Over the last few years, as Canada has weathered the recession and begun to point back to a rosy future of economic growth, we’ve heard a lot about how important Alberta’s strong economy has been. Anecdotal evidence assures us that, thanks to the tar sands and the new oil industry in the province’s north, Alberta is the place to go for money, a magical land where working the front counter of a McDonald’s can earn upwards of $14 an hour. Just look at the way Alberta’s job growth since 2008 compares to the rest of the country:
Alberta isn’t all tar sands, though. In fact, the province’s oil reserves are concentrated in certain areas, so that — geographically speaking — oil and gas, along with their associated industries, are a smaller part of the economy than we might think. To keep things manageable, we chose to look at oil and gas extraction and support activities for oil and gas extraction, as well as heavy construction and specialty contractors, which are strongly connected to oil and gas in the Alberta economy. Look at the drop-off in jobs among Alberta’s Census Divisions for this cluster of oil and gas-related jobs:
Perhaps, though, seeing a huge difference between Calgary and Edmonton’s job totals and those of other Census Divisions shouldn’t be a surprise. We can get around this, though, by looking at Alberta through the lens of location quotient.
Location quotient, or LQ, measures how concentrated an industry is in a specific economy. It isn’t affected by the size of a workforce — just how a certain industry relates to the rest of the economy (an LQ of 1.00 equals the national average). This gives us much more interesting and descriptive results. Alberta as a whole is already well above national averages for the four industries in the cluster we’re considering, and well out in front of the rest of the provinces and territories:
As we noted, though, that’s a province-wide measure. Within the Alberta economy the oil and gas industry and its closest related industries are the most concentrated in certain smaller areas. Look at the job totals and LQ for the oil and gas industry’s main Census Subdivisions in Alberta:
Census Subdivision Name 2012 Jobs 2012 National Location Quotient
Source: Employees - EMSI 2013.1 BETA
Wood Buffalo 32,081 9.36
Grande Prairie County No. 1 3,546 7.78
Redcliff 1,367 7.06
Leduc County 7,891 6.75
Bonnyville 2,002 5.76
Red Deer County 2,250 5.09
Whitecourt 1,986 4.98
Rocky Mountain House 1,998 4.80
Drayton Valley 2,075 4.72
Hinton 1,609 4.09
Those are some extremely high LQs. What’s fascinating is to consider the context these are in; there are well over 400 Census Subdivisions in Alberta. Of those, 182 have no jobs in these industries, and only 24 have more than 1,000 jobs. In fact, of the 120,000 jobs in this sector that aren’t in Calgary or Edmonton, almost 66,000 are in these 10 most-concentrated CSDs.
Interestingly, though, they’re not actually the most concentrated Census Subdivisions in the country for oil and gas. The highest LQs for CSDs with over 1,000 related jobs are in BC and the Northwest Territories. Look how much higher they are than Alberta’s most concentrated CSD:
Those are isolated areas, though, and they’re quite unique. BC and the Northwest Territories each only have a few secluded areas of activity in these industries. Look at this distribution of the top Census Subdivisions in Canada for these four industries and see Alberta’s total dominance:
That’s half of the top 30 CSDs, all in Alberta. While none of them are the most concentrated, the sheer proliferation of concentrated pockets of oil and gas activity is what has pushed Alberta’s economy forward at a growth rate three times that of the rest of the country. Not every part of Alberta is profiting equally from the growth of the oil and gas sector. But for the lucky few, there’s nothing more important.
Data for this post came from Analyst, EMSI’s online labour market data tool. For more information on what Analyst can do for your college or business, contact Fraser Martens. Follow EMSI on Twitter @DesktopEcon.