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Rural and Urban Employment Impacted Differently by COVID-19

Across Canada, the COVID-19 pandemic has led to unprecedented job losses. Employment fell by 0.4% (-73,500) in April and remains 2.2% (–422,750) below the pre-pandemic employment level in February 2020.

The loss and partial recovery in employment has followed different patterns based on where workers live. As of April 2021, large cities remain the furthest below their pre-pandemic level, down 2.6% (–367,500) from February 2020. Small cities have fared somewhat better, with employment now down 1.3% (–19,500). Rural areas, by contrast, have seen the speediest overall recovery, with employment now 1.1% (-35,750) below its pre-pandemic level. Note that all data discussed are not adjusted for seasonality.

Box 1: Defining Urban and Rural in Canada

There are different ways to identify urban and rural regions in Canada. This blog post identifies three types of geographies. Large cities are census metropolitan areas (CMAs)—areas with a population of more than 100,000. Small cities are census agglomerations (CAs)—areas with populations between 10,000 and 100,000. The remaining regions of the country—about 95% of land area and 20% of the population—are rural areas.


Charting job loss and recovery in urban and rural areas

In the initial phase of the pandemic, nearly three million jobs were lost between February and April 2020. These losses were shared relatively evenly between urban and rural regions. Large city employment declined by 16% (–2,204,500) during March and April, a larger contraction than the (still enormous) 14% decline in small cities (-224,500) and in rural areas (-452,000).

Employment then recovered much faster in rural areas and small cities than in large cities during the summer of 2020, reaching pre-pandemic employment levels by September. (See Figure 1.) However, through the autumn of 2020, the recovery outside cities stalled. As a result, the employment recovery gap between urban and rural areas began to narrow.

All regions then suffered another drop in employment as the second wave of COVID-19 took hold in December and January. Employment in rural and urban regions then recovered through to March. Most recently, employment has fallen once again for urban regions as public health restrictions were tightened in April.

The different recovery patterns are the result of several factors. As the large-scale shutdowns were lifted in May and June 2020, employment in goods-producing sectors (e.g., manufacturing, construction, agriculture) recovered quickly. Accordingly, rural areas, which have a higher proportion of jobs in goods-producing sectors, had a faster recovery. Additionally, the available data are unadjusted for seasonality, and the higher share of seasonal jobs (e.g., in agriculture, forestry, fisheries) in rural and small urban centres may help explain their jobs recovery in the summer and decline in the autumn.

Conversely, large cities recovered slowly but steadily. As businesses adjusted to online sales, remote work and curbside pickup, service-sector employment grew more resilient to public health restrictions. Although businesses in all regions have become more resilient, the greater share of service sector employment in large cities is an important reason for this pattern of recovery.

The Way Forward

Large cities suffered a disproportionately higher share of job loss and a slower employment recovery than other regions following the historic employment losses at the outset of the pandemic. Rural areas and small cities performed better early on, but large cities have largely caught up in recent months (based on data not adjusted for seasonality).

LMIC will continue to deliver more specific information on the impacts of COVID-19 and the recovery from it to support Canadians as they navigate the recovery and post-COVID world.

Headshot of Michael Willcox, LMIC Economist.
Michael Willcox is an Economist with LMIC. He contributes to the analysis and development of labour market information in Canada.

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