What a great way to feed the fear that is already prevalent out there just to shill a few papers. I just read the article from the Edmonton Journal talking about Alberta’s bankruptcy’s being up by 86%. The sub headline compares us to the national average of 34%.
So first off, it sucks that people are going into bankruptcy. It’s hard on them, it’s hard on their families, and it’s hard on the economy. I don’t wish it on anyone.
Now for the realities of it. Alberta went through what was possibly the biggest boom Canada has ever seen in the mid 2000’s. Money literally fell off trees here and that is why people flocked to the province, home values skyrocketed and spending went crazy. Add on top of that the entrepreneurial spirit folks in Alberta seem to have and the number of personally owned small businesses in the province that require a busy economy and you can see why bankruptcies have jumped here.
We became intoxicated with the boom and with such a young average age in the province all we knew was economic success. Alberta led the country in retail sales, we led the country in average wage increase, and we led the country in unemployment, the list just goes on and on about how successful we were. Now that the money train has stopped for many and the economy has slowed down, of course we will see the repercussions of people used to a lifestyle that couldn’t be maintained.
The biggest spike in bankruptcies just happens to be in Fort McMurray and the Peace Country which just happen to be driven by oil and gas. It would be interesting to see statistics about the average age of these bankruptcies. Perhaps it might show younger individuals who were making six digit annual wages and living incredibly well having to survive off of $1,600 monthly EI payments? When they have $1,000 monthly vehicle payments, you know that won’t last long.
On top of that, look at how many individuals have gone the route of contract work for companies to acquire the bigger monthly pay checks. During a boom, this was an incredible way to go. The downside of course is during a slowdown, many contract workers are the first to go. For the company these contracts don’t require big severance packages versus paying out long term employees. For the contract employees, suddenly they are faced with the situation where they don’t even qualify for unemployment insurance!
These are a few of the reasons why we are higher than other provinces, it’s not that things are worse here than anywhere else. The situation here in Alberta is actually far better than many other areas, we have just experienced a much larger swing of the pendulum so it is more visible statistically.
So in the end, maybe this was a wakeup call. Maybe we are reminded again about the 80’s and how we asked for another boom and promised not to piss it away again. Maybe we just come out if this a little bit wiser, create a better plan for our future and ask for one more boom?
