Calgary's unemployment rate is trending higher than Canada's — but it's not because of layoffs

Calgary's unemployment rate continues to surpass the national average, but not due to widespread layoffs. Instead, the primary reason is the rapid population growth in Alberta, outpacing the availability of jobs.

"We're going through a period of adjustment — it'll take some time for the labour market to absorb all the people," said Mark Parsons, chief economist at an Alberta government-owned bank.

Despite strong job growth in the province, it has not been sufficient to match the influx of new residents. Statistics Canada reports that Calgary's unemployment rate reached 7.9% in November, exceeding the national average of 6.8%.

For nearly a decade, Calgary's unemployment rate has often been higher than the national rate, a trend that began with the 2014 oil price collapse and continued through much of the COVID-19 pandemic. The rates briefly converged in 2022 at approximately 5%, but Calgary’s unemployment rate has since risen due to a significant increase in interprovincial migration. International migration, particularly among temporary residents, has also contributed to the city's population growth, according to Parsons.

Migration and Employment Challenges

The influx of new residents has led to a unique situation: while more people are employed in Calgary than ever before, the unemployment rate continues to rise. Parsons attributes this to Alberta's population growing faster than the labour market can adapt. From July 2023 to July 2024, Alberta's population expanded by about 204,000 people—a 4.4% annual growth rate, the highest among provinces and the fastest in Alberta since 1981. Approximately 42% of this growth occurred in Calgary, with 40.5% in Edmonton.

The unemployment rate in Edmonton is even higher, at 8.3%. "It's not surprising to see Alberta's major cities having some of the highest unemployment rates in Canada," said Charles St-Arnaud, chief economist with Alberta's credit union central banking facility. He noted that the significant population growth has outpaced the absorption capacity of local labour markets.

Adjusting to Rapid Growth

The increase in population is not entirely negative news, as it is not driven by layoffs. However, challenges remain, particularly for new graduates and recent arrivals, who may face longer periods of job searching. Research suggests that entering the job market during high unemployment can negatively impact long-term earning potential.

Certain industries, such as skilled trades and hospitality, still report labour shortages despite the growing workforce. Parsons predicts that as population growth stabilizes, the unemployment rate will moderate, but it is likely to remain elevated compared to the national average until 2026.

Looking ahead, Alberta is expected to remain an attractive destination for individuals seeking affordable living options, continuing the trend of migration from other provinces. "It is going to take some time for the labour market to adjust to this rapid influx," Parsons concluded.