1

ABSTRACT
Canada’s three large city regions – Montréal, Toronto and Vancouver – have been relatively successful in retaining their Manufacturing bases, while at the same time adding substantial numbers of New Economy job opportunities. Deindustrialization appears to have occurred primarily in the Montréal CMA (census metropolitan area) and in some smaller communities where motor vehicle manufacturing was significant.
Growth in New Economy jobs has occurred in the larger CMAs; the smaller urban areas have had little success in attracting these jobs. For the most part, these trends appear to be path dependent: prosperous communities with substantial proportions of New
Economy jobs are likely to remain prosperous and to attract more such jobs. The lack of significant correlation between economic health and the presence of immigrants, same sex couples, performing and visual artists suggests that local economic development strategies based on these factors may have limited success.
INTRODUCTION
Although natural resources (forestry, mining, agriculture and fishing) continue to be of major importance in the Canadian economy, Canada registers one of the highest rate of urbanization in the world . Large metropolitan areas make a substantial contribution to the country’s economic prosperity (Lefebvre & Brender, 2006). The fortunes of second tier urban areas have not always been as favorable (Coffey &
Shearmur, 1996; Gottlieb, 1995). Smaller urban areas often have less diverse economic bases, providing them with fewer resiliencies when faced with a plant closing or other
2

economic downturn (Erickcek & McKinney, 2004; Polèse & Shearmur, 2006).
Demographics also work against these smaller cities: young adults and seniors may leave for jobs and retirement homes, respectively. Moreover, birth rates in these communities are relatively low (see Malefant et al ., 2007 and Filion, this volume) and they have been able to attract only a limited number of immigrants.
1
Distance from major metropolitan areas appears to have a negative effect on the prospects of these smaller urban areas
(Polèse & Shearmur, 2002).
An important trend shaping perspectives on urban economic health in the 21 st
Century is the perceived “deindustrialization” of much of North America (Teaford,
1994). The actual manufacturing of goods has increasingly been shifted to locations
(generally overseas) where wages and other production costs are lower. In Canada, the proportion of all employment in manufacturing industries has fallen from 16.8 percent in
1986 to 13.9 percent in 2001. The decline in manufacturing employment has been particularly severe in North America’s industrial heartland (Polèse & Shearmur, 2006;
Wial & Friedhoff, 2006). Despite the strength of this trend, many local governments, as well as States and Provinces, continue to pursue economic development strategies that are based on securing an automobile assembly facility or other large manufacturing plant
(Voytek & Ledebur, 1991; The Economist , 2003).
In many locations, the decline in manufacturing has been partly offset by growth in Services industry employment, with higher order Business Services being the most attractive replacements.
2
These jobs pay well but typically require considerable education and training (Glaeser & Mare, 2001; Erickcek & McKinney, 2004; Duderstadt,
2005). As a result, they may not be a perfect substitute for lost manufacturing jobs that
3

often have relatively low educational requirements. The transition of displaced manufacturing workers to comparable quality jobs in the New Economy can be quite difficult.
Because of the importance of education and skills for these New Economy jobs, some economic development officials have begun to focus on human capital based strategies. In the early 1990s, Harvard’s Edward Glaeser and others (Glaeser et al ., 1992;
Feser, 2003) began to advocate economic development strategies based on investments in education and skills development. Rapid changes in technologies and work environments place a premium on workers who are not only well educated and skilled, but are also flexible and creative (Cook & Beck, 1991; Malecki, 1997; Glaeser & Mare, 2001;
Chapelle et al ., 2004).
Human capital is an important element of Richard Florida’s concept of the
“Creative Class” (2002, 2005). Unlike previous emphases on education and training as keys to human capital development, Florida advocates attracting existing talented individuals, who would in turn attract the 21 st
Century, New Economy jobs that would lead to prosperous communities (Eakin, 2002; Lever, 2002; Luciana, 2006; Scott, 2006).
Many academics have expressed doubts about Florida’s strategies. It has proven difficult to replicate Florida’s statistical results (Peck, 2005) or to demonstrate the correlation between Creative Class individuals and Economic Health (Malanga, 2004;
Scott, 2006; Reese & Sands, 2007). Nevertheless, local governments across North
America have embraced human capital theories. Both the State of Michigan and
Province of Ontario have attempted to incorporate them in their economic development strategies (Gertler et al ., 2002; Glazer & Grimes, 2005).
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Despite the widespread acceptance of Creative Class economic development strategies, the effectiveness of such policies remains unclear. If economic development policies based on attracting and retaining the creative class are actually effective, one would expect that cities with large creative class populations would be more prosperous than those urban areas still tied to the old economy. The knowledge economy and higher order services employment typically cluster in large metropolitan areas. Small urban centers may be able to compete in attracting creative workers if they are in relatively close proximity to a large urban center (allowing reasonably convenient opportunities for commuting or face to face contacts). These smaller centers may also offer lower rents and other business costs, making them attractive to the small entrepreneurial startup companies that are said to result from the presence of the Creative Class (Florida, 2005).
To shed greater light on contextual trends in the economies of Canadian cities, the following research questions are considered:
 Have Canada’s urban regions undergone deindustrialization over the past
15 years?

Have lost Manufacturing jobs been replaced by New Economy jobs?
 Do the peripheral areas of major urban regions enjoy any “spillover” benefits from these large urban areas?

What is the relationship between changing employment profiles and the
Economic Health of cities?

Is the presence of New Economy jobs a good predictor of future Economic
Health?
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The next section of the paper considers the restructuring of employment profiles of the three largest Canadian metropolitan areas, followed by an assessment of changes in the smaller metropolitan areas in these city regions. The following section explicitly considers the relationship between New Economy jobs and metropolitan economic well being. The paper concludes with a discussion of the public policy implications of these findings.
CONCEPTS
Before the data are presented, it is first necessary to define the terminology as used here. Clarification of the meaning of these terms is necessary to ensure that the analysis is replicable and the results have utility.
City Regions
In this paper, the term City Region is used to denote the subsystem of urban areas that surrounds major urban areas. This study focuses on the urban regions of Canada’s three largest metropolitan areas – Montréal, Toronto and Vancouver – and the smaller urban areas in their environs. Montréal, Toronto and Vancouver are important North
American metropolitan centers and included more than 42 percent of the Canadian population in 2006.
The mid-sized (population between 50,000 and 500,000) urban areas included in this study are those Census Metropolitan Areas (CMA) and Census Agglomerations (CA) that are generally within 100 kilometers of their large metro area.
3
The specific CMAs and CAs included in each region, along with their 2006 population are listed in Table 1.
Most of these urban areas enjoyed growth rates in the first half of this decade that were higher than the Canadian average of 5.4 percent. The Québec urban areas are primarily
6

characterized by manufacturing and public services, while three of the Ontario cities have diversified economies.
4 While each of these urban areas is sufficiently distant from major cities that they can function independently and not as suburbs, improvements in transportation and communications technology have integrated all of the urban areas into regional economies.
Table 1: Urban Areas by Region
Region
Montréal
Toronto
CMA/CA
Canada
Montréal
Granby
Drummondville
Saint-Hyacinthe
Saint-Jean-sur-Richelieu
Sherbrooke
Toronto
Brantford
Guelph
Kitchener
Oshawa
2006 Population Change 2001-
2006
31,612,897 5.4%
3,635,571
68,352
78,108
55,823
87,492
186,952
5,113,149
5.3%
8.4%
7.3%
2.9%
9.9%
6.3%
9.2%
124,607
127,009
451,235
330,594
St. Catharines-Niagara
Vancouver Vancouver
Abbotsford
Nanaimo
390,317
2,116,581
159,020
92,361
Victoria 330,088
Source: Statistics Canada, 2006 Census of Population.
5.5%
8.2%
8.9%
11.6%
3.5%
6.5%
7.9%
7.8%
5.8%
New Economy Jobs
Florida and his collaborators have tended to define creative occupations increasingly broadly, such that close to half of all employment might be included
(Florida, 2002; Gertler, et al
., 2002). “Core” creative occupations, which represent a much smaller proportion include engineers, design professionals (architects, landscape architects and industrial designers), policy analysts and consultants, and persons employed in the performing and visual arts (Florida, 2005). Arts employment may not
7

only be an indicator of creativity but it may also reflect community tolerance (willingness to accept different life styles) and serve as an indicator of quality of life (Markusen et al.
,
1999; Florida et al ., 2008).
There is no consensus with respect to what should be included in the definition of the New Economy jobs category. Choices with respect to which industries to leave in or to leave out can be determined as much by data availability as conceptual relevance.
There is likely no single “correct” answer. Unlike the definition of an index of economic well-being, the components selected to represent New Economy jobs may make considerable difference in the outcomes.
For this analysis, the selection of New Economy employment generally follows the conceptual framework provided by Gertler et al . (2002). Their research on the
Creative Class in Canada used broad Industry categories, including High Tech
Manufacturing, Higher Order Business Services, Knowledge Industries and the Arts.
They utilize specific North American Industrial Classification codes to gauge the size of the creative class in urban areas.
Available data from Statistics Canada are not sufficiently detailed to allow use of
Industry data for this analysis, especially in smaller urban areas. Privacy regulations preclude the reporting of specific numbers of employees when this would allow identification of employment at a specific firm. Consequently, Industry data are generally only available at a higher level of aggregation or are reported in ranges that do not allow for meaningful analysis of trends.
This difficulty has been addressed by using Occupation data from the Canadian
Census of Population. Although these data are collected from a sample of respondents,
8

they at least make it possible to obtain employment counts for all places. Comparisons of aggregated Industry and Census Occupation data suggest that there is no consistent bias that results from use of the Census data; there is both over and under representation in individual industries. These data are available for the 1991, 1996, 2001 and 2006
Censuses.
5
A major advantage of using Occupation data is that they allow a more precise indication of the number of New Economy jobs. Industry data indicate the total number of workers in a firm, including production workers, office support staff and the like.
Occupation data, on the other hand, describe what the worker does, rather than the characteristics of the employer firm. A comparison of the number of workers in
Manufacturing industries (NAICS 31-33) with the number of workers in occupations that are unique to manufacturing, processing and utilities (Census Division J) suggests that about half of the jobs in Canadian Manufacturing industries are not directly involved in production activities. Likewise, some New Economy workers may be employed in traditional industries.
6
Occupation data report employment by residence of the workers, rather than by location of the jobs. In theory, a community could have a large number of New Economy workers and no New Economy jobs (or vice versa). While such an extreme condition is unlikely, given that one of the selection criteria for the peripheral urban areas was proximity to the large urban center, commuting could distort the results to some degree.
Table 2 lists the Occupational categories used here along with the Industry employment categories used in the Gertler study. (A detailed list of Occupation codes is provided in the Appendix.) The most important differences are that High Tech
9

Table 2: Definitions of New Economy Employment
Higher Order Services
Engineers
Design Professions
Occupations in
Current Study
Business Services,
Consulting
Engineers, Computer
Occupations
Architects, Landscape
Architects, Planners,
Industrial Designers
Higher Education
Performing Arts
University Professors
Actors, Dancers,
Composers, Directors,
Musicians
Visual Arts
High Tech Manufacturing
Writers, Painters, Sculptors,
Photographers
Industry Employment
(Gertler et al .)
Research & Development
Computer Programming
Engineering
Architectural
Universities
Performing Arts Companies
Independent Artists, Writers
& Performers
Aircraft Parts, Computer &
Electronic Products,
Medicine Pharmaceuticals,
Surgical Appliances
Manufacturing is not a separate category in the present study; Gertler’s Arts category is divided into two categories here.
Economic Health
The economic health of a community can be measured by the economic wellbeing of the individuals and households that live there. Three variables were selected for inclusion in the Economic Health Index: median family income, employment rate (the complement of the unemployment rate) and the proportion of total income that does not come from government transfer payments. The last measure identifies the extent to which wages and other private sector sources (rents, dividends, and proprietor’s income) contribute to community income. While the latter two measures do not reflect
10

conventional usage, they offer the advantage of allowing all higher values to be interpreted more positively, thus making them consistent with the income measure.
7
Individual measures have been standardized as location quotients. A location quotient is the ratio of a local value (say income) to the same value for a larger area.
Values of unity indicate that the local area equals the larger area on this particular measure; values larger (or smaller) than one indicate that the local area has more (or less) than the base. Location quotients for the three largest metropolitan areas use the comparable national figures as a base; that is, the location quotient for Montréal compares Montréal CMA values to the Canada wide figure. For the smaller urban areas, the basis of comparison is the regional metropolis; for example, Granby is compared to
Montréal, Guelph to Toronto and Nanaimo to Vancouver.
EMPLOYMENT RESTRUCTURING IN MONTRÉAL, TORONTO AND
VANCOUVER
Between 1991 and 2006, the Canadian economy added more than 2.6 million jobs. The early 1990s saw little growth, but in each of the two subsequent five year periods there was job growth of about 1.25 million. The number of Manufacturing jobs in Canada increased by 120,000 between 1991 and 2001; most of these gains were lost in the next five years, however.
8
In the aggregate, the data suggest that Canada has experienced little in the way of deindustrialization. Manufacturing’s share of all jobs fell by just one percentage point over the 15 year period (Table 3).
Table 3 Manufacturing Jobs as a percent of the total, 1991-2006
Montréal
1991 1996 2001 2006 1991-2006
Change
10.25% 8.41% 8.10% 5.89% -4.36
11

Toronto
Vancouver
Canada
8.16%
5.33%
7.53%
Source: Statistics Canada.
8.32% 8.26% 7.42%
4.84% 4.71% 4.30%
7.63% 7.66% 6.50%
-0.74
-0.97
-0.97
Among the large city regions, both the Montréal and Toronto CMAs had above average proportions of their labor force in Manufacturing jobs in 1991; the Vancouver
CMA was more than two percentage points below the national average. By 2006, all three had experienced declines in the relative share of Manufacturing employment, with the largest loss (more than four percentage points) occurring in Montréal; most of the decline occurred in the last five year period. Vancouver, with the smallest share of its jobs in Manufacturing, had a decline of just less than one percentage point, while gaining about 2,500 Manufacturing jobs. The Toronto CMA gained some 25,000 Manufacturing jobs but still had a small relative decline, remaining about one percentage point above the national average.
Table 4: New Economy Jobs as Percent of Total, 1991-2006
Montréal
Toronto
Vancouver
Canada
1991
4.62%
5.92%
4.67%
4.00%
1996
5.72%
6.60%
5.33%
4.45%
2001
7.12%
8.77%
7.30%
5.82%
2006
6.57%
8.00%
7.08%
5.36%
1991-2006
Change
+1.95
+2.08
+2.41
+1.36
Source: Statistics Canada.
The number of New Economy jobs in Canada increased by 335,000 (59 percent) to 568,000 between 1991 and 2006. As a result, New Economy jobs’ share of the total increased from 4.0 to 5.3 percent. Within the New Economy jobs category, the largest gains occurred in the Design/Arts subcategory. These jobs increased from 12 to 18
12

percent of all New Economy jobs. Employment in cultural industries which is concentrated , primarily in larger cities increased (Coish, 2004).
The three large urban areas each include above average proportions of New
Economy jobs (Table 4).
9
Toronto is substantially ahead of the other two metropolises throughout the period. Although Montréal and Vancouver had about the same proportion of New Economy jobs in 1991, by 2006 Vancouver is clearly ahead, registering the largest gain among the three urban areas.
Figure 1 reflects the growing importance of New Economy jobs in Canada.
Nationwide, the ratio of Manufacturing to New Economy jobs fell from almost two to one in 1991 to five to four in 2006. In each of the large CMAs, the number of New
Figure 1: New Economy Jobs Net of Manufacturing Jobs, 1991-2006
0
-1
-2
-3
-4
-5
-6
-7
4
3
2
1
Montreal Toronto
Economy jobs exceeded that of Manufacturing in 2006. This shift occurred first in
Vancouver in 1996, followed by Toronto in 2001 and Montréal in 2006.
EMPLOYMENT RESTRUCTURING IN PERIPHERAL URBAN AREAS
Canada’s largest metropolitan areas have been able to gain above average proportions of New Economy jobs, while retaining much of their Manufacturing base.
Vancouver
Smaller urban areas, even the ones in close proximity to major centers, typically have not
1991
1996
2001
2006
13

fared as well in terms of attracting New Economy jobs. Even though all of the smaller urban areas recorded gains in New Economy jobs, many added fewer of these jobs between 1991 and 2006 than they did Manufacturing jobs. Given that these less populous urban areas typically began with higher proportions of Manufacturing jobs than the large CMAs or the Nation, the extent of diversification of the local economy is minimal.
Manufacturing’s share of total employment is substantially higher in the peripheral urban areas than in major cities (Table 6). In the Québec and Ontario small urban regions, Manufacturing accounted for between nine and 18 percent of total jobs in
1991. In British Columbia, Manufacturing’s share was substantially lower, between two and eight percent. Over the next 15 years, Manufacturing declined as a proportion of all jobs in each of the urban areas, with the exception of Guelph, Ontario. While most of the
Québec and British Columbia small centers had declines of less than a percentage point, in Ontario several areas experienced losses of more than three percentage points.
Oshawa and St.Catharines-Niagara in Ontario and Nanaimo, British Columbia were the only three urban areas where there was an absolute decline in Manufacturing jobs.
Granby, Québec continued to have the highest proportion of Manufacturing jobs and
Victoria, British Columbia the lowest.
Table 6: Manufacturing Jobs 1991-2006
Drummondville
Granby
Saint-Hyacinthe
1991 1996 2001 2006 1991-2006
Change
16.23% 18.24% 18.02% 14.73% -1.50
17.6%1 19.27% 21.06% 17.33%
12.68% 14.09% 15.46% 11.99%
-0.28
-0.69
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Saint-Jean-sur-Richelieu
Sherbrooke
Brantford
Guelph
Kitchener
Oshawa
St.Catharines-Niagara
Abbotsford
Nanaimo
7.50%
4.91%
Victoria 2.25%
Source: Statistics Canada.
10.60% 11.25% 11.73% 9.65%
9.14% 10.26% 11.57% 8.53%
15.71% 16.12% 17.09% 12.53%
12.61% 14.86% 14.34% 13.84%
14.52% 19.77% 13.90% 12.62%
12.75% 12.00% 10.35% 8.39%
10.88% 10.32% 9.45% 7.07%
7.45%
4.30%
2.19%
7.45%
3.73%
2.17%
7.15%
3.53%
1.87%
The peripheral urban areas generally had relatively small proportions of New
Economy jobs. Ten of the 13 had relatively fewer New Economy jobs in 1991 than the national average of four percent. Guelph, Kitchener and Victoria are the exceptions.
Over the next ten years, every small urban area, save Nanaimo, experienced a steady increase in New Economy jobs. As was the case with the three large CMAs, loss of
-0.95
-0.61
-3.28
+1.23
-1.90
-4.36
-3.81
-0.35
-1.38
-0.38 substantial numbers of Computer related jobs between 2001 and 2006 resulted in across the board declines in the number of New Economy jobs.
All of the smaller centers gained New Economy jobs between 1991 and 2006; increases of more than a percentage point occurred in Victoria, Kitchener, Guelph and St-
Jean-sur-Richelieu. New Economy jobs represented between two and seven percent of the total in 2006. The first three metros had the highest proportion of New Economy jobs in 1991. St-Hyacinthe was the only urban area where there was a relative decline, as a result of an increase of just 120 New Economy jobs. Victoria, British Columbia was the only metropolitan area in which New Economy jobs exceeded Manufacturing jobs.
Table 7: New Economy Jobs 1991-2006
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Drummondville
Granby
Saint-Hyacinthe
Saint-Jean-sur-Richelieu
Sherbrooke
Brantford
Guelph
Kitchener
Oshawa
St.Catharines-Niagara
Abbotsford
Nanaimo
1.51%
1.96%
Victoria 4.86%
Source: Statistics Canada.
1991
1.84%
1996 2001 2006 1991-2006
Change
2.18% 2.96% 2.36% +0.52
2.08% 3.27% 3.93% 3.01% +0.93
2.34%
2.34%
2.41% 2.73% 2.33%
2.97% 3.40% 3.35%
-0.01
+1.01
3.85%
1.95%
5.17%
4.32%
3.68%
2.40%
4.69%
3.04%
4.77%
3.44%
4.24%
2.41% 2.78% 2.75%
5.22% 6.91% 6.23%
5.13% 6.47% 6.17%
4.20% 5.25% 4.57%
3.00%
+0.39
+0.80
+1.06
+1.85
+0.89
+0.60
1.83%
2.52%
5.79%
2.78%
2.26%
7.70%
2.27%
2.58%
7.17%
+0.76
+0.64
+2.31
ECONOMIC HEALTH IN LARGE METRO AREAS
Table 8 illustrates the construction of the economic health measures for these areas in 1996. Toronto and Vancouver were above the national average for medial family incomre. Montréal recorded median family income that was about four percent below the national figure, resulting in a location quotient of 0.96. It was also the only one of the metro areas experiencing a double-digit unemployment rate in 1996. Government transfer payments were also slightly above the national average in both Montréal and
Vancouver.
Table 8: Economic Health Measures, 1996: Large Urban Areas.
Canada Montréal Toronto Vancouver
Median Family Income $46,951 $45,142 $52,959 $51,281 location quotient 0.96 1.13 1.09
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Employment Rate 89.9% location quotient
Private Income Sources 86.0%
88.8%
0.99
85.6%
90.9% 92.5%
1.00 1.03
89.6% 89.3% location quotient
Economic Health Index
0.99
2.94
1.01
3.14
0.97
3.10
Source: Statistics Canada, 1996 Census of Population
Over the course of the next ten years, Canada and its three largest metropolitan areas experienced positive changes in each of the economic health measures. Canadian median family income increased, while unemployment and government transfer payments as a proportion of total income declined. All three large urban areas experienced gains on each indicator. The Montréal CMA essentially gained parity with national figures for each of the variables to achieve an overall Economic Health index of
3.02 in 2006 (Table 9). Toronto also registered improvement in overall health, largely as
Table 9: Economic Health Indices, 1996-2006
Montréal
Toronto
1996
2.94
3.14
Economic Health Index
2001
2.97
3.20
2006
3.02
3.09
Vancouver 3.10 3.24 3.14
Source: Statistics Canada. a result of a 20 percent gain in median family income. Although the Vancouver area recorded gains in income, employment and private sector earnings, these did not match the national rate of improvement so that Vancouver’s overall Economic Health Index suffered a decline.
ECONOMIC HEALTH IN PERIPHERAL URBAN AREAS
It is perhaps not surprising that Canada’s three largest cities have attracted above average proportions of New Economy jobs and enjoy levels of Economic Health that are
17

also above the national average. But what about the nearby, smaller urban areas? Are these CMAs and CAs experiencing any positive benefits of their proximity to the major metropolitan areas? To test for these relationships, indices of Economic Health and New
Economy jobs were calculated for each of the 13 smaller urban areas. The base for each location quotient was the corresponding value for the regional metropolis; that is, incomes in the Québec peripheral urban areas are compared to that of Montréal, while in
British Columbia, the comparison is to Vancouver.
The peripheral urban areas around Montréal generally had Economic Health
Indices in 1996 that lagged Montréal; only Saint-Jean-sur-Richelieu had an index total of three. Over the next five years, all of the smaller urban areas enjoyed substantial increases in their Economic Health indices (see also Morazain, 2002). This advantage did not last, however; by 2006, all of the areas experienced a sharp decline.
Drummondville, which had the lowest Economic Health index of the Québec municipalities, was 0.14 below Montréal. Only Saint Jean-sur-Richelieu had a higher index score in 2006 than in 1996, although the difference is not great. The Montréal
Index values have been quite close to the national averages throughout this period, so that the smaller urban areas in Québec have essentially the same Economic Health indices as if they were being compared to national figures.
Table 10: Economic Health Indices, Montréal City Region, 1996-2006
Drummondville
Granby
Saint Hyacinthe
Saint Jean-sur-Richelieu
Sherbrooke
1996
Economic Health Index
2001
2.89
2.93
2.92
3.00
2.97
2.99
3.05
3.05
3.14
3.10
2006
2.86
2.91
2.91
3.04
2.94
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For the communities in Ontario, the relatively high Health Index for Toronto disadvantages them somewhat. Nevertheless, in 1996, Guelph and Oshawa had higher
Economic Health index scores, above three, with Kitchener not far behind. Over the next ten years, these urban areas experienced little change in their indices. (As (?) Toronto was experiencing growth, the peripheral areas were also experiencing substantial growth.) Brantford experienced the greatest change, as a result of its poor performance in the late 1990s and recorded the lowest Economic Health index of any of the 13 small urban areas.
Table 11: Economic Health Indices, Toronto City Region, 1996-2006
Brantford
Guelph
Kitchener
Oshawa
St. Catharines-Niagara
1996
Economic Health Index
2001 2006
2.88
3.09
2.99
3.08
2.88
2.80
3.09
2.97
3.06
2.85
2.80
3.10
2.99
3.08
2.85
Each of the peripheral British Columbia municipalities had an Economic Health
Index below that of Vancouver in 1996 (Table 12). Economic Health indices for both
Victoria and Abbotsford declined slightly between 1996 and 2001. Nanaimo, on the other hand, fell well behind the other urban areas and had the second lowest Economic
Health Index of all the three province’s peripheral urban areas in 2001. By 2006, however, Nanaimo had recorded the largest increase of any of the small urban areas.
Abbotsford and Victoria also recorded substantial gains.
Table 12: Economic Health Indices, Vancouver City Region, 1996-2006
Abbotsford
Nanaimo
1996
2.89
2.81
Economic Health Index
2001
2.85
2.60
2006
2.98
2.89
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Victoria 2.98 2.97 3.07
NEW ECONOMY JOBS AND ECONOMIC HEALTH
What is the relationship between New Economy jobs and Economic Health in these urban areas? Bivariate correlations between the proportion of New Economy jobs and Economic Health scores are positive and statistically significant in 1996 and 2006
(Table 13). The results are similar for all 16 metropolitan and urban areas combined, as well as for the 13 smaller metro areas considered separately.
Table 13 also presents the correlation coefficients for the different components of the New Economy jobs measures. In each case, the correlation is based on contemporary data; that is, 1996 Economic Health with 1996 Employment, 2001 Economic Health with
2001 Employment and so on. The percentage of Engineers (the largest single Occupation category) exhibited the strongest correlations in each of the Census years. Employment levels in Visual Arts and Performing Arts exhibited significant correlations only in 2006.
The proportion of Manufacturing jobs was not significant in any period.
Table 13: Correlations Between Economic Health and New Economy Jobs
(16 metropolitan and urban areas)
1996
Economic Health Index
Proportion New Economy Jobs 0.784**
2001
0.519*
2006
0.821**
Engineers 0.753** 0.607* 0.838**
Higher Order Services
Design
0.522*
0.514*
0.352
0.282
0.682**
0.755**
Visual Arts
Performing Arts
Proportion of Manufacturing
0.476
0.528
-0.332
*Correlation significant at .05
**Correlation significant at .01
0.148
0.203
-0.178
0.600**
0.650**
-0.422
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Table 14 presents correlations between the Economic Health Indices and a number of other variables. Population is significantly correlated with the Index only in
2006. The remaining variables in this table are aspects of the diversity and tolerance that are considered to be important to attracting and retaining the Creative Class (Florida,
2002). There is a significant relationship between the proportion of University graduates and Economic Health in both 1996 and 2006. While the proportion of immigrants is also significant in these two years, Visible Minorities are not significant in any year. (For correlations that do not include the three large metro areas, the Immigrant variable is no longer significant in any year.) The proportion of Same Sex couples (a surrogate measure for gay/lesbian population, which in turn is a surrogate for tolerance) is not significantly correlated in any period.
Table 14: Correlations Between Economic Health and Social Characteristics
(16 metropolitan and urban areas)
Population
University Graduates
1996
Economic Health Index
2001
0.470
0.685**
0.358
0.424
2006
0.644**
0.753**
Immigrants
Visible Minorities
0.567*
0.183
Same Sex Couples na
*Correlation significant at .05
**Correlation significant at .01
0.121
0.054
0.215
0.720**
0.238
0.238
The relationship between New Economy jobs and Economic Health would have greater value if it possessed some predictive power; that is, if knowledge of the proportion of current New Economy jobs provided some clues as to local Economic
Health at some point in the future. Table 15 presents the results of these correlations. The proportion of New Economy jobs in 1991 is significantly correlated with Economic
21

Health in all three subsequent periods. Lower, but still significant, correlations result from the 1996 New Economy jobs. There is again a strong correlation in the 2001to
2006 comparison.
Table 15 also suggests that there is considerable path dependency involved; there is a significant correlation between the health indices at different points in time. Simply put, high levels of Economic Health in any one year are likely to result in high levels of
Economic Health five and ten years later. The proportion of University graduates is a good leading indicator of Economic Health in 1996 and 2006. Not
Table 15: Predictors of Economic Health (16 metropolitan and urban areas)
New Economy 91
1996
1
0.790**
Economic Health Index
2001
0.539*
2006
0.815**
New Economy 96
New Economy 01
Health Index 96
Health Index 01
University 91 na na na na
0.691**
0.524* na
0.805** na
0.396
0.799*
0.813**
0.887**
0.639**
0.750**
University 96
University 01
Manufacturing 91
Manufacturing 96 na na
-0.461 na
0.434 na
-0.176
-0.129
0.753**
0.789**
-0.474
-0.250
Manufacturing 01 na na -0.489
1
1991 Economic Health Index data not available,
*Correlation significant at .05
**Correlation significant at .01 surprisingly, the proportion of Manufacturing jobs is negatively correlated with
Economic Health in later years, although none of the relationships are significant.
The foregoing analysis provides some answers to the initial research questions:
22

 Have Canada’s urban regions undergone deindustrialization over the past
15 years?
The data suggest that, at least in the Toronto and Vancouver urban regions, this is not the case.
In absolute terms, both of these urban regions experienced a net gain of
Manufacturing jobs. In the Montréal CMA, Manufacturing jobs declined by over four percentage points between 2001 and 2006. Perhaps more importantly,
Montréal lost more than 57,000 Manufacturing jobs, primarily in the last five year period.
In the peripheral parts of these city regions, the proportion of Manufacturing jobs declined in all but one instance (Guelph). The small cities with the greatest deindustrialization – Brantford, Oshawa and St.Catharines-Niagara – are in
Ontario and are the location of motor vehicle manufacturing operations. Thus, their Manufacturing declines are not surprising and are likely not over. For the
Montréal-centered city region, the proportion of Manufacturing jobs fell in each urban area. Have lost Manufacturing jobs been replaced by New Economy jobs?
Although technically there has been little opportunity to “replace” Manufacturing jobs (since most urban areas did not experience an absolute decline in these jobs), there has been significant growth in New Economy jobs in all three city regions.
Of the four urban areas that had a net loss of Manufacturing jobs, Montréal and
St.Catharines-Niagara gained a smaller number of New Economy jobs, resulting in net losses of 8,000 and 4,000 jobs, respectively. In Oshawa and Nanaimo,
23

added New Economy jobs more than compensated for losses of Manufacturing jobs, although the net increases were just 1,800 and 400. St-Jean-sur-Richelieu,
Kitchener and Victoria gained more New Economy than Manufacturing jobs.

Do the peripheral areas of these urban regions enjoy any “spillover” benefits from these large urban areas?
For the most part, the peripheral urban areas continue to have relatively higher proportions of Manufacturing jobs (most of which they have been able to retain) and generally lower proportions of New Economy jobs. Peripheral metro areas that began with relatively high proportions of New Economy jobs (Victoria,
Guelph and Kitchener) were the most successful in attracting more such jobs, suggesting an element of path dependency. There are other mitigating factors to consider, however. Guelph and Kitchener are within a (admittedly lengthy) commuting distance (70 to 80 kilometers) of Toronto; they are also the location of major universities. Victoria is anomalous because of its status as Provincial capital and its well developed tourist industry. Like Nanaimo, Victoria requires commuting by air or water to Vancouver. The five Québec peripheral metros gained only 2,650 New Economy jobs, well below the 49,500 jobs in this category that the Montréal CMA gained. Similar disparities exist in the other city regions. The small city with the greatest increase in New Economy jobs – St-
Jean-sur-Richelieu – is within easy commuting distance of Montréal (40 kilometers) and is increasingly serving as a “bedroom community.” In this case, the place of residence data may provide a less accurate description than would place of work data.
24


What is the relationship between changing employment profiles and the
Economic Health of these cities?
Relative to national measures of economic well being, all three of the large metropolitan areas have recorded improvement since 1996. The Economic Health
Index scores for Toronto and Vancouver hav e remained well above parity with the national figures in each census year. Montréal has also improved but remains close to the national average.
The peripheral urban areas in Québec and Ontario have generally been stable or experienced slight declines compared to Montréal and Toronto. Guelph and
Oshawa have consistently higher Economic Health scores than Toronto; Saint-
Jean-sur Richelieu surpasses Montréal. For Oshawa, however, this may change as the number of high paying automotive production jobs continue to decline. In
British Columbia, the smaller metros showed gains but only Victoria scored higher than Vancouver, and then only in 2006.
Overall, it would appear that cities with more New Economy jobs enjoy better economic health. The broad category of Engineering jobs is a significant correlate, but past health is also significantly correlated with future health, showing a trend of path dependency.
There was a lack of significant correlation between Economic Health and some of the other variables tested. The correlations between Economic Health and jobs in the Visual and Performing Arts were not significant. Diversity, at least as measured by the presence of same sex couples, was not significantly related to economic prosperity, as Florida has argued. Immigrants only appear to be a
25

factor when they are present in large numbers, suggesting a critical mass of this population is necessary.
Finally, significant correlations with Economic Health are generally found in relatively prosperous times (1996, 2006) but not in 2001. Possible explanations for this include: New Economy jobs may be less important than a community’s traditional job base during economic slowdowns, or the surge in the number of computer professionals in virtually every community (possibility as a result of
Y2K concerns) could have temporarily distorted the results.
POLICY ISSUES
What do these results indicate for economic development strategies that focus on attracting New Economy jobs to smaller urban areas? Is it possible then to conclude that increasing the proportion of New Economy jobs would provide smaller urban areas with an advantage in terms of future economic prosperity? Unfortunately, the answer is probably not. Although correlation analysis suggests that New Economy jobs may be reasonably good indicators of future economic health,
10
past Economic Health is also significantly correlated with future Economic Health. (This latter finding is perhaps a reminder to local planners and policy makers of how difficult it is to make positive changes in a community’s economic prospects.)
Moreover, the nature of New Economy jobs makes them problematic as potential economic drivers for small urban areas. Services employment is arguably less vulnerable to off-shoring than Manufacturing, but much of this employment benefits from face to face contacts (proximity to markets) and agglomeration (clustering); these characteristics are difficult to create from scratch (see Gottlieb, 2001; Elfring & Hulsink, 2003).
26

Similarly, while economic benefits may accrue to capital cities and university towns, basing one’s economic development strategy on attracting a major research university or a new seat of government does not seem practical.
With respect to other measures, serious questions of the direction of causation remain. For example, does an active arts scene cause economic prosperity or does a prosperous economy generate more opportunities for cultural activity? Although the evidence is limited, a plausible case could be made for the latter. This is an important question in the design of local economic development strategies.
While New Economy jobs may be key to economic prosperity, other factors may also be relevant (Senécal, 2002). Richard Florida (2002) suggests that factors such as tolerance and the presence of talented individuals (regardless of occupation) are essential to economic prosperity. Although Florida’s causal linkages have not been empirically verified (see Madden, 2001 and Sands & Reese, 2008), there is nevertheless an intuitive appeal to economic development strategies that emphasize tolerance of others and culture. In any case, including such factors may result in improved understanding of the potential for achieving local economic prosperity.
The focus on three city regions, no matter how major, may also skew the findings.
If indeed size and critical mass do matter, the conclusions based on the cities of Montréal,
Toronto and Vancouver may not present a realistic picture of the importance of New
Economy jobs across a broad range of communities. Nevertheless, it appears that the
New Economy is not, as some have argued, aspatial. Characteristics of places – economic, social and physical – will continue to be relevant to individual and corporate decisions about where they locate.
27

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APPENDIX: NEW ECONOMY JOB CATEGORIES
Engineering
C031 Civil Engineers
C032 Mechanical Engineers
C033 Electrical and Electronics Engineers
C034 Chemical Engineers
C041 Industrial and Manufacturing Engineers
C042 Metallurgical and Materials Engineers
C043 Mining Engineers
C044 Geological Engineers
C045 Petroleum Engineers
C046 Aerospace Engineers
C047 Computer Engineers
C048 Other Engineers
C070 Computer and Other Information Systems Professionals
High Order Services
B022 Professional Occupations in Business Services to Management
E031 Natural and Applied Science Policy Researchers, Consultants and Program Officers
E032 Economists and Economic Policy Researchers and Analysts
E033 Business Development Officers and Marketing Researchers and Consultants
E034 Social Policy Researchers, Consultants and Program Officers
E035 Education Policy Researchers, Consultants and Program Officers
E111 University Professors
Design
C051 Architects
C052 Landscape Architects
C053 Urban Planners
C152 Industrial Designers
Visual Arts
F021 Authors and Writers
F036 Painters, Sculptors and Other Visual Artists
F121 Photographers
Performing Arts
F031 Producers, Directors, Choreographers and Related Occupations
F032 Composers, Conductors and Arrangers
F033 Musicians, Singers
F034 Dancers
F035 Actors and Comedians
Statistics Canada, 2006 Definitions
31

1 Three-quarters of immigrants to Canada move to Montréal, Toronto or Vancouver (Malenfant et al .,
2007).
2 In part, this trend reflects the physical separation of manufacturing production functions from management, marketing and research activities.
3 Sherbrooke, somewhat further from Montréal, is the only exception. Actual travel times from the small urban areas to the large city vary considerably.
4 Coffey & Shearmur, 2006. St.-Jean-sur-Richelieu also fell in the diversified economy group.
St.Catharines-Niagara and Brantford are in the Basic Manufacturing/low-order services group. The British
Columbia urban areas are distinct from the others in that they have little manufacturing employment.
5 It is expected that occupation data using the prior definition will not be available for 2006 or later; thus, further analysis will necessitate using the new definitions only from 1996 and later.
6 The automotive industry is an example of this problem; although auto companies are usually considered
Old Economy manufacturers, the firms nevertheless employ large numbers of engineers, designers and other creative workers.
7 Two other economic health variables, labor force participation rate and proportion of low income persons, were tested but did not contribute much to the results.
8 It is also possible that Canada’s deindustrialization is simply lagging behind that of the United States, perhaps because Canada has been less dependent on Manufacturing.
9 Larger metropolitan areas also tend to have higher proportions of scientific and engineering employment; see, for example, Beckstead and Brown, 2006.
10 This analysis does not address the issue of economic growth , only the current level of health.
32