Former Federal Reserve Chairman Alan Greenspan
The Small Business Myth
Electioneers like to push the meme that in Canada "80% of jobs are created by small business". The table attached from StatsCan does not bear this out so precisely. According to StatsCan's use of the North American Industry Classification System (NAICS), it's actually 70%.
The additional table shows the most recent breakdown of the currently employed and 65% of us work in the private sector.
So, if my understanding is correct then the 70% of our workforce that have jobs created by "small business" reflects 70% of the 65% of us who are employed in the private sector ie: 45% of us in the private sector owe thanks to the small business employer. Write me if I have made an error in the math.
Currently the NAICS defines size as:
- Small = 1 to 99 employees
- Medium = 100 to 499 employees
- Large = 500 or more employees
A small business therefore can be one that employs at least 1 person and as many as 99 depending on the other qualifiers. That's a big difference. We all know that showing up for work in an office of 1, 2 or 3 people is a much different business experience than one that hires 49 or 99 workers. Not only that but a 3 person Canadian "small business" in the software sector could very easily compete with medium sized software businesses (100 to 499 employees) simply by using code and script writers offshore in low labour cost jurisdictions to do the grunt work and not have to pay Canadian labour costs. Or if you prefer, there is a big difference between a business that can replace labour with machines (hardware and software) and a business not as easily automated.
As software consumes the world and artificial intelligence reduces the need for expensive labour, the trend will continue to shed employees moving more of us into small business.
So when someone says 80% of jobs in Canada are produced by the "small" business sector, it does not mean that 8 out of those 10 employees have a personal relationship with the owner.
One more thing; the table at the top of the page is 2012 data published by StatsCan. Hey Canada this is the eve of 4Q 2015. Can we please get fresher data collected and published in this country?
#OPENDATA - THIS CITIZEN'S DREAM: It would help if Government Agencies had open to the public online databases updated in real time as transactions get tabulated so that the private sector could produce unbiased market analysis. If we want a society able to make better decisions we need better access to data. Write your Member of Parliament.
The Next Great Leap in Manufacturing"
- Robotics use is reaching the takeoff point in many sectors. The share of tasks that are performed by robots will rise from a global average of around 10 percent across all manufacturing industries today to around 25 percent by 2025. Big improvements in the cost and performance of robotics systems will be the catalysts. In several industries, the cost and capabilities of advanced robots have already launched rapid adoption.
- Adoption will vary by industry and economy. Among high-cost nations, Canada, Japan, South Korea, the UK, and the U.S. currently are in the vanguard of those deploying robots; Austria, Belgium, France, Italy, and Spain are among the laggards. Some economies, such as Thailand and China, are adopting robots more aggressively than one might expect given their labor costs. Four industrial groupings—computers and electronic products; electrical equipment, appliances, and components; transportation equipment; and machinery—will account for around 75 percent of robotics installations during the next decade.
- Manufacturing productivity will surge. Wider adoption of robots, in part driven by a newfound accessibility by smaller manufacturers, will boost output per worker up to 30 percent over the medium term. These gains will be in addition to improvement from other productivity-enhancing measures, such as the implementation of lean practices.
Andrew McAfee: What will future jobs look like?
As the chart illustrates, U.S. home ownership is back to the 1980's levels and unreported debt is growing (table below chart).
This is what happens when debt levels outpace earning capabilities. The stress of watching one's equity evaporate leads many consumers to lose track of obligations when reporting.
If debt levels are under reported in the U.S. it's probably similar in Canada as well. James Fitz-Morris examines debt-to-income levels for the average Canadian family in the video below.
The bubbly asset levels in Canada represent a huge risk because without price appreciation, debt repayment becomes an occupation.
- Economists' understanding of the finances of U.S. consumers is based heavily on survey data, and on the Survey of Consumer Finances (SCF) in particular. However, recent research calls into question survey respondents' willingness and ability to report their debts accurately.
- This study compares U.S. household debt as reported by borrowers to the SCF with debt reported by lenders to Equifax using the FRBNY Consumer Credit Panel (CCP). Debt levels, distributions, and trends are compared by loan type, both in aggregate form and for age, region, and household-size subsamples.
- Our most striking finding is that, overall and in most disaggregated debt categories, debt levels reported in the SCF and CCP are quite similar. Even bankruptcy measures correspond well.
- The exceptions lie in the unsecured debts. Under our most inclusive assumptions, SCF-implied aggregate credit card debt is 37 percent lower than that implied by the CCP, and SCF-implied aggregate student debt is 25 percent lower.
Canada's Sky-Rocketing Household Debt 1990 vs 2015
for the average Canadian family; September 13, 2015
Debt to Income
Equity to Debt
While we lose another night's sleep tossing and turning over whether the U.S. Fed will begin rate "normalization" tomorrow, here is a look for anyone not familiar with Vancouver's bizarre real estate market.
By the way, even if the Fed does raise 25 beeps, it still ain't normal. Normal is when you have the ability for price discovery. At the moment it's punters fishing for the credulous.
The 2 images are the number of single family detached houses for sale starting with a list price of $2,000,000 and houses for rent for a minimum of $6,000/mo.
On the for sale graphic (source: www.realtor.ca) there are +/- 1500 houses for sale starting at $2,000,000 up to $37,000,000. On the for rent graphic (source: vancouver.craigslist.ca) there are +/- 100 houses for rent starting at $6,000/mo up to $30,000/mo.
On my Affordability Page, notice that Demographia who looks at hundred's of cities housing and economic metrics globally defines affordable as "...the ability for any urban household to be able to rent a dwelling for less than a 25% of its monthly income, or to buy one for less than about three time its yearly income!"
On that scale, one would need an income of $24,000 per month to rent a $6000/mo house; that's easily accomplished by only 12 of those imported foreign workers (2 or 3 to a room) that we subsidize corporations with to flesh out their labour pool. Why export a low wage job when high wage jobs are easier to export and that's the Canadian will.
And on the same Demographia scale one only needs $666,666 in annual income to buy a $2,000,000 house - that's only 28 of those imported foreign workers banding together in joint ownership. That's only a half dozen or so workers per bedroom. I bet the refugee swarm scaling the new walls of Europe would easily do that if given the chance.
Oh ya, I forgot we are afraid of terrorists, but not so much of the peer pressure and institutional mountebankers that have exposed so many Canadians to so much risk in only a decade.
Portlandia: Escrow Scene
It depends on where you are in this country and in your life.
In Canada there are only 4 provinces where average earnings are greater than the average and the 4th, Ontario, barely makes the cut (chart of June 2015 data - 2 months lag).
BC didn't make the cut and BC and Ontario are home to the bubbliest cost of accommodation in the country. So I think we can say that earnings have not been the driver of housing costs.
The Bloomberg piece below does suggest that current economic policy in the last decade has been, if anything, ideological.
Canada's Economic Slide in Five Charts
Bloomberg, September 2, 2015
By Christopher Flavelle
Tuesday's announcement that Canada's economy shrank for the first two quarters of 2015, putting the country into a technical recession, puts a little more strain on the ruling Conservative Party's claim of sound economic management, the core of its campaign for next month's federal election. What's more interesting is how long the party has been able to hang on to that mantle.
The charts below show Canada's ranking on the most basic economic indicators relative to other developed countries, first for 2006, when Prime Minister Stephen Harper's Conservatives took office, and then for the latest period for which data is available. For each indicator, the country has slipped.
Individually, any of these economic indicators could perhaps be explained away as the result of adverse circumstances, or just plain bad luck. Taken together, they force the question of how exactly the Conservative government has strengthened Canada's economy after almost a decade in power.
The answer is probably in the final chart, which shows that Canada now spends less of its gross domestic product on social programs than any member of the Organization for Economic Cooperation and Development save for three (Iceland, Estonia and South Korea). Shrinking government has been the overriding goal, and chief accomplishment, of the Conservatives' tenure. Whether you agree or not with the wisdom of that shift, the other charts suggest it hasn't done much for Canada's economic performance.
This doesn't necessarily mean the Conservatives will lose; voters may not trust the other parties to do a better job. But the government's claim to have run the economy well doesn't stand up to a comparison against other OECD countries, and that was true before this week.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Original Post Here
If China is the Commodity Engine
Canadian resource exporters will have to add more value.
"Working Class Hero" John Lennon
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
Balance Of Trade
Rent Or Buy