The City of Toronto reached an important milestone in 2013 as it recorded the largest number of jobs in its history. Formerly, the city’s highest employment levels were back in 1989.
Since the 1980s, Toronto’s economy and labour market experienced major changes. Although those changes resulted in many positive aspects, they have also led to volatile recessions, a rise in precarious work, and growing wealth inequality.
The following commentary examines the historic trends and changing nature of employment in Toronto and explains why the focus of the economy has shifted since the 1980s and how that influences where job growth happens. The data for this analysis was derived from the Toronto Employment Survey, which has been collected annually since 1983 at all business establishments across the city
1. Historic Employment and Change by Sector
Figure 1 shows the total employment levels for the City of Toronto since 1983.
It is clear from Figure 1 that Toronto’s employment levels have echoed broader global economic forces, such as the recession of the early 1990s, the dot com bubble in 2001 and most recent recession of 2008/2009. The recession of the early 90s was particularly harsh for Toronto, as the city lost approximately 200,000 jobs between 1989 and 1996. However, what followed was a stable increase in employment, with relatively mild job losses experienced in the early 2000s and post 2008 period.
In addition to the effects of several recessions, restructuring of the global and domestic economy resulted in considerable changes to the sectoral composition of Toronto’s employment. Figure 2 shows employment change in Toronto across six major sectors since 1983. Evidently, the economy has shifted toward more service based employment with substantial growth in office and institutional sectors and a slow and steady decline in manufacturing & warehousing based positions. Institutional jobs, which are primarily made up of health care and education positions, grew by over 75% since 1983.
Although retail employment increased by 8% across 31 years, it never recovered from its peak in 1990. Services on the other hand rose by over 40%, demonstrating their resiliency, despite the growing popularity of online shopping.
The inverse relationship between office and manufacturing employment trends is due to a variety of reasons:
- Restructuring of the economy by Ronald Reagan and Margaret Thatcher, emergence of globalization and evolving technologies in automation (i.e., production of goods) increased opportunities for international investment (e.g., NAFTA) and intensified competition among firms. Subsequently, a greater need for knowledge-intensive jobs was created while reducing demand for lower-skilled, labour based positions. During this period, westernized nations experienced an extensive decline in manufacturing activity as many companies outsourced their operations to rapidly growing 2nd and 3rd world countries where significantly lower labour, land and operating costs were available.
- Domestically, Montreal was Canada’s largest city and financial centre for a number of decades, until it was surpassed by Toronto in the 1970s. Toronto’s striking economic performance and vast population growth throughout the 1970s attracted considerable investment in the financial sector as many companies established their head offices there. The city’s expansion was further bolstered by the rise of the Quebec sovereign movement, which induced a number of major Quebec based firms such as Bank of Montreal, Royal Bank, Sun Life and Cadbury to relocate to Toronto.
- The Canadian dollar also has an important effect on sectors like manufacturing, as shown in Figure 3, with a lower-valued dollar creating a profitable environment for goods production and exporting. Rapid increase of the Loonie during the 2000s shed a lot of manufacturing employment in Toronto, as the number of manufacturing based jobs is currently at its lowest point in 31 years.
- Toronto’s manufacturing sector was further eroded as many companies relocated to other parts of the GTA, namely York and Peel Regions due to the lower land and tax costs, expedited construction and permit approval timelines and improved transportation networks for goods movement.
Economic restructuring over the last three decades had a profound impact on the global economy and labour market, as regulations around international trade, private enterprise, and personal wealth were loosened, leading to tremendous growth in service oriented positions and declining manufacturing activity. Given the polarizing nature of service based jobs, these shifts have also exacerbated wealth inequality and contributed to a shrinking middle class.
2. Full and Part Time Employment
The rise of precarious work in recent decades has caused many to question the quality of employment. A study recently undertaken by United Way and McMaster University determined that about half of the people working in the Greater Toronto and Hamilton Area are employed in precarious work, which consists of part-time, temporary, contract and on-call positions. These types of jobs put people in vulnerable positions as they don’t have certain futures, are unstable and often lack benefits.
Figure 4 shows the change in full and part time work in Toronto since the 1980s.
Two major things are apparent from Figure 4: 1) part time employment demonstrates consistent growth over the last 31 years despite multiple economic shocks, and 2) full time employment has not yet recovered from its peak in 1990. Between 1983 and 2014, the share of full time employment has decreased from roughly 90% to 77%. Although a large number of part time jobs have been added to the city’s economy since 1983, growth has slowed considerably and continues to in recent years, with an annual growth rate of 1.7% since 1991, compared to a remarkable 15% growth per year during the 1980s.
The rise of part time work over the decades is largely due to employers wanting to keep labour costs down as a result of increased economic competition among firms. The discrepancy between full and part time work is especially heightened during recessions, as many employers shed full-time work through these uncertain periods, while growing their part time position base.
Precarious work is most prevalent in the retail sector, with part time jobs accounting for almost half of all retail jobs in Toronto. Figure 5 shows the change in the number of full and part time retail jobs since 1983.
Retailers are under immense pressure to remain relevant and competitive given that the sector is constantly changing to respond to consumer demand. The rapidly evolving nature and general instability of the sector is one of the reasons part time jobs are prevalent.
Growth of big box oriented retailers in the 1980s and 1990s drove many “mom and pop” shops out of business, as big boxes were able to offer lower prices due in part to their predominantly part time workforce and relationship with suppliers.
Nowadays many retailers are facing issues adapting to “e-commerce”, which allows consumers to purchase things online with ease and express delivery. This was one of the reasons retail jobs have stagnated since the early 1990s, while services grew.
Although retail positions are generally not considered as “quality employment”, they do offer significant social and economic benefits. Most notably, retail jobs are a common entry point into the labour force for youth and students because of their flexibility and generally lower qualifications requirements. As well, the sector provides an authentic foundation for start-ups and small businesses.
3. Geography of employment
The right location is essential to the success of a business. Offices benefit tremendously when they are located with direct links to transit stations and highways, as well as in the vicinity of an amenity rich environment that includes similar firms and a variety of ancillary services to support the workforce. Retail uses on the other hand seek high traffic volume areas, with good visibility and easy access. It is also important for retailers to be in neighbourhoods and areas that reflect their intended customer base. Industrial (i.e., manufacturing & warehousing) uses are best situated close to major highway interchanges, rail corridors, ports and airports as they need capitalize on optimal distribution channels. As well, these uses are generally in districts away from residential areas, due to the potential noxious emissions from the factories and erratic travel behaviour.
Figure 6 shows the location of the city’s downtown, employment districts and regional centres (or “centres”), relative to the subway, rapid transit, highway and road network. Employment districts are Toronto’s manufacturing and warehousing hubs, whereas the downtown and centres are predominantly made up of office related employment. The remainder of the city comprises a general mix of all employment sectors, with the most common uses being retail & services, offices, and institutional, entertainment, cultural and recreational facilities.
The most important distinction to note is that there are virtually no residential uses in Toronto’s employment districts.
Figure 7 shows the total change in employment between the downtown and centres, employment districts and rest of the city since 2000. Employment districts have experienced a general decline in jobs, which is not surprising given that industrial jobs, which are most commonly found in employment districts, have been in decline on a broader scale. The downtown core and centres in contrast have shown commendable growth over the years, with office related employment generating the vast majority of growth. The rest of the city has also increased in total employment since 2000, but at about half the growth rate of the downtown and centres.
Employment change across Toronto’s four regional centres and downtown core is shown in Figure 8. Over 90% of total employment growth in the downtown and centres was generated solely by the downtown core, which increased by 82,000 workers since 2000. Etobicoke was the only regional centre that noted a decline in employment, with a loss of approximately 1,000 jobs (or 10% of its workforce). Although over 3,000 jobs were added to Yonge-Eglinton since 2000, the centre has in fact never recovered from its peak employment levels in 1975. North York centre at the Yonge-Sheppard-Finch area has shown the most consistent gains in employment, with more than a twofold increase in total jobs since the early 1980s. More recently however, the centre has experienced a decline of about 4,000 jobs since 2010.
It is important to note that virtually no new office buildings have been constructed in any of the four regional centres over the last 20 years. In fact, almost all the recently constructed and proposed office buildings have been confined to the Union Station area in the core. Although this trend is favourable for the downtown core area, the lack of interest from employers and commercial office developers to locate in other parts of the city can deteriorate the locational distribution of jobs and severely deplete employment opportunities in Toronto’s inner suburbs, further aggravating wealth inequality. These trends can also place strain on the transportation network and transit system as people would increasingly be travelling to the downtown core for work, instead of being able to work closer to home. Moreover, new residential condo projects have reduced the amount of available land for office development in the downtown core and four centres, diminishing opportunities for employment generating real estate projects.
Figure 9 shows the total and percent employment change across the 16 different employment districts throughout Toronto. Only 3 of the 16 employment districts witnessed increases in jobs since 2000. The Airport Corporate Centre’s growth in employment across the study period was driven primarily by offices. Despite the surge in jobs since 2000, the district only employed 900 people as of 2014. The Central Inner-city employment districts which consist of Liberty Village and the area south of Eastern Avenue (located immediately east of the Don River) have also witnessed increases in employment, again largely generated by offices. Most of the growth however has taken place in Liberty Village.
Despite overall job losses in the employment districts, the number of business establishments has actually increased since 2000, demonstrating that the districts still remain as an attractive place for investment.
The rise in employment across the rest of the city is likely attributable to new and expanding institutional facilities (e.g., new Humber River Hospital, York University, UofT Scarborough, Humber College, etc.), new and expanding retail centres (e.g., Shops at Don Mills, Stockyards, Yorkdale Mall, Bayview Village etc.) and office and service job growth along the city’s avenues.
The findings from this section show that not all areas of the city are growing equally. Although the downtown core and a few other parts of the city have demonstrated resilient job growth over the years, a large part of the city appears stagnant from an economic and employment perspective. There is evidently serious locational implications associated with widening wealth inequality.
In spite of a few concerning factors with regards to Toronto’s existing employment situation, namely rising precarious work, and increasing wealth and spatial inequality, the economic outlook shows potential signs of promise. Since the recession of the early 90s, the City has consistently added jobs and continues to be an attractive place for investment. Very few cities in the world are able to demonstrate this type of economic perseverance.
The city’s economic outlook however does not come free of caveats. Although growing at a much slower rate than in previous decades, part time work still persists and threatens the stability and livelihood of workers and equality and certainty of jobs. As well, the growing spatial polarization of employment could have detrimental implications on Toronto, with the worst effects likely to be felt by the inner suburbs of Scarborough, Etobicoke and North York.
Ultimately, it is critical to recognize that Toronto is a magnet for people and businesses. With this growth, the key for the future will be to attract the right type of jobs, in the right locations.
Toronto Employment Survey- http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=c7ac186e20ee0410VgnVCM10000071d60f89RCRD
A Region in Transition, Strategic Regional Research and Canadian Urban Institute, January 2013- http://www.cbc.ca/toronto/features/stuckintraffic/docs/transition.pdf
The New Geography of Office Location and the Consequences of Business as Usual in the GTA, Canadian Urban Institute and Real Estate Search Corp., March 2011- http://www.toronto.ca/legdocs/mmis/2012/ed/bgrd/backgroundfile-46067.pdf
Crumbling infrastructure, failed governance and an outflow of people: Exploring Montreal’s economic decline, Globe and Mail, February 2015- http://news.nationalpost.com/news/crumbling-infrastructure-failed-governance-and-an-outflow-of-people-exploring-montreals-economic-decline
It’s More than Poverty Employment Precarity and Household Well-being, PEPSO, McMaster University and United Way, February 2013- http://www.unitedwaytoronto.com/document.doc?id=91