Welcome to Ontario, Canada’s Alabama. That’s not much of a marketing slogan, but it does capture the stakes of the massive productivity problem plaguing not just the province, but the entire country.
For decades, Canada’s productivity growth has lagged that of the United States. The problem has grown more dire since the pandemic, with this country’s real economic expansion not even keeping pace with population growth.
The (perhaps to some) shocking result: Ontario’s per capita gross domestic product is the same as that of the not-so-great state of Alabama, as University of Calgary economist Trevor Tombe recently wrote. Ontario’s performance almost qualifies as good news: five of the six poorest subnational jurisdictions are Canadian provinces – only Mississippi prevents Canada from sweeping the least prosperous category.
On the flip side, even oil-rich Alberta doesn’t crack the top 10. Or to look at the productivity challenge from a different perspective: labour productivity – output per hour worked – has declined for the past four quarters, erasing a half-decade of gains.