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Equal Pay Day

Every year, women around the world celebrate (angrily) the day their average full-time full-year earnings have caught up to men’s average full-time full-year earnings from the year before.

This year in the United States that day fell on April 12th. In Germany it was March 19th. In Switzerland it was February 24th.

In Ontario? Equal Pay Day** comes on April 19th.

This will be the third year that the Ontario provincial government officially recognizes Equal Pay Day, but this year there is cause to be hopeful that change is in the works. Not only has the Ontario provincial government been examining this issue, but the federal government has convened a special committee on pay equity.

To help us better understand gender pay gap dynamics in Ontario, Dr. Kendra Coulter at Brock University conducted a survey of retail workers, an already low wage and feminized sector. Sheetal Rawal, a lawyer and pay equity expert, contributed analysis and context, and I helped out with some numbers. Our whole report can be found on Dr. Coulter’s website, revolutionizingretail.org.

What we found will sound familiar to many who have worked on pay equity issues over the years. Managers are more likely to be men, lower wage occupations within retail are more likely to be women. Men are more likely to be employed full time, whether they are managers or cashiers. Even within retail locations, managers have gendered ideas about skills, expecting women to be better with customers or to be good at cleaning tasks, and expecting men to do more physical labour.

Equal Pay Day is calculated based on the difference in full-time earnings between men and women, but it turns out it is not just about wage equity, but also about “hours equity”.

The women who responded to Dr. Coulter’s survey wanted more hours, but were consistently frustrated with growing precarious work trends in their workplaces. They told us that unpredictable scheduling is the norm rather than the exception, and it is common for employers to hire more casual workers instead of giving current workers more hours. This persistent hours deficit combined with unpredictability takes a toll on workers, especially if they have unpaid work responsibilities as well.

As our report notes, “Workers are often expected to have full-time availability without any of the benefits (financial and otherwise) that come with being employed fulltime.”

Our report makes several recommendations about how the Employment Standards Act can address the gender gap in hours, including:

  • advance notice for work schedules,
  • minimum hours guarantees,
  • requiring that part-time, contract, and temporary workers be paid the same wage as full-time workers doing the same tasks, and
  • paid sick leave.

Provincial consultations on the gender pay gap ended on February 29th, 2016, and a report is expected from the steering committee in May 2016. Then we’ll need to mobilize to make sure the evidence gathered results in concrete changes for women in Ontario, and across Canada. Otherwise, we’ll be waiting another 228 years for the wage gap to close on its own.

Ain’t nobody got time for that.

**Your own personal Equal Pay Day may vary significantly, based on a variety of factors. The Labour Force Survey gives us some insight into the pay gap for new Canadians and Aboriginal workers living off reserve.  The CCPA in Ontario have calculated that women who are landed immigrants earn $21,000 less per year than non-immigrant men (39% pay gap), and Aboriginal women earn $31,000 less per year than non-Aboriginal men (57% pay gap). We desperately need better data on the pay gap for racialized workers and workers living with disabilities.

“Signing Trade Deals” is NOT Synonymous with “Promoting Trade”

The fine folks at the Institute for Research on Public Policy have undertaken an important and eclectic review of Canadian trade policy. They have marshaled 30 contributions from researchers addressing all aspects of Canada’s recent trade performance, and how we can improve it. The contributions will eventually be published in a single volume, Redesigning Canadian Trade Policies for New Global Realities, edited by Stephen Tapp, Ari Van Assche and Robert Wolfe (part of the IRPP’s “The Art of the State” series). But in the meantime individual chapters are being electronically released on their own. One recent and especially informative contribution was Koen De Backer and Sebastien Mirodout’s review of global supply chains and how Canada is being sidestepped (on both the supply and the demand sides) by that important change in trade patterns.

The IRPP invited me to contribute to the project, and I chose to develop an empirical examination of Canada’s disappointing international trade performance since the turn of the century — highlighting the seeming contradiction between those lousy results, and the government’s simultaneous ambitious effort to sign as many free trade and investment agreements as possible. If these deals are the key to trade success, why is it that the more of them we implement, the worse our trade becomes? Perhaps the deals are doing more harm than good.  And perhaps there are other factors holding back our exports, rather than “lack of free access to foreign markets.”

Here is the link to my full chapter on the IRPP site. And below I post a summary of my findings (which I also presented this week, via videoconference from Sydney, to the Senate Standing Committee on International Trade). Read more »

Using Data to End Homelessness in Calgary

Over at the web site of the Calgary Homeless Foundation, I’ve written a blog post titled “Using Data to End Homelessness in Calgary.”

The link to the English version is here; the link to the French version here.

Corporate rights masquerading as trade (again)

Anti-democratic investor rights deals are in the news again, thanks partly to a Communications Workers of America & Trade Justice Network event that brought Nobel prize winning economist Joseph Stiglitz to Canada. Professor Stiglitz pronounced the Trans-Pacific Partnership the “worst trade deal ever”, adding that provisions allowing multi-nationals to sue governments are particularly toxic.

Professor Gus van Harten pointed out that enacting the CETA and the TPP would dramatically increase the number of corporations that are allowed to sue Canadian governments. Canada is already the most sued nation under various investor state dispute settlement mechanisms. Under NAFTA, Canada has settled 4 investor claims for a cost of $150 million, lost 3 cases for a cost of about $48 million, and 7 cases are still ongoing as of 2015.  The problem with corporations suing governments is not only the cost, but the regulatory chill.

And Pia Eberhardt told us that the changes to CETA’s investor state dispute settlement mechanism didn’t fix the basic problems, calling it the zombie ISDS. She said that Canada’s experience with NAFTA was a big part of the reason Europeans were so mobilized against including similar mechanisms in their own deals.

The Broadbent Summit also hosted a panel on “The Free Trade Charade”, where Michael Geist, Ianik Marcil, Pia Eberhardt, and I explained why there was very little benefit to joining the TPP, but lots of risks.

The other reason that trade deals are in the news is because the House of Commons Standing Committee on International Trade wants to hear your views on the TPP. You are encouraged to send them a 1,500 word brief on how the TPP will impact you and your community at ciit-tpp-ptp@parl.gc.ca no later than April 30, 2016.

P.S. If you missed the Making Sense of the TPP event held at the University of Ottawa on April 1, the video is is available at: https://www.policyalternatives.ca/newsroom/updates/what%E2%80%99s-big-deal-understanding-trans-pacific-partnership.

It includes the keynote address by Nobel-prize winning economist Joseph Stiglitz.

The morning panel included:

  • Gus Van Harten, Associate Professor – Osgoode Hall Law School – “Who has benefited financially from special privileges in the TPP for foreign investors in ISDS?”
  • Meghan Sali, Digital Rights Specialist, Open Media “IP, copyright and Canada’s digital future”
  • Scott Sinclair, Senior Researcher, Canadian Centre for Policy Alternatives Trade and Investment Project “Democratic deficit: the TPP’s questionable legitimacy”

The afternoon panel included:

  • Professor Ron Labonte, Canada Research Chair Globalization and Health Equity and Ashley Schram “The TPP and health. Few gains, some losses and many risks”
  • Jeronim Capaldo, Research Fellow Global Development and the Environment, Tufts University “Unemployment, Inequality and other Risks in the TPP”
  • Steven Shrybman, Goldblatt Partners “Does the TPP really advance labour rights?”
  • Pia Eberhardt, Researcher and Campaigner, Corporate Europe Observatory “Why are Europeans concerned about TPP’s little brother, the CETA?”

This event was hosted by the Trade Justice Network, CWA/SCA Canada, and the University of Ottawa’s School of Epidemiology, Public Health and Preventive Medicine, and The School of International Development Studies.

Comparing Fiscal Federalism in Canada and Australia

One interesting topic for a Canadian living in Australia is the manner in which fiscal and social responsibilities are divided between the levels of government.  Both countries are big, regionally diverse, and resource-rich (with all the pluses and minuses that entails).  As in Canada, Australian states are largely responsible for the big-ticket social programs: including health care, hospitals, and education.  The federal (or Commonwealth) level retains some direct social funding responsibilities, however.  For example, the Commonwealth government provides direct operating grants for schools (including, unfortunately, to the private schools that serve about one-third of Australian primary and secondary students).  The federal government also pays directly for Australia’s progressive pharmaceutical benefits scheme (which provides low-cost prescription drugs).

The revenue side of the equation, however, is much more centralized than in Canada.  Read more »

Mixed bag for EI in Budget 2016

The 2016 Budget announces some much needed improvements to Employment Insurance, and leaves room for more changes in the near future. The changes announced in the budget are largely positive, but many details are still missing, and some stinkers from Harper are left unchanged.

The Good …

Significantly, the government will reduce the 910 hours threshold for new entrants/re-entrants as of July 2016. All workers within a region will have the same entrance requirements – between 420 hours and 700 hours, depending on the local unemployment rate. This change will be implemented 6 months earlier than promised in their election platform, and will be a meaningful change for young workers, recent graduates, and new Canadians. (Grade: A+)

Another significant announcement is $106 million over two years for front line staff. In their election platform, the Liberals had committed to reducing EI wait times, but had not allocated any funding for that purpose. This budget provides a one year increase of $19 million to help Service Canada meet increased demand for processing. It also provides $73 million over two years for increased staffing at EI Call Centres, and $14 million over two years to “promote compliance with program rules”. Mostly good, but in my experience, face-to-face discussions with well-trained staff near the beginning of claims are the best way to promote compliance with program rules. (Grade: A-)

The budget will extend the duration of EI regular benefits by 5 weeks, up to a maximum of 50 weeks of benefits, for claimants whose primary residence is in one of the 12 EI regions with the sharpest increase in unemployment. The extension will be available for a year starting in July 2016, and will apply retroactively to all eligible claimants as of January 4, 2015. The government will also offer an additional 20 weeks of EI regular benefits to long-tenured workers who reside in those same 12 EI regions, up to a max of 70 weeks of benefits.  This too will be available for a year, and applied retroactively.

While this benefit extension will be significant for many workers, many others will fall through the cracks. Those who worked in affected regions but returned home to look for work will not qualify, and younger workers are unlikely to qualify for the 20 week extension offered to long tenured workers. Long -tenured workers must have paid into the EI program for the past seven out of ten years, and over the past five years must have received 35 weeks or less of EI benefits. About 20 – 25% of EI recipients fall into the long-tenured category. (Grade: B)

In a positive step, the maximum duration of work-sharing agreements will be extended from 38 weeks to 76 weeks. I encourage the government to work with employer and worker groups to increase awareness of this program, as it can be very effective but take up is low. (Grade: A+)

The government will extend the current version of the working while on claim pilot until August 2018. This pilot allows workers to keep 50% of their earnings from employment, up to a maximum of 90% of their weekly insurable earnings. All workers will also have the option to fall under an earlier pilot. Under the alternate working while on claim pilot, workers may keep all of the first $75 earned and have earnings above that amount deducted dollar for dollar from their EI benefits. This alternative pilot may work better for low wage workers with opportunities for part-time work. (Grade: A-)

As promised in their election platform, the two-week waiting period for EI benefits will be reduced to one week, starting January 1, 2017. This change does not add to total benefits, it simply starts the claim period one week earlier. I think this money could be better spent elsewhere in EI, but it was an election platform promise. (Grade: A)

The Mixed Bag …

Budget 2016 promises to reverse job search requirements by claimant category introduced by the Conservative government in 2012, but maintains the three claimant categories: frequent claimants, occasional claimants, and long tenured workers. Since one of the requirements to be “long tenured” is seven years of EI contributions, this automatically excludes younger workers.  (Grade: D)

Other elements of Harper’s cuts to EI are not addressed in this budget, such as changes to the appeals process or changes to the number of EI regions in PEI, Yukon, Nunavut, and the Northwest Territories. This is certainly not what workers expected when we called on the federal government to undo the Conservative EI changes that were punitive to workers. (Grade: D)

Despite some expansion of benefits, this budget predicts a $1.7B accumulated surplus in the EI Account by December 2016. If you’re looking for stimulus, money in workers’ pockets is the most effective route, and there was enough money in the EI Account to make that happen. It’s disappointing that opportunity was wasted. (Grade: D)

The budget also forecasts a seven year break even rate at 1.61 per $100 of insurable earnings. This premium level does not take into consideration the promised expansion of benefits for compassionate care leave, or parental leave. Since the new premium rate is set to take effect on January 1st, 2017, it’s hard to know what that means. Will they figure out the details of the new programs before then, and then announce a new rate? Will they let the EI Account go further into deficit in 2017 and then raise rates later on if required? Unknown.

The takeaway? So much better than Harper, but still lots of work to do. And I expect that Atlantic Canadian MPs are going to be hearing an earful over Easter.

February Labour Force Woes

The unemployment rate is up again this month, to 7.3%, with 1.4 million workers looking for jobs in February. A loss of full-time work was partly replaced by part time positions. A disproportionate percentage of last year’s growth came from precarious self-employment.

Remember those heady days when we could say that at least Canada’s unemployment rate was lower than the U.S.? Yeah. Adjusted to U.S. concepts the Canadian unemployment rate is 6.2%, compared to their 4.9%.

Well, all is not lost. The Alternative Federal Budget was released yesterday, and it included some pretty key investments to create jobs, boost economic growth, lower income inequality, and lift people out of poverty.

While there are many great suggestions in the AFB (fully costed, with a distribution impact assessment), the job numbers today show that improvements to Employment Insurance are particularly urgent. And with EI, skills training and supports to help workers adjusting to shifts in the economy.

Saskatchewan, my home province, lost 7,800 jobs in February, and 6,000 more workers left the labour market. Alberta has lost more than 50,000 full time jobs over the past year. Having lost high wage jobs in the natural resource industry, many are wondering what comes next.

This is why the labour movement talks about a just transition. Individual workers shouldn’t have to bear the brunt of economic restructuring on their own. A strong social safety net, skills training programs, and thoughtful social and physical infrastructure investment can cushion the blow for workers now, and speed the transition to a more prosperous future.

Go read the AFB, it’s time to move on.

2016 PEF Student Essay Contest is Open!

Please use this submission form. You can download a poster (English, French) here — please help us out and post one in your department.

2016 PEF ESSAY CONTEST RULES

Deadline: 2 May, 2016

All entrants receive a complimentary 1-year membership in the Progressive Economics Forum.

ELIGIBLE ENTRANTS
➢ Open to all Canadian students, studying in Canada and abroad, as well as international students presently studying in Canada. All entrants receive a complimentary 1-year membership in the Progressive Economics Forum.
➢ The definition of “student” encompasses full time as well as part time students.
➢ Students eligible for the 2016 competition must have been/be enrolled in a post-secondary educational institution at some point during the period of May 2015 – May 2016.

LEVELS OF COMPETITION
There are two levels of competition
➢ One for undergraduates
➢ One for graduates*
*Note: Those who have previously completed an undergraduate degree or graduate degree, and are returning to do a second undergraduate degree will only be considered for the graduate student competition. The same holds for student who spend part of the academic year in a graduate program.

CONTENT OF THE ESSAY
➢ Entries may be on any subject related to political economy, economic theory or an economic policy issue, which best reflects a critical approach to the functioning, efficiency, social and environmental consequences of unconstrained markets.

ELIGIBLE SUBMISSIONS
Eligible entries will be…
➢ …sent by email at the latest on May 02, 2016, to:
essaycontest@progressive-economics.ca
➢ …the only submission by the author(s) (i.e., one submission per person)
➢ …between 20-40 pages in length, and typed in 12-point font, double spaced
➢ …referenced to academic standards (including any data)
➢ …written in either English or French
➢ …original, single-authored essays that do not infringe upon the rights of any third parties
➢ …accepted on re-submission once
➢ …accompanied by a signed scanned file of the completed PEF Essay Contest Submission Form.

Entrants consent to having the Progressive Economics Forum publish essays from winners and those receiving honourable mention. Each applicant will submit a valid email and postal address for correspondence.

ADJUDICATION
➢ A panel of judges selected and approved by the Progressive Economisc Forum will judge entries.
➢ Entries will be judged according to the following criteria: substance and originality, writing style, composition, and organization.
➢ The Progressive Economics Forum reserves the right not to award a prize or any prizes where submissions do not meet contest standards or criteria.

WINNING SUBMISSIONS
➢ The winning essays will be announced at the Annual General Meeting of the PEF.
➢ A cash prize of $1,000 will be awarded the winner of the graduate competition; and $500 will be awarded to the winner of the undergraduate competition.
➢ The winning essays will be published on the PEF website.
➢ Judges’ decisions are final.

*******

2016 Concours de textes étudiants

Date limit : le 2 mai 2016

Qui peut participer ?
➢ Ouvert à tous les étudiants canadiens, qui étudient au Canada ou à l’étranger, ainsi qu’aux étudiants étrangers étudiant au Canada. Tous les participants deviennent gratuitement membres du Progressive Economics Forum pour un an.
➢ Le terme « étudiant » couvre les étudiants à temps plein et les étudiants à temps partiel.
➢ Pour être éligible à l’édition 2016 du concours, un étudiant doit avoir été ou être inscrit dans une institution post-secondaire à un moment donné pendant la période allant de mai 2015 à mai 2016.

Niveaux de compétition 

Il y a deux niveaux de compétition :
➢ Un pour les étudiants prégradués
➢ Un pour les étudiants gradués*
*NB: Ceux qui ont déjà complété un programme prégradué ou un programme gradué et qui retournent faire un deuxième programme prégradué ne peuvent participer qu concours qu’au niveau gradué. C’est la même chose pour tout étudiant ayant passé une partie de l’année dans un programme gradué.

Contenu du texte
➢ Les textes peuvent porter sur tout sujet relié à l’économie politique, la théorie économique ou une problématique en lien avec des politiques économiques, qui reflètent une approche critique sur le fonctionnement, l’efficience, et les conséquences sociales et environnementales des marchés libéralisés.

Pour être accepté, un texte doit…
➢ … être envoyé par courriel, au plus tard le 2 mai 2016, à l’adresse suivante : essaycontest@progressive-economics.ca
➢ … être le seul texte envoyé par le(s) auteur(s) (un texte par personne).
➢ … avoir entre 20 et 40 pages, tapé dans une police de taille 12 points, à interligne double.
➢ … avoir des références écrites selon les standards académiques (incluant les données)
➢ … être écrit en anglais ou en français
➢ … être un texte original, avec un seul auteur, qui n’enfreint pas les droits d’auteurs d’une tierce partie.

➢ … n’avoir été soumis au maximum qu’une fois auparavant (donc un texte peut être soumis un maximum de deux fois)
➢ … être accompagné par une fiche d’inscription pour le concours de textes du PEF complétée, signée et numérisée.

Les participants acceptent que le Progressive Economics Forum publie les textes des gagnants et de tout autre participant recevant une mention d’honneur.

Tout participant devra soumettre une adresse courriel qui fonctionne, ainsi qu’une adresse postale pour fins de correspondance.

Jugement
➢ Un panel de juges choisis et approuvés par le Progressive Economics Forum va juger les textes soumis.
➢ Les textes seront évalués selon les critères suivants : substance, originalité, style, l’organisation et la cohérence de l’ensemble.
➢ Le Progressive Economics Forum se réserve le droit de ne pas décerner un prix, ou quelque prix que ce soit, si aucun texte ne remplit les critères ou n’atteint les standards.

Textes gagnants

➢ Les gagnants seront annoncés à l’Assemblée générale annuelle du PEF.

➢ Un prix de $1,000 sera attribué au gagnant du concours pour les étudiants gradués et $500 sera attribué au gagnant du concours pour les étudiants prégradués.
➢ Les textes gagnants seront publiés sur le site internet du PEF.
➢ Les décisions des juges sont sans appel.

 

Working in the Homeless-Serving Sector

Over at the web site of the Calgary Homeless Foundation, I’ve reviewed an excellent new book written by Professor Jeannette Waegemakers Schiff.  The book is written for people who do ‘front line’ work with homeless persons.

The link to the English version of my review is here, while the link to the French version of my review is here.

Le budget de 2016, la stimulation économique, et l’AE

Déclaration commune des groupes communautaires et syndicaux sur le budget de 2016, la stimulation économique et l’AE

Nous exhorter le gouvernement à agir rapidement et de façon décisive pour rétablir le régime d’assurance-emploi (AE) du Canada.

Plus précisément, il est crucial que le budget de 2016 assure une stimulation économique et prépare le pays à affronter d’éventuelles tempêtes économiques. Comme l’a confirmé une récente étude fédérale, l’AE est le plus puissant stabilisateur automatique, car elle réduit jusqu’à 14 % les pertes de PIB et d’emplois lors de récessions. Or, des années de compressions ont enlevé à l’AE une grande partie de sa capacité de stabilisation, puisque seuls 40 % des personnes en chômage reçoivent désormais des prestations.

Nous recommandons que le gouvernement reporte toute décision portant sur les modifications des cotisations et amène, sans tarder, les nécessaires améliorations à l’AE. Ces améliorations auraient dû être apportées depuis longtemps. Si elles sont incorporées au budget de 2016, elles auront en outre un vigoureux effet de stimulation économique :

  1. Annuler les modifications apportées à l’AE en 2012-2013. Ces modifications comprennent, sans s’y limiter, les nouvelles règles punitives et discriminatoires sur la recherche d’emploi; le calcul défavorable des « meilleures semaines de rémunération » des travailleurs et travailleuses à faible revenu; l’élimination du projet pilote des prestations prolongées; la diminution des prestations des personnes qui acceptent un travail occasionnel pendant une période de prestations; et la création pour des raisons politiques de nouvelles régions de l’AE dans l’Île-du-Prince-Édouard et dans le nord du Canada.
  1. Accélérer les améliorations prévues de l’AE. Elles comprennent la promesse de réduire la période d’attente à une semaine et la réforme du calcul de la période de référence, fondé sur les heures de travail, afin d’élargir l’accès aux prestations et de rétablir des périodes de prestations raisonnables. L’élimination de la règle des 910 heures applicable aux nouveaux immigrants, aux jeunes travailleurs et travailleuses et aux parents qui redeviennent membres de la population active serait un premier pas important, mais d’autres mesures sont également nécessaires et urgentes. L’AE doit assumer le rôle qu’on lui a donné, surtout dans un marché du travail débordant d’emplois précaires, temporaires et à temps partiel et qui, de surcroît, risque de subir un ralentissement.
  1. Régler sur-le-champ les problèmes généralisés que posent la prestation des services d’AE et les appels des décisions sur l’AE. Les niveaux de dotation et les services en personne ont grandement diminué, ce qui décourage les travailleurs et les travailleuses à présenter une demande de prestations. De plus, le système d’appel a été affaibli par la création du Tribunal de la sécurité sociale, issue des modifications apportées en 2012. Le système d’appel doit faire l’objet d’une réforme fondamentale et le rôle des employeurs et des syndicats doit être rétabli.
  2. Créer un Compte d’AE indépendant et voir à ce que les cotisations d’AE servent exclusivement à financer des programmes d’AE. L’excédent prévu pour 2016 devrait servir à financer les améliorations susmentionnées.

Au nom du Groupe de travail interprovincial sur l’AE :

Unemployed Workers Help Centres, Saskatchewan

Fédération du travail de l’Alberta

Community Unemployed Help Centre, Winnipeg

Coalition Good Jobs for All, Toronto

Congrès du travail du Canada

Coalition de l’Est du Québec

Fédération des travailleurs et travailleuses du Québec

Mouvement autonome et solidaire des sans-emploi (MASSE)

Confédération des syndicats nationaux

Centrale des syndicats du Québec

Centrale des syndicats démocratiques

Alliance de la Fonction publique du Canada – Atlantique

Fédération du travail de la Nouvelle-Écosse

Coalition du Nouveau-Brunswick contre les coupures à l’Assurance-emploi

Fédération du travail de Terre-Neuve-et-Labrador

PEI Coalition for Fair EI

… et autres.

 

The Budget, Stimulus, and E.I.

A coalition of community and labour organizations have come together to present their views on necessary EI reforms as part of the pre-budget process.

Joint Community and Labour Statement on the 2016 Budget, Stimulus, and E.I.

We urge the government to act quickly and decisively to restore the integrity of Canada’s EI social insurance system.

In particular, it is vital that the 2016 Budget provide economic stimulus and be at the ready as the country prepares for difficult economic storms. As an earlier federal study found, EI is ‘the single most powerful automatic stabilizer’ reducing both GDP and job losses by up to 14% during recessions. Much of that earlier capacity has been lost with only 40% of the unemployed now receiving EI benefits after years of repeated cutbacks.

We recommend the government delay any decision on premium changes and immediately begin the job of making much-needed improvements to EI. All are long overdue but will now also serve as strong economic stimulus in the 2016 Budget:

1. Repeal the 2012/13 EI changes. This includes but is not limited to the punitive and discriminatory job search rules, a detrimental ‘best weeks’ calculation for low income workers, removal of the extended benefit pilot project, erosion of the ‘working while on claim’ benefit for those taking casual work while unemployed, and the politically-motivated addition of new EI regions in Prince Edward Island and Canada’s North.

2. Move up EI improvements. This includes the promised 1-week waiting period and reforms to the EI Hours System that will expand access and restore reasonable benefit durations. The elimination of the 910-hour rule for new immigrants, young workers, and parents re-entering the labour force is an important down payment. But other reforms are urgently needed. EI must be allowed to do the job it’s supposed to do in a labour market overflowing with precarious, temporary and part-time jobs and now facing a downturn.

3. Immediately address rampant problems with EI service delivery and appeals. Staffing levels and in-person services have seriously declined, discouraging workers from pursuing a benefit claim. The appeal system is also suffering with the Social Security Tribunal that was introduced with the 2012 changes; the model requires fundamental reforms and restoration of the business-labour role.

4. Ensure there is an independent EI Account and that EI contributions are used exclusively to fund EI programs. This includes the projected 2016 surplus, which should be used to pay for the highlighted improvements.

On behalf of the Inter-provincial E.I. Working Group:

Unemployed Workers Help Centres, Saskatchewan

Alberta Federation of Labour

Community Unemployed Help Centre, Winnipeg

Good Jobs for All Coalition, Toronto

Canadian Labour Congress

Coalition de l’Est du Québec

Fédération des travailleurs et des travailleuses du Québec

Mouvement autonome et solidaire des sans-emploi (MASSE)

Confédération des syndicats nationaux

Centrale des syndicats du Québec

Centrale des syndicats démocratiques

Public Sector Alliance of Canada – Atlantic

Nova Scotia Federation of Labour

New Brunswick Coalition Against EI Cuts

Newfoundland and Labrador Federation of Labour

PEI Coalition for Fair EI

… and others.

 

L’itinérance au Canada: Sa croissance, les réponses politiques, et le plaidoyer

Le 1er février, j’ai fait une conférence sur l’itinérance adressée aux étudiants du séminaire d’études supérieures de monsieur Steve Pomeroy à la School of Public Policy and Administration à l’Université Carleton. Le thème de ma présentation a été l’émergence de l’itinérance au Canada en tant que domaine politique publique pressant dans les années 1980. J’ai parlé la croissance de l’itinérance, les réponses politiques et le plaidoyer. Mes diapositives de la présentation peuvent être téléchargées ici.

J’ai commencé à travailler dans le secteur de l’itinérance en 1998 quand j’ai commencé à travailler dans un refuge d’urgence pour les sans-abri. J’ai passé 10 ans à faire le travail auprès des personnes sans abri à Toronto. (J’ ai également écrit un rapport sur l’itinérance à Toronto en 2009.)

Je m’excuse pour la nature quelque peu Toronto-centrique du présent blog. Puisque beaucoup de mon expérience dans le secteur de l’itinérance a eu lieu à Toronto, ce blog va, sans aucun doute, omettre d’importants développements qui ont eu lieu dans d’autres parties du Canada.

Voici 10 choses à savoir:

1. Entre 1980 et 2000, le nombre de personnes qui dormaient dans les refuges d’urgence pour les sans-abri à Toronto sur une base quotidienne a augmenté de 300%. Je pense que ce phénomène a contribué à la croissance des ressources publiques dans l’itinérance.

Read more »

Political Reality and Climate Policy: A Response to Mark Jaccard

Mark Jaccard’s article in Policy Options has generated a lot of interest. It is a provocative article that challenges the economic orthodoxy that prioritizes carbon pricing above all else. Jaccard calls for a host of “smart” regulations that progressively introduce zero-emission technologies within specific sectors such as vehicles, electricity, housing, and appliances. “Political reality” is the reason he calls for this broader mix of regulatory policies, usually grudgingly accepted by economists as “second best”.

It is refreshing to see an economist recognizing the need for a political analysis. Yet, Jaccard does not explain the dynamics that cause some regulations to be more politically successful. Regulatory strategies can encounter the same difficulty as carbon pricing. If the benefits of environmental improvements are spread across a large number of people, and regulatory costs are borne by a powerful few, the powerful losers tend to block the policies through political mobilization. Regulatory policies are sustainable when there are clear beneficiaries who can mobilize politically. Insights from political science discuss the role of positive feedback between policies and the political coalitions that support those policies. How to create political coalitions and political bargains is the key question.

Citizen mobilizations for cleaner air were responsible for both Ontario’s coal phase out regulations and California’s vehicle standards, which Jaccard celebrates. The clear beneficiaries of the policies were citizens concentrated in Toronto and Los Angeles, respectively. Sometimes the beneficiaries of a policy aren’t as easy to organize. In these cases, progressive policy reformers can create the social and technological conditions that prepare society and markets for new regulatory standards.

One way to smooth the way for new regulatory standards is to promote technology demonstrations, green labels, retailer education, and to create initial markets for low-carbon technologies by offering direct incentives to consumers. Energy efficiency program administrators have experience running these “market transformation” programs in appliance sectors, and similar strategies can be used to pave the way for stronger regulations in transport and housing sectors.

Direct government involvement in technology development also influences the stringency and design of regulations. Jaccard praises the California vehicle standards, which helped create a market for hybrid vehicles. It is important to realize that the most successful hybrid – the Toyota Prius – did not come out of nowhere. It evolved out of decades of Japanese industrial policy exploring low emission vehicles through a complex process of trial-and-error learning.

The California standards also provide a story of losing regulatory momentum. Regulators relaxed the standards when US car companies resisted vehicle electrification and promised that they would introduce hydrogen-based future if given more time to develop the technology. The softened standards led to a lost decade in the electric vehicle industry. Political and economic momentum might have been sustained if the US government had pushed the transport sector into developing zero to low emission vehicle technologies earlier.

There is also a role for embedding technologies within society. New regulations and technologies can increase social inequalities and create new social frictions, but there is also an opportunity to create political bargains with a wider policy mix. For example, California’s suite of climate policies have stronger buy-in because of provisions to ensure low-income citizens can participate in the energy transition through rate designs, as well as solar and energy efficiency programs that ensure energy affordability.

So if we are serious about implementing meaningful carbon pricing and regulations we need to think about creating the political dynamics that reinforce these policies. This calls for a much wider policy mix, including well designed energy efficiency and energy poverty programs, policies that “transform” and prepare markets, and green industrial policies that help create and diffuse new technologies.

While Jaccard makes an important contribution by opening up the policy discussion beyond carbon pricing towards regulations he does not seem prepared to accept that a broader suite of policies might have an important role to play. In fact, he leads off his article by dismissing energy efficiency, stating that “for three decades, governments and utilities have made efficiency the focus of their emission reduction efforts, with negligible results”. This is an odd statement, because federal efficiency programs have been inconsistent and none of the Canadian provinces are achieving the levels of savings seen in leading US states such as Massachusetts, Vermont, and California. (Nova Scotia was getting close, but the provincial government capped the energy efficiency budget). Energy efficiency is a low-carbon climate solution that shouldn’t be dismissed. Especially because well designed energy efficiency strategies can play a valuable role in transforming markets and creating political bargains.

So policymakers and climate activists should heed Jaccard’s advice in taking politics seriously. I would suggest that doing so requires thinking more about the kind of policy mix needed to reinforce economic transformations and paying less attention to economists fixated on “first-best” and “second-best” policy instruments, while dismissing everything else.

 

This article first appeared in Policy Options

Homelessness in Canada: Its Growth, Policy Responses, and Advocacy

On February 1, I gave a guest presentation on homelessness to a graduate seminar class on housing policy taught by Steve Pomeroy at Carleton University’s School of Public Policy and Administration. The focus of my presentation was the emergence of homelessness in Canada as a pressing public policy area in the 1980s. I discussed the growth of homelessness, policy responses and advocacy. My slides from the presentation can be downloaded here.

I first got involved in the homelessness sector in 1998 when I began working at a homeless shelter as a front-line worker. All told, I spent 10 years doing front-line work with homeless persons in Toronto; most of that time was as a mental health outreach worker at Street Health. (I also wrote a report on Toronto homelessness in 2009.)

I apologize in advance for the somewhat Toronto-centric nature of the present blog post. Since much of my early experience in the homelessness sector took place in Toronto, this blog post will no doubt omit important developments that have occurred in other parts of Canada.

With the above in mind, here are 10 things to know:

  1. Between 1980 and 2000, the number of persons sleeping in Toronto homeless shelters on a nightly basis increased by 300%. This resulted in more public attention on homelessness. I also think it helped lead to more public resources being channeled to homelessness.
  1. I think six main factors led to that increase in homelessness. During the time period being considered: 1) there were two deep recessions that led to double-digit unemployment levels across Canada; 2) the percentage of unemployed Canadians who qualified for unemployment insurance benefits fell significantly; 3) many Canadian provinces reduced the generosity (I use the term loosely) of their social assistance programs; 4) for-profit developers essentially stopped building rental housing; 5) senior levels of government stopped devoting substantial amounts of funding to the creation of new affordable housing units; and 6) rental vacancy rates dipped to very low levels. I would argue that all of these factors created the ‘perfect storm’ for rising homelessness.
  1. As homelessness grew in Toronto, supportive housing became a popular program response. By supportive housing, I mean government-subsidized, permanent housing for low-income persons, combined with ‘social work’ support to help the tenant maintain their tenancy. (For more on supportive housing, see this report.) In many cases, the homeless person receiving the housing did not have to prove their ‘housing readiness’ in order to receive the housing.
  1. Beginning in 2005, there emerged a lot of talk in Canada about something called housing first. For the purpose of the present blog post, I’ll define housing first as the practice of providing a homeless person with immediate access to permanent housing (rather than requiring that the person prove themselves ‘ready for housing’ before receiving it). I would argue that, at least in Toronto, housing first began in the 1980s with the introduction of supportive housing. In fact, Homes First Society, which started offering supportive housing in Toronto in the early 1980s, was named for precisely the same reason as housing first—its founders believed that people needed homes first before they could work on other challenges (e.g. employment, health problems, etc.). That said, I think the beginning of Streets to Homes (a large housing first program in Toronto) in 2005 ultimately encouraged officials across Canada to be more forthcoming than previously in terms of providing permanent housing to homeless persons without requiring ‘housing readiness.’
  1. The use of the term housing first is confusing. I think that’s because, by definition, it refers to the method by which program administrators determine when a homeless person should receive permanent housing. Yet, because it appeals to persons on the left and right of the political spectrum, it’s become a popular catchphrase. For example, the term appears 118 times in the federal government’s 2014-2019 directive for the Homelessness Partnering Strategy. I suspect the federal government uses the term so frequently in that directive largely because of the term’s popularity.
  1. The same federal department that mentions housing first 118 times in one document also administers federal funding for homelessness that today (on an annual basis) is worth just 35% of what it was in 1999. Last November, I wrote that annual federal funding for homelessness today is worth considerably less than it was in 1999. Indeed, I wrote that, in order for such funding to be restored to 1999 levels, the federal government would have to increase its annual funding for the Homelessness Partnering Strategy from $119 million to $343 million.
  1. Beginning in approximately 2005,[1] there was a shift in terms of who was dominating the public advocacy debate on homelessness in Canada. I think that many of the people who’d previously been strong advocates for the homeless on a national level started to ‘run out of gas’ (not to mention resources). Meanwhile, a new crop of advocates started to emerge. Suddenly, the most vocal advocates were more ‘glass half full’ than their predecessors. A key—often implicit—argument of the new generation of advocates was that public resources for the homeless had been mismanaged in the past and that, if they were better managed going forward, we would see major reductions in homelessness (possibly without a great deal more public spending). I’ve come to know key players in both the pre-2005 and post-2005 camps and have great admiration for their tenacity and integrity. I also think that each approach has its strengths.
  1. I think a strength of the pre-2005 ‘glass half empty’ approach was its brutal honesty. Many would argue that an honest, meaningful discussion about homelessness must include a strong focus on high mortality rates among persons experiencing homelessness; and you could always count on the pre-2005 advocates to raise this topic loudly. Moreover, the Toronto Disaster Relief Committee’s call for senior levels of government to double annual spending on affordable housing, in my opinion, would have been good public policy.
  1. I think a strength of the post-2005 ‘glass half full’ approach is that it often presents as non-threatening to public officials. I find that adherents of this approach like to publicly applaud announcements and long-term goals that have the potential to reduce homelessness, even when such moves aren’t accompanied by new funding. Indeed, incremental moves by government are publicly applauded. The success of the aforementioned housing first approach is often offered as proof that methods of responding to homelessness have indeed improved over the years. I would argue that one key organization that embodies this ‘glass half full’ approach is the Canadian Alliance to End Homelessness.
  1. There’s no inherent reason why both approaches can’t co-exist and complement each other. I think the ‘glass half empty’ advocates can create space for the ‘glass half full’ advocates. A colleague of mine refers to the former as “outsiders”—they’re typically outside the offices of elected officials and senior government staff. The same colleague refers to the latter as “insiders”—they’re very often meeting inside the offices of elected officials and government staff. In short, I think there’s room both inside and outside the offices of decision-makers for important conversations about homelessness.

[1] I’ve somewhat arbitrarily chosen 2005, as that’s the year that the City of Toronto introduced its Streets to Homes program.

The 2016 Federal Budget

Here is a link to the Broadbent Institute pre Budget Submission, trying to push the Liberal platform in a more progressive and social democratic direction.

http://www.broadbentinstitute.ca/budget_2016_charting_progressive_agenda

 

W. A. Mackintosh: Great Canadian Economist of the 20th Century

There were two great Canadian economists of the last century: H.A. Innis and W.A. Mackintosh. Innis had been much written about but not Mackintosh. This is now corrected by a thoroughly researched biography by Hugh Grant of the University of Winnipeg with the straightforward title W.A. Mackintosh: The Life of a Canadian economist.

Mackintosh was both a distinguished scholar and a policy activist. He co-founded tne staples theory with Innis and wrote a brilliant book on wheat as a staple. He played a key role in bringing Keynes to Canada in the late 1930s. He was a member of the Canadian delegation to Bretton Woods and rubbed shoulders with Keynes. All the while the editor of the Canadian Banker. Unlike Innis, he resonded to circumstaners, like the Great Depression.

After our last election Paul Krugman wrote a column on how the Liberals had abandoned a commitment to balanced budgets and thereby brought Keynes to Canada. He was off by 75 years. Mackenzie King with the expertise of Mackintosh had made Canada one of the first countries in the world to implement Keynes.

Mackitosh was a progressive economist years ago and he should be honoured by us today. The mainstream profession won`t because it has slight interest in history. WhMackintosh did should be known and Grant has given us the opportunity to know.

Stanford Responds to Moffatt: Why I Still Worry About Auto Job Losses Under a TPP

My friend and fellow #cdnecon tweeter Mike Moffatt has published a thought-provoking commentary regarding the impact of the proposed Trans Pacific Partnership (TPP) on Canada’s auto industry. Specifically, Mike engages critically with previous arguments I have made (on this site and elsewhere) that the TPP, as currently negotiated, could result in the ultimate loss of tens of thousands of Canadian auto jobs, due to the relocation of a significant proportion of the industry’s North American supply chain.  In this blog post I will respond to his three main arguments. Read more »

Boosting the economy for the rest of us

Elites and the talking heads in the media are arguing about how to respond to Canada’s soured economic outlook. Who should try to boost the economy, the federal government via fiscal stimulus or the Bank of Canada via monetary policy? But while elites argue amongst themselves, the overriding context is a transfer and concentration of economic power upwards. This, not $10 billion here or 0.25% there, is what hamstrings any policy response going to the benefit of the many.

First, some context. Yesterday’s report from the Bank of Canada describing the state of the economy did not make for happy reading. While there is no crash, no panic and no crisis, the picture isn’t particularly rosy. The kind of generalized malaise and stagnation that has affected much of the globe since the last crisis—and that our resource boom staved off—seems to be hitting home. The Bank revised downwards its projections for both growth and inflation, and has a history of being overoptimistic.

As the big drop in the price of oil is looking more and more long-term (and actually coming back to what it has been in inflation-adjusted terms in the very long run), other parts of the economy have not yet picked up the slack. More Bank of Canada analysis released yesterday, focusing on the impact of cheap oil, said as much. Here’s the headline chart showing a projected long negative adjustment to lower oil prices across the whole economy, beyond just the oil provinces: Read more »

Redistribution, Inequality, and Federal Policy: Guest Post by Edgardo Sepulveda

We are pleased to present this rich guest post by a new PEF member, Edgardo Sepulveda. Edgardo has been a consulting economist for more than two decades advising Governments and operators in more than 40 countries on telecommunications policy and regulation matters (www.esepulveda.com).

Redistribution, Inequality and the new Federal Tax & Transfer initiatives

I want to present an analysis of Canada’s taxation and transfers system from a historical and international perspective, focussing on how changes in Canada’s fiscal redistribution over the last two decades have increased after tax income inequality. I also situate three of the new Federal Government’s proposed initiatives: the “middle class tax cut” (“MCTC”), the new Canada Child Benefit (“CCB”); and increases to GIS benefits in this broader context. This work brings together several elements that have been discussed here and in other research, and updates the analysis based on recently-released internationally-comparable data from the OECD.

Analysis

Figure 1 presents “market” and “after tax” income Gini coefficients for Canada and the OECD. Market income is before taxes and government cash transfers, while after tax income is after taxes and transfers. The Gini coefficient varies from 0 to 1.00, with higher values representing higher inequality. For comparative purposes, I include the “OECD-14” (representing the 14 OECD Member-Countries for which Gini coefficients are available from the mid-1980s) average, as well as the traditional inequality/taxation revenue “book-ends”: the USA and the four larger Nordic countries (“Nordics-4”: Denmark, Finland, Norway and Sweden).

Sepulveda Fig1

 

Figure 1 shows that market income inequality generally increased relatively quickly until the mid-1990s, after which it slowed down or stabilized across the OECD-14. Canada’s market inequality is below the OECD-14, similar to that of the Nordics-4 and lower than the USA. Governments redistribute income via the tax and transfer systems (“fiscal redistribution” or “redistribution”) and hence after tax income Gini coefficients are always lower than the respective market income Gini coefficients.

Fiscal redistribution varies significantly across time and countries. For example, Canada has historically had lower market inequality than the OECD-14, but has historically had higher after tax inequality. Similarly, Canada has had market inequality comparable to the Nordics-4, but has historically had much higher after tax inequality. One way to measure redistribution is presented in Figure 2, which shows the percentage difference between market and after tax income Gini coefficients. For example, Canada’s figure of 34% for 1994 indicates that redistribution reduced market to after tax inequality from 0.432 to 0.287. Figure 2 confirms that Canada (currently at 27%) has traditionally had less redistribution than the OECD-14 (currently at 35%) and the Nordics-4 (currently at 41%) and that its redistribution has decreased since peaking in 1994. Redistribution in Canada has been closer to the USA (currently at 23%) for more than a decade.

Sepulveda Fig2

A country’s redistribution is a combination of its fiscal capacity and allocation of revenues and expenditures. Figure 3 presents total (“all Government”) taxation revenues as a percentage of GDP and shows a steady increase and subsequent stabilization until about the mid/late 1990s for Canada, the OECD-14 and the Nordics-4, at around 35%, 37% and 45%, respectively (the USA is an outlier at around 25%). Figure 3 shows that Canada’s taxation revenues to GDP started to decline in the late 1990’s so that by the 2010s Canada had stabilized at around 30%-31%; Canada is now closer to the USA than the OECD-14 and is at its lowest level since 1980.

Sepulveda Figure 3 (standard res1)

 

Research has shown that transfers have generally accounted for about two-thirds of the redistributive impact, with taxes accounting for the other third. Personal income tax (PIT) revenues to GDP in Canada have been historically similar to those in the OECD-14, and hence cannot explain the differences in redistribution. In fact, Figure 4 shows that these differences are due to transfers; Canada has historically had lower transfers to GDP than the OECD-14. Since 1980, the OECD-14 have on average allocated 34% of total taxation revenues to transfers, while Canada has averaged 28%. Taken together, Canada’s relatively low and decreasing taxation revenues to GDP and its low allocation to transfers have led to comparatively low and decreasing transfers, resulting in low and, and since 1994, decreasing redistribution.

Sepulveda Figure 4 (standard res)

 

The next two figures separate the effect of taxes and transfers on redistribution since it peaked in 1994. This more disaggregate analysis is possible for Canada because Statistics Canada also makes available the “total” income Gini coefficient (not available from the OECD), which is the market income plus transfers, but before taxes.

Sepulveda Fig5

For Canada, Figure 5 brings together the changes in transfers to GDP with the transfers component of redistribution. Figure 5 also includes total redistribution (all numbers indexed to 1.00 in 1994). Figure 5 shows that transfers to GDP and transfers redistribution are closely correlated and have stabilized at between 20%-25% below the 1994 peak: decreased transfers lead to less redistribution. Transfers redistribution decreased more than total redistribution. The redistributive impact of any fiscal variable may be disaggregated between the size and the progressivity of the variable. The close relationship between transfers and transfers redistribution suggests that it is primarily the size of transfers that has changed since 1994 (with only modest changes in progressivity). In effect, other research indicates that the main drivers of this overall reduction were decreases in the “size” of provincial social assistance (SA) and federal Employment Insurance (EI) relative to GDP.

Figure 6 presents the equivalent data for the taxation component and shows that both PIT revenues to GDP and the tax redistribution increased from 1994 to 1999 (higher taxes led to greater redistribution), after which they generally decreased (lower taxes led to less redistribution). Figure 6 shows a relatively close relationship between the two variables over the 1994-1999 period, but less so during the 2000-2014 period, with PIT decreases not resulting in commensurate increases in inequality, suggesting that the progressivity of PIT increased somewhat during this period.

Sepulveda Figure 6 (standard res)

 

Discussion

Canada’s tax and transfers have historically provided less fiscal redistribution than almost all our OECD-14 counterparts. Most of the difference in this performance is due to Canada’s low and declining transfers, which together with lower personal income taxes, has led to higher after tax income inequality in Canada over the last two decades.  This is in spite of underlying market income inequality being relatively stable over this period.  In almost all these respects Canada has diverged from the OECD-14 and converged to the USA over the last two decades.

Such changes in fiscal redistribution are policy-induced and therefore subject to change. I have shown that other OECD-14 counterparts have achieved and maintained much higher redistribution and lower after tax income inequality.

This analysis identifies a number of broad policy options to increase redistribution, which I also use to situate and discuss the new Federal Government’s three proposed initiatives.

·         One policy option is to increase the progressivity of taxes and/or transfers. The MCTC is a good example of this, in that it re-allocates about $3 billion of PIT around the upper income distribution while (more or less) being “revenue neutral”. The MCTC is therefore modestly progressive but its relative “size” is very modest (accounting for less than 2% of PIT revenues), so I expect its redistributive impact will be very modest.

·         A second policy option is to increase the size of taxes and/or transfers. The increase of about $0.7 billion in GIS benefits is a good example of this. This proposed initiative may be expected to be relatively progressive, but its relative size is very modest (accounting for less than 1% of Government cash transfers), so its redistributive impact will also be very modest.

·         A third policy option is to combine an increase in the size and progressivity of taxes and/or transfers. The new CCB is a good example of this because it eliminates three existing child benefits (about $18 billion + $2 billion from income splitting elimination) and combines them into a new $22 billion CCB (with an additional $2 billion) (therefore a net increase of $4 billion), that is designed to be somewhat more progressive. I expect that the CCB will have a modest redistributive impact.

All three Federal Government initiatives will increase redistribution and will therefore reduce after tax income inequality. As possible future work I may try to model the redistributive impact of these three initiatives. Based on the analysis above and other research, my current “back of the envelope” estimate is that, ceteris paribus, when fully implemented, the combined redistributive impact of the three initiatives would decrease Canada’s after tax Gini coefficient by perhaps up to 0.005 points and thus increase Canada’s redistribution perhaps by one percentage point – that is, from the current 27% to perhaps about 28%. These initiatives are therefore relatively very modest and would constitute only first steps in a long process towards returning Canada’s redistribution to prior levels (peak of 34%) or those that are comparable to most of our OECD-14 counterparts (currently at 35%), let alone the Nordics-4 (currently at 41%).

Of course, given Canada’s system of fiscal federalism, the Provinces would also have to do their part. The Provinces together collect PIT revenues that are comparable to those of the Federal Government, receive transfer payment from the Federal Government intended for social programs (the Canada Social Transfer (CST)) and are also responsible for important transfers, including social assistance (SA); hence have both the fiscal capacity and the tools to increase redistribution.  As noted above, the size of SA relative to GDP has decreased considerably since the mid-1990s. Using the same “back of the envelope” methodology, I estimate that for the Provinces to “match” the one percentage point redistribution increase from the Federal Government’s three initiatives, they would have to, for example, increase the “size” of SA by perhaps in the range of $5-$6 billion in total. Such an increase could be through some combination of broadening the eligibility criteria or increasing the amount of cash benefits.

Canada Once Again Adding Value to Its Exports

In the course of researching a forthcoming commentary on Canada’s trade policy for the good folks over at the IRPP, I stumbled upon a surprising and encouraging bit of data.  I grouped Statistics Canada’s series on exports and imports by broad commodity grouping (CANSIM Table 228-8059) into three categories: 4 primary sectors (including agriculture, energy, mining, and forestry), 2 intermediate sectors (basic metal and industrial products), and 5 value-added sectors (machinery, electronics, auto, aerospace & other transport equipment, and consumer goods).  Canada’s overall trade balance has deteriorated badly since 2014 (from an already weak position), thanks in large part to declining energy prices.  But there are some bright spots in the picture. Read more »

Jobs and Growth after the Great Recession

This is the time of year when articles list their favourite things about last year, and their “things to watch” for the next year.

Naturally, my “things to watch” list will always include the labour market. Where have we seen the strongest job growth or worst job losses, and what are the trends that might affect this in the coming year.

We know that the employment rate (the proportion of Canadians over 15 who have a job) has never really recovered from the 2008 / 2009 recession. While this is partly because of demographic trends, I still think that this is an important indicator to watch, as it reflects the proportion of the adult population in paid employment. Full employment is a worthwhile goal, as jobs are still the main way that we create wealth / distribute income.

Employment rate

So where are the jobs going to be in 2016?

Well, we know where they weren’t in 2015. Looking at the most recent SEPH data by industry, the impact of lower oil prices are clear. The table below compares the employment levels in industries at the three digit NAICS level. Support activities for resource extraction tops the list of job losses over the past year, by a wide margin. General merchandise stores comes in second, and I’ve bolded it because it is the only industry that makes the worst 5 list both in the past year, and since October 2008. Perhaps surprisingly, provincial and territorial public admin makes the top 5 list for job losses.

CANSIM 281-0023, seasonally unadjusted

CANSIM 281-0023, seasonally unadjusted

On a more positive note, let’s see where the growth is happening. SEPH data in recent years has had a disproportionate number of unclassified businesses, so it is no surprise that this is the *industry* with the most employment growth over the past year. More meaningful is the employment growth in food services, social assistance, and hospitals. Again, food services is bolded because it made it into the top 5 list for the past year, and since October 2008. (I’ve included 6 industries here because of a connection with the job vacancy data).

CANSIM 281-0023, seasonally unadjusted

CANSIM 281-0023, seasonally unadjusted

So how does this job growth compare to reported vacancies, perhaps a better indicator of where short term job growth will be coming from? Food services and drinking places tops the job vacancies list too. Unfortunately for workers, the average wage offered in this industry is the lowest of all reported in the Job Vacancy and Wage Survey.

CANSIM 285-0002

CANSIM 285-0002

A better indicator for workers might be where are wages rising, and where are they falling. Over time the new Job Vacancy and Wage Survey should be able to give us a decent understanding of this. Right now we only have two data points, Q1 and Q2 of 2015, when we were smack dab in the middle of an oil shock induced recession. For what it’s worth, so far the fastest growing wages on offer are in data processing, financial investments, and high tech manufacturing. The biggest wage offer declines were seen in natural resource sectors.

Where are the jobs with decent wages going to be in 2016? Demand in health care and social services will continue, but nearly all provincial governments are coming up against self-inflicted revenue constraints which will affect both hiring and wages in this sector. Low wage jobs abound, so movements like #Fightfor15 become even more important. Unions and other civil society groups that are pushing for better employment standards for precarious workers, and for universal benefits will become even more necessary in the next few years.

Real test of Paris climate agreement will be how markets and regulators react

So did we save the planet?

From the outset, this was never about “saving the planet.” Our spinning hunk of rock has been around billions of years and will continue to support diverse life forms long past the time humans roam it. The question is whether we have a planet that can support human life over the long term, in something close to the style with which we have become accustomed.

The answer is maybe: IF countries go back and deliver on their commitments, and IF they table more ambitious policies in the coming years, then MAYBE we can put a lid on global warming and keep the worst damage at bay. Time will tell.

The Paris Agreement on climate change is, yes, historic, an important step forward on this pressing collective action problem. After 21 years of meetings, all countries have now signed on and pledged to turn away from fossil fuels. There is some hard science baked in to the Agreement that implies, but does not overtly say, decarbonization or 100% renewables by 2050. There is a ratcheting mechanism whereby countries must tighten up their commitments every five years.

But as the saying goes, “the road to hell is paved with good intention.” We have a piece of paper that represents a statement of grand ambition, but lacking the commitments from countries to make it happen, and absent the enforcement teeth one would see in, say, a trade and investment agreement.

When it comes to commerce, for example, governments can challenge governments to live up to their trade and investment commitments. In many bilateral and regional trade and investment agreements, corporations can sue governments directly for perceived injustices. Contrast that with the dilution of loss and damage section of the Paris agreement, which excludes liability and compensation. Ditto for failure to include indigenous rights, since it is indigenous people around the world who are on the front lines of battles against fossil fuel and mining extraction.

Many actors on this stage have a stake in claiming victory with this agreement. Don’t listen to them. The real test will be what happens in the financial markets on Monday morning: will there be a sell-off of fossil fuel stocks because the world has now recognized the vast majority of reserves need to stay underground, and therefore the business plans of the “carbon majors” are inconsistent with new international law? Or will it just be back to business as usual?

Another series of tests will be around whether new LNG terminals or bitumen pipelines get approved in 2016. The emphasis of the (largely voluntary) Paris Agreement is on reducing consumption of fossil fuels, but many jurisdictions have been seeking to push more fossil fuel reserves onto world markets, even amid low, low commodity prices. This plays into “all of the above” political commitments that talk climate action on one hand, and boosting oil and gas production on the other.

While it is heart-warming that leaders recognized the need for greater ambition, in the form of a 1.5 degree target, rather than 2 degrees, it is not clear that politicians and negotiators really get what that entails. Missing is a coherent framework that clearly states a carbon budget – a total amount of carbon we can “safely” use before exceeding 1.5 degrees. Pre-Paris estimates put the commitments on the table at being more consistent with 3 or more degrees of temperature increase. The negotiations themselves rendered the previous 2 degree target near-impossible, so there is no way we can even contemplate a 1.5 degree target without serious measures to keep carbon in the ground.

After two decades of dithering in five-star hotels in the capitols of the world, this appears to be the best that our political leaders are able to do. One wonders how much worse the agreement could have been with a PM Harper still in power.

What happens next will make all the difference: PM Trudeau has committed to meeting with the Premiers within 90 days to make concrete a pan-Canadian plan of action. It will be up to Canadians to ensure our country moves beyond vague commitments toward effective climate policies. So take a breather, celebrate this new Paris Agreement, then be prepared to fight for it in 2016.

 

Dix choses à savoir sur les défis associés avec mettre fin à l’itinérance au Canada

Le 18 novembre, j’ai fait une présentation sur les défis en ce qui concerne « mettre fin à l’itinérance » au Canada au 7 Cities Leadership Summit à Edmonton. Ma présentation, illustrée de diapositives, peut être téléchargée ici.

Voici dix choses à savoir en tant que défis concernant « mettre fin à l’itinérance » au Canada.

  1. En 2008, Calgary est devenue la première municipalité canadienne à s’engager publiquement à mettre fin à l’itinérance.  Plus d’une douzaine d’autres municipalités canadiennes ont fait la même chose depuis lors; ainsi le maire de Medicine Hat a récemment affirmé que sa municipalité avait mis fin à l’itinérance.  De tels plans ont le potentiel de sensibiliser et de concentrer les efforts collectifs pour développer de nouvelles pratiques visant la fin de l’itinérance. Je pense que l’une des raisons pour lesquelles plusieurs villes en Alberta ont adopté de telles approches découle de l’utilisation réussie de campagnes de sensibilisation similaires aux États-Unis. Lors d’une conférence à Toronto en 2009, Nan Roman a déclaré: « En disant que le problème continuait, nous ne recevions pas de ressources. En nous concentrant sur des solutions, nous avons obtenu plus de ressources. » Autrement dit, en parlant positivement (et en démontrant des résultats positifs) on peut obtenir plus de ressources pour lutter contre l’itinérance; c’est là,  je pense, une raison importante qui a ammené de nombreux avocats au Canada à élaborer des stratégies pour mettre fin à l’itinérance.

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Making Real Change Happen

Today’s throne speech was notable for its brevity, but there were certainly a lot of priorities packed into those 1600 words. A small selection:

  1. “The Government will, as an immediate priority, deliver a tax cut for the middle class.” This is quite easily my least favourite action promised by the new Liberal government. The plan increases the marginal tax rate on high income earners, and gives it back on earned income between $45K – $89K. Thanks to the magic of marginal tax rates, this means you only get the maximum $670 if you earn more than 89K. Combine that with median incomes in the $30K range, and you can see that this does very little for middle income earners. The NDP have proposed changes that would reach more Canadians, which I hope the government takes seriously.
  2. “The Government has also committed to provide more direct help to those who need it by giving less to those who do not. The new Canada Child Benefit will do just that.” This change will make a real difference for low income families with children. 5 thumbs up.
  3. “To give Canadians a more secure retirement, the Government will work with the provinces and territories to enhance the Canada Pension Plan.” This will be huge for the 11 million workers in Canada who don’t have a workplace pension plan, particularly young workers.
  4. “The Employment Insurance system will be strengthened to make sure that it best serves both the Canadian economy and all Canadians who need it.” This is one social program that is particularly close to my heart, and I am cautiously optimistic that this will bring positive change to a key pillar of our badly frayed social safety net.
  5. “The Government will undertake these and other initiatives while pursuing a fiscal plan that is responsible, transparent and suited to challenging economic times.” So this is pretty vague, but I think we need to look at what wasn’t said. There is no mention of returning to balance in 2019 (hallelujah!), and not even any mention of debt-to-GDP targets. In conjunction with public statements by Bill Morneau, let’s hope this means that the new government is comfortable with a probable $15B – $20B deficit for FY2016/17. In the face of today’s job numbers, it looks like we’ll be needing that lift.

Is your pension in climate denial?

Fossil fuel divestment campaigns have become a focus for climate change organizing, targeting university endowments, churches, foundations and pension funds. While the motivations are primarily moral—if it is wrong to wreck the climate, it is wrong to profit from that wreckage—there are important economic arguments for divestment.

If we are to have a reasonable chance at staying below 2°C of global warming – the target for international negotiations – between two-thirds and four-fifths of proven fossil fuel reserves (those already near development) will need to stay underground, forever.

This situation is even more dire for Canada due to our economic reliance on fossil fuels, plus our high costs of production. Figure 1 from our new report, Pension Funds and Fossil Fuels: The Economic Case for Divestment (co-authored with Justin Ritchie), presents a cost curve ranking of future oil production around the world, from lowest to highest cost, mapped against various estimates of a global carbon budget.

In a world of constrained carbon, the lowest-cost reserves are likely to be developed first. Canada is a relatively high-cost producer, with Canadian heavy oil projects (in green) requiring a breakeven price of $70-85 per barrel. To meaningfully address climate change, a large share of Canada’s bitumen reserves cannot be developed.

Screen Shot 2015-11-17 at 11.52.01 AM

Institutional investors, including some pension funds, are increasingly aware that fossil fuel company business models are not compatible with a habitable planet. But this is not reflected in the annual reports of Canadian public pension funds, which don’t mention climate change as a material risk to pension sustainability.

In effect, Canadian pension funds have been living in a form of climate denial through their major holdings of fossil fuel stock, and are thus exposed to risks from new policies to address climate change. Integrating an understanding of climate policy risk that includes the potential for new regulations, carbon pricing, emission caps and unburnable carbon reserves is a logical next step in the conversation on sustainability within the pension world.

In addition to climate policy, a number of other risk factors could turn today’s fossil fuel stock into tomorrow’s stranded assets:

  • Commodity price risk – As we have seen since mid-2014, low commodity prices have shelved new investment in Alberta’s oil sands, and hit the bottom lines of companies. We estimate that the accompanying drop in share prices amounted to a loss of $5.8 billion for Canada’s top 20 public sector pension funds. 
  • Energy innovation risk – The cost of renewable electricity generation in recent years has fallen close to fossil-fuel-based energy. Renewables, plus conservation and energy efficiency, may be better poised to meet new energy demand.
  • Carbon liability risk – The link between carbon emissions and damages is evolving, and as Governor of the Bank of England Mark Carney recently commented, it is possible we will soon see fossil fuel producers held liable for damages. This is similar to tobacco companies being sued for health damages resulting from use of their products. A new investigation of Exxon’s climate denial practices by the New York Attorney General also points towards future litigation.
  • First Nations and community opposition risk – Fossil fuel mega-projects are facing delays and opposition wherever proposed. Enbridge’s Northern Gateway and TransCanada’s KeystoneXL pipeline projects are the most recent to get shelved due to popular protest. Even though the previous federal government had approved the Enbridge pipeline, legal challenges from affected First Nations meant it was unlikely the project would ever get built.

In this context, the concept of fiduciary duty needs a rethink. Because of the long-term planning horizons of pension funds, climate change must be taken seriously by trustees, and funds must equally represent the interests of young workers for their eventual retirements.

Divestment from fossil fuels is, in our opinion, consistent with fiduciary duty. But funds can and should also play a transformative role in building and scaling up the green infrastructure needed for a zero-carbon world. Infrastructure requires up-front capital investment with a return paid out over decades, which aligns well with the needs and long-term horizons of pension funds. A great deal of that money will need to come from the public sector through vehicles such as green bonds.

We recommend a four-point plan: (1) higher standards of disclosure so there is daylight on fossil fuel holdings; (2) carbon stress testing to clarify the risks associated with fossil fuel holdings, and develop criteria to evaluate best and worst performers; (3) engagement with companies about their capital expenditure plans; and, (4) developing a process for divestment from fossil fuels and re-investment in green alternatives.

* Thanks to Justin Ritchie for his excellent research in support of this report.

 

Ten Things to Know About the Challenges of Ending Homelessness in Canada

On November 18, I gave a presentation on “ending homelessness” at the 7 Cities Leadership Summit in Edmonton. My PowerPoint slides can be downloaded here.

Here are ten things to know about “ending homelessness” in Canada:

1. In 2008, Calgary became the first Canadian municipality to publicly commit to “ending homelessness.” More than a dozen other Canadian municipalities have since followed suit, with Medicine Hat’s Mayor recently claiming that his municipality has indeed “ended homelessness.” Such plans have the potential to raise awareness and focus collective efforts to develop new practices focused on ending homelessness. I think one reason Alberta communities have adopted such advocacy approaches stems from the successful use of similar advocacy campaigns in the United States. Speaking at a Toronto conference in 2009—and drawing on successful homelessness advocacy campaigns in the United States—Nan Roman said: “By saying the problem keeps getting worse, we weren’t getting resources. By focusing on solutions, we got more resources.” Put differently, speaking positively (and demonstrating positive outcomes) can result in more resources being committed to fighting homelessness; and I think that’s been an important reason that many advocates in Canada have developed “ending homelessness” strategies.

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Progressive, pro-family, pro-growth

A good parental leave system makes children more affordable, and improves gender equity in the labour force and at home.

In Quebec, parental leave innovations include time reserved solely for the father, higher replacement rates, and flexibility. This has dramatically increased the number of fathers taking parental leaves, which in turn has a long-term impact on the distribution of labour within the home. (It may also have contributed to Quebec’s shrinking pay gap – which is happening at a time when the gender pay gap in the rest of Canada is stagnating.)

While it is clear that “use-it-or-lose-it” parental leave for fathers will nudge more of them to take leave, research shows that higher replacement rates make a difference as well.

A Statistics Canada review of European parental leave programs shows that take-up rates for parental leaves are lower where replacement rates are low.

“since men, on average, earn more than women, families may be dissuaded from having the father claim parental leave because of the greater financial burden (Moss and O’Brien 2006).”

This is why I was so excited to see the Newfoundland and Labrador NDP propose  a substantial top-up to parental leave (from 55% to 80%), paid from provincial coffers. The province is facing a declining birthrate, and has been hard-hit by the falling price of oil.

This is exactly the kind of policy that supports families in their choices, but works against the structural economic forces that disadvantage women. Bravo, NL NDP for a well-designed, feminist & progressive policy.

Let’s hope other provinces are paying attention.

Who’s Afraid of Deficits?

We all knew that Budget 2015 was optimistic about medium term growth and rebounding oil prices, but the good people at the PBO have given us an indication of just how far off those projections were.  They estimate that nominal GDP will be about $20B lower through 2020 ($30B lower in 2016), which also means bigger government deficits through 2020.

While pundits had been OK with small, temporary deficits, at this news some headlines shouted that the Liberal’s plan to balance the budget was in jeopardy, and others contemplated the possibility that the new government would be less bold in the face of economic weakness.

Of course that is exactly the wrong response, and gladly McCallum pointed out the obvious, that this news “is something that underlines the need for the job-creating infrastructure investments”.

There has emerged a mainstream consensus that deficits / surpluses don’t matter so much, that a better yardstick of fiscal sustainability is our debt-to-GDP ratio. So what does yesterday’s news mean for this indicator?

Assuming the Liberal government fully implements the investment promises in its platform and the PBO projections are correct, the debt-to-gdp ratio is still projected to fall by 3 percentage points between now and 2019/20. In fact, the ‘modest’ deficits proposed in the Liberal platform only add 1 percentage point to the debt-to-GDP ratio over this timeframe, which translates into an increase of about $42B in debt between 2015/16 and 2019/20. (And, all of this assumes that there is no short term stimulative effect from the proposed spending either.)

debt2gdp

 

Let us look at the increase in spending/borrowing over the 2015-16 to 2019-20 timeframe that would result from targeting various debt-to-gdp ratios.

Assuming the PBO projections for GDP growth are correct, the federal government could borrow more than twice as much over the next four years – $86B – and the debt-to-GDP ratio would still be lower than when they took office.

Debt

 

Given that the economic news has worsened, a case should be made for increasing spending. Even though we aren’t in a recession any more, we are facing a period of what Armine calls “slowth”. Demographic shifts, among other things, are limiting our economic potential.  Investments should target medium to long term growth, and meet basic needs that have fallen through neo-liberal cracks – such as clean water for First Nations communities.

There is more than enough room for increased investment, even given mainstream economic constraints.

Five Things to Know About Pre-1964 Canadian Housing Policy

On November 4, I gave a historical presentation on Canadian housing policy at the annual conference of the Canadian Alliance to End Homelessness. My slide presentation, which focused on pre-1964 Canadian social history, can be downloaded here.

Here are five things to know about pre-1964 history that set the tone for important developments in Canadian housing policy:

  1. Prior to the 1940s, there was virtually no government-assisted housing for anyone at all in Canada. In the early 1900s, if you were without work and needed help paying the bills, you typically had to rely on family or friends for assistance. In some cases, a social welfare agency might provide you with time-limited support (i.e. used clothing, food, fuel); in other cases, a local church might help you. But barring any of those options, you likely faced destitution.

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Cinq choses à savoir sur la politique du logement au Canada, avant 1964

Le 4 novembre, j’ai fait une présentation sur la politique du logement au Canada, lors de la Conférence nationale pour mettre fin à l’itinérance. Ma présentation (qui a porté sur l’histoire sociale canadienne avant 1964) illustrée de diapositives, peut être téléchargée ici.

Voici cinq choses à savoir sur l’histoire avant 1964, période qui a donné le ton à des développements importants dans la politique du logement au Canada:

  1. Avant les années 1940, il n’y avait pratiquement pas de logements subventionnés par le gouvernement au Canada. Dans les années 1900, si on était sans travail et avait besoin d’aide pour payer les factures, on devait généralement compter sur sa famille ou ses amis. Dans certains cas, un organisme de protection sociale pouvait fournir un soutien limité dans le temps (par exemple, des vêtements, de la nourriture, de l’essence); dans d’autres cas, l’ église pouvait aider. Sans cela, on était probablement confronté par l’indigence.

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