected quite differently and mean different things.

"The Canadian Labour Force Survey is a different type of survey to the Payroll Survey in the U.S.," she explained on the phone Friday.