The agriculture industry is tightly connected to the job market because of its seasonal nature, says an official with Rabobank.
Christian Lawrence, a senior macro markets strategist with the company, told the recent Alberta Beef Industry Conference in Calgary that there are a lot of similarities between the United States and Canada, especially when it comes to immigration, both legal and illegal, and how that can affect unemployment rates.
As well, ripple effects are still being felt from the job exodus that occurred during the COVID-19 pandemic in 2020.
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“In the U.S., back in 2022, you had a very unusual situation. You had about two-and-a-half jobs available for every person looking for a job. There’s still (presently) about 1.4 jobs out there for every person looking in the U.S. It’s still a tight labour market. It’s just not as tight as it was a couple of years ago,” Lawrence said.
“But historically, there’s usually more people looking for work than there are jobs available.”
The best scenario for consumption-driven economies is for people to have jobs so that they can pay for good and services. Those jobs have increased in value in the United States, with wages rising faster than the cost of living over the last 2 1/2 years.
“This is a great environment for the U.S. consumer. People are making their wages going up faster than inflation, and they can have a job if they want it. This is one of the reasons why we’ve seen such strong consumption in the U.S.,” said Lawrence.
Part of the reason for this was the mass retirement of workers older than 55 that occurred during the pandemic, which affected an already small workforce.
Counteracting this has been the huge influxes of immigration in both countries.
Statistics from the U.S. Department of Homeland Security show that the number of people caught crossing the U.S.’s southern border rose from 200,000 to 500,000 a year in 2020 to two to 2.5 million, although that decreased to about 1.5 million in 2024.
“When you actually think about overall net migration in the U.S., it’s been about three to three and a half million a year for the last four years. That is a significant increase in the size of the workforce. So the fact that the unemployment rate has risen in the U.S., it isn’t about mass layoffs, although we can argue that might be coming, particularly if (the U.S. Department of Government Efficiency) is successful in cutting federal workers. But up to now, it’s been mainly about just more people entering the workforce,” said Lawrence.
“The immigration story is very relevant in Canada as well, one of the largest surges in immigration in recent history. That is another reason why we’ve seen Canadian unemployment rise so rapidly.”
In Canada, it has also been a story of an economic slowdown and more layoffs. Canadian households have felt the squeeze of higher mortgage rates coupled with inflation that has reduced their spending, and that is slowing the economy, as well as corporate layoffs
“The good news in Canada is that wage growth is now back into positive territory when you adjust for inflation. That is a positive for consumption going forward. But, we are coming from a pretty weak position in Canada,” said Lawrence.
Lawrence expects the recent population increases to slow down, especially given U.S. president Donald Trump’s hard-line stances in tightening up his border and conducting mass deportations. The size of the reduction is difficult to determine for sure, he added, but it will affect the agriculture and construction industries.
“The immigration story is going to be slowing going forward. I think one of the big question marks in the U.S. is, do we actually see some of these additional nearly 10 million people that have entered the country over recent years? Do we see them being deported en masse? Now for some industries, this is certainly a concern. When you look at the economy as a whole, though, you need to see millions of people being deported for it to really change the unemployment rate. Practically, I’m somewhat skeptical that can actually happen,” said Lawrence.
”If it does happen, you’ll see unemployment come back down. You’ll see even more in the way of wage growth as the labour market becomes very tight and companies struggle to find workers, and you’re going to see even more inflation come through. But without a doubt, that size of the workforce isn’t going to be surging the way it has over recent years in either Canada or the U.S. When I think about my forecasts, I have U.S. unemployment still below four-and-a-half per cent this year, and in Canada, I expect it to be around that six-and-a-half per cent level for most of this year.”
