Canada’s boss economy: What explains the boom in management jobs?

Canada’s job market has defied the odds to expand even in the face of high interest rates. One surprising engine of that growth is bosses.

Managers have emerged as the fastest-growing occupation in the country, with the number of workers in management positions rising sharply after decades of companies flattening their corporate hierarchies in the pursuit of efficiency.

Now, managerial ranks are overflowing. Since early 2021, more than 500,000 new management jobs have been created, a 33-per-cent increase at a time when non-management jobs grew by only 8 per cent, according to an analysis of Statistics Canada’s monthly labour force survey data.

At least, that’s the picture the numbers paint. The reality may be far more complex.

Economists and human resources experts point to a number of competing explanations for what’s going on – from employers doubling up management roles as boomers retire to companies dispensing manager titles as a retention play to a dilution of the title itself as employers try to appease Gen Z workers starved for recognition.

It all adds up to a puzzle at the heart of Canada’s job market. And depending on which explanation is right, it’s a development that could have implications for Canada’s productivity crisis and the worsening skills gap.

The numbers show a widespread expansion of Canada’s managerial class, one that stretches across multiple industries and sectors. Data compiled by Statscan for The Globe and Mail show the industries with the biggest increase in managers from 2019 to 2023 were professional, scientific and technical services (up 59.4 per cent), but also wholesale trade (49.8 per cent), manufacturing (41.5 per cent) and finance (27.1 per cent).

Nor is the management boom being driven by the outsized growth of Canada’s public sector; the private sector has experienced a faster pace of management bloat than the public sector over that same period.

All told, managers account for 10.2 per cent of workers, up from 8.5 per cent in early 2021, reaching the highest share since 2009.

The U.S. has experienced a similar a management surge. Managers accounted for 6.9 per cent of all U.S. jobs in 2023, up from 5.5 per cent before the pandemic, according to the Bureau of Labor Statistics.

Former Bank of Canada governor Stephen Poloz has watched the rise closely and attributes the phenomenon to demographics.

Baby boomers are retiring in large numbers. As managers announce their retirement dates, Mr. Poloz said, companies are promoting their replacements early so the new managers can be mentored by the outgoing ones before they leave.

This doubling-up tactic has helped minimize succession risks in a tight job market, Mr. Poloz said, citing discussions he’s had with companies.

However the tag-team management approach could also be dragging down Canada’s already weak productivity levels.

“If you’ve got two people in a box for three months, or six months, or whatever the overlap is, then your productivity measure is going to temporarily slow,” he said. “I know there are lots of other reasons why productivity is low in Canada, but I do think it’s possible this is contributing to the bad news and it’s going to continue as long as you’ve got the baby boomers retiring.”

However, one of the frustrating things about the upswing in management jobs is there’s limited data to corroborate the trend, said Brendon Bernard, senior economist at job-posting website Indeed Canada. “You’re left wondering whether there are quirks in the data we don’t know about,” he said.

Mr. Bernard credited Bryan Yu, chief economist at Central 1 Credit Union in British Columbia, for one plausible theory: that people were promoted to management to justify pay hikes.

Canada’s labour market was exceptionally tight over 2021 and 2022, with the number of job vacancies soaring to one million and the unemployment rate falling to historic lows. This situation put considerable pressure on companies to retain their employees, who could potentially jump ship for better pay and working conditions.

Likewise, others argue title inflation is a widespread response to the rapid influx of Gen Z workers into the job market. As of last year, people in that age group, born between 1997 and 2012, already accounted for roughly one-fifth of Canada’s working-age population.

Those younger workers bring an expectation of more immediate, more frequent recognition of their experience than generations past, and employers have increasingly met that demand by assigning management-style titles, said Nita Chhinzer, an associate professor of human resources at the University of Guelph and an HR consultant.

“We’re using the term manager to now reflect that someone’s position has influence rather than authority,” she said. “It’s a recognition tool for people who are not actually managing people.”

Mr. Bernard pushed back on the concept of job title inflation – the idea that companies were giving their employees more impressive titles, but without the pay bump to typical managerial levels. Average hourly wage growth has been strong for managers, he noted.

As companies in various industries have grappled with remote work arrangements and the rise of AI, they’ve also boosted their tech teams, and many roles in tech carry the title manager even if they don’t involve oversight of subordinates, such as customer service managers, social media managers and financial planning and analysis managers.

The growing ranks at BCE Inc. may be a sign of that. At the company’s annual general meeting in May CEO Mirko Bibic said the telecom hired 7,500 new employees in 2023 and the first quarter of 2024, of which 20 per cent were management roles. Many new hires are high-tech talent, he added, such as software developers, cybersecurity and digital media specialists. “We’ve grown that group of employees 15 per cent, and they now represent over 25 per cent of management roles since 2020,” he said.

BCE declined to answer questions about management hiring.

The question then becomes how to measure this trend in the job numbers.

When people respond to Statscan’s labour force survey they are asked to describe their job, where applicable. From those answers, the agency assigns occupations through “automated or manual means with a quality control process,” said Andrew Fields, senior analyst with Statscan’s Centre for Labour Market Information, in an e-mail.

There is, however, no management box to tick and it’s possible Statscan is misinterpreting a rising proportion of jobs as management, based on respondents’ descriptions of their roles.

That might explain why some private sector measures of the job market don’t show this trend.

For example, researchers at Visier Inc., a Vancouver-based provider of AI tools for work-force planning and retention, have access to 20 million anonymized employee records worldwide. The company classifies managers as those individuals in an organization who actually have several direct reports, said Andrea Derler, research principal at Visier.

The Visier Benchmark database shows managers as a share of all employees have decreased in Canada to 9.3 per cent in early 2024 from 11.6 per cent in early 2019, according to data the company provided to The Globe and Mail which reflects 300 Canadian companies with more than 280,000 employees.

In fact, there are fresh signs some companies are taking the knife to their middle management levels.

As of March, Canada Goose Holdings Inc. had eliminated more than 25 per cent of senior management jobs, part of a broader cost-cutting effort. There was “too much management overhead and it led to additional complexity and siloed behaviour,” said Beth Clymer, the company’s president of finance, strategy and administration during a May call with investors.

If the management surge is an artifact of how statistics are gathered, it doesn’t change the fact that a growing number of workers see themselves in management-like roles, and that will “cause even more confusion in the labour market” and worsen the existing skills gap, Prof. Chhinzer said.

Nor is the rise in unemployment that’s under way likely to correct the situation, she said. Some workers who are laid off from these management positions will resist accepting jobs without a similar title.

“This is not a good sign for the overall labour market,” she said.