Was there any concrete economic reason for Stephen Harper to call Stephen Poloz yesterday, as global stock markets continued their gyrations? And then to have his office subsequently issue a cryptic and rather foreboding statement about the conversation? Read more »
Congratulations to Statscan on the occasion of the first release from the National Job Vacancy and Wage Survey, with data for the first quarter of this year. The survey received funding from HRSDC to put some hard numbers on job vacancies, and the first tranche of data are impressively granular, providing detail on vacancies at a detailed occupational level and by economic region as well as by province. (In addition to what is published in the Daily and on CANSIM, Statscan will provide detailed tables on request.)
If you ever wanted to know how many vacancies there are for accountants or retail clerks in Winnipeg or wherever, this is the place to go. The Survey provides information on how long vacancies have existed, and what wages were offered to fill vacant positions. (The latter data are not yet available.)
Knowledge of job vacancies is essential to good labour market policy. In addition to the information needed to select temporary workers and economic immigrants to fill bona fide shortages of Canadian workers , job vacancy data should guide government training programs and the decisions of individuals re fields of study and possible occupational futures.
The data released put some hard numbers on job vacancies for skilled workers, showing that there are a significant number of jobs sitting vacant for three months of more, likely due to lack of enough qualified workers. This seems to be the case for some skilled trades and health occupations among others.
My overall sense, however, is that many vacancies may simply reflect a reluctance on the part of employers to raise wages to fill empty positions. Fully 37% of all vacancies – 149,9880 out of 400,000 – are in the lowest paid and least skilled occupational category of sales and service workers. When we have the data it will be interesting to see the wages offered to fill these positions.
And the new data do not suggest significant overall labour shortages. The overall vacancy rate is calculated to be 2.5%, but only one half of the vacancies in the first quarter had been unfilled for more than one month. Our biggest problem by far remains a slack job market.
Canadian recession will go beyond first half of 2015
Associate Professor, Laurentian University
Co-Editor, Review of Keynesian Economics
With news of economic turmoil in China and other emerging economies, repercussions for Canada will be quite “atrocious”. Expect the recession to continue beyond the second quarter of 2015.
This raises questions about the supposed recovery in the second half of 2015. Currently, Canada is in recession. Most pundits are predicting that it is a mild recession, and that Canada will fully recover in the third and fourth quarters of 2015. But those predictions are surely wrong and are based on faulty economic logic.
Over the past two weeks, Stephen Harper has made three new housing-related promises on the campaign trail. However, they won’t help the crisis of affordability. The pattern is familiar: make things worse and prepare to blame others.
- First, there’s the promise to allow first-time home buyers with RRSPs to take an extra $10,000 out of their retirement savings for a down-payment. This will likely have only a small effect, but whatever effect it does have will further heat up the housing market by increasing demand here and there. This makes the housing crisis worse. (Bonus negative effect: it eats into retirement savings.)
- Second, Harper promised to bring back a home renovation tax credit: people who own homes and spend $1000 to $5000 on renovations will be eligible to get 15% back at tax time. Again this isn’t much (and it’s poor tax policy too), but ultimately it helps drive up property values. This too makes the housing crisis worse.
- Finally, Harper says he would gather data on foreign real estate buyers. While there is certainly lots of capital sloshing around the world and some of it is landing in places like Vancouver and Toronto housing, it’s unclear how much of our bubble is due to foreign money and how much of these fears are a xenophobic blame-game. Data will be good, but given how Harper has been blaming all of Canada’s economic woes on external factors, this looks more like an exercise in something similar.
It’s certain that we are in the midst of a housing unaffordability crisis—that much Harper gets right. His proposed solutions, however, continue in the pattern of the past few decades, a pattern that has created bubbling housing markets that have left many shut out and scrambling. Read more »
Child care will be a major issue in this federal election campaign. The NDP has pledged to create 370,000 new $15-per-day spaces through joint federal-provincial initiatives by 2017-18, at an estimated cost of around $2 billion per year (growing that to 1 million spaces by 2023). The Liberals have not yet announced their child care platform, but have indicated it will also include significant funding for federal-provincial initiatives. The Conservatives, in contrast, have launched an ideological war on the very concept of publicly-funded child care, claiming it is unaffordable and that families should be allowed to spend “their money” on whatever priority they choose. Read more »
Associate professor of Economics – Laurentian University
Founding co-Editor – Review of Keynesian Economics
Follow him on Twitter – @Lprochon
This story from the CBC on August 14, 2015. See story here.
With the NDP riding high in a number of national polls at the moment, there is an increasingly real possibility the New Democrats will form the next federal government. Some are predicting, however, an NDP win would be catastrophic for Canada and would spell economic doom for the country.
After decades in third-party obscurity, an NDP win would certainly be one for the history books, and mark either the beginning of the end for the Liberal Party or quite possibly the beginning of a healthy three-party system.
Democratic issues aside, some pundits have begun the fear-mongering, warning of catastrophic events if the NDP would indeed form the government. In many ways, this is not surprising.
On the campaign trail, Prime Minister Harper repeated assertions that relaxing pot laws will lead to terrible, horrible things: ““When you go down that route, marijuana becomes more readily available to children, more people become addicted to it and the health outcomes become worse.” The Conservative response is to escalate the “war on drugs,” even though this moral crusade has utterly failed in its attempts to eradicate drug use, while wasting public resources on law enforcement and the justice system.
This fear mongering is far behind the times. Social acceptance of pot, in spite of decades of negative propaganda, is on the rise. In a poll conducted last year for the federal government, 71% of Canadians supported loosening of the country’s pot laws (37% supported full legalization). In Vancouver, pot is already rampant through medical dispensaries and is de facto decriminalized. But the big shift is, of course, happening south of the border, with legal pot in Washington, Colorado, Oregon and Alaska, while being decriminalized in 16 other states, while still more allow medical use. Ballot initiatives in 2016 will likely see the number of states with legal pot increase again, including heavyweights like California. It’s not hard to imagine pot being legal everywhere before long.
PM Harper’s antiquated tough-on-drugs rhetoric may resonate with his social conservative base, but may prove divisive for other conservative supporters of a more libertarian stripe. That is, people should be free to do something they choose as worthwhile as long as it does not harm anyone else. And to the extent that there is harm from pot, that comes precisely from the fact that it is illegal – theft, damages, injuries and death resulting from organized crime.
In terms of human health, if anything, medicinal marijuana’s positive health impacts have taken the spotlight. A wide range of health applications (glaucoma, multiple sclerosis, treatment of nausea arising from chemo, and increased food intake for AIDS patients) are known. But there is tremendous untapped potential for better research studies on health applications, which would arise in a legalized environment.
There is also scope for better understanding health impacts of recreational use. While smoking pot implies some health risk of lung cancer, the evidence on this is actually inconclusive, while some research reports anti-cancer properties from active ingredients, THC and CBD. Plus, the advent of vaporizors and edibles eliminates potential harm from inhaling carcinogens in smoke. No overdose deaths are attributable to pot, although it is possible to eat too much of that cookie and end up in Emergency. Impaired driving is also a concern.
What about addiction? Pot is not considered to be physically addictive. Daily users can go off it without feeling withdrawal symptoms. This is different than alcohol, tobacco or even coffee, all of which produce negative physical symptoms during withdrawal. That said, pot can become habitual and in extreme circumstance this could lead to problems for users in managing work and personal relationships. Gambling addiction is a much more serious problem, but last I checked our governments were pushing for ever more casinos and lotteries.
Would use increase if drug laws were loosened? Probably. But if adverse health impacts of pot are minimal, this is only a problem if you buy into a “drugs are bad” morality. And if you are there, the only consistent position is to eliminate all drugs from society, including legal substances such as alcohol. This was the drive of the early 20th century temperance movement that led to alcohol prohibition, and we all know how that turned out.
What about the children? For recreational purposes pot should be kept away from kids, and be treated the same as alcohol. But the reality for teenagers is that it is hard to imagine pot becoming more available than it is currently. At least under a legal regime the door would be open to honest education and conversation among teens about the pros and cons.
So the real debate is whether we should decriminalize or legalize pot. My sense is that legalization is the best approach, if accompanied by appropriate regulation and taxation policies. Decriminalization stops making users into criminals, but it won’t stop harms associated with organized crime. Moreover, it presumes that usage is a negative. Having a drink after work and having a toke should be treated the same in the eyes of the law.
Legalization also opens up the economic potential of pot. A legal market for pot would facilitate growing (domestic market and export), retail outlets and Amsterdam-style coffee shops (including tourism potential), and various value-added activities (vaporizors, edibles, oil products, etc). That means new demand for commercial and industrial real estate, gains in (legal) employment, and for governments, increased taxes (personal and corporate income taxes on new activity, plus sin taxes on sales) and reduced expenditures (law enforcement, courts and incarceration).
Time will tell what regulatory and tax regime makes the most sense, as US states experiment. In Colorado, a state about the same size as BC, legalization yielded $76 million in revenues in 2014. Loosening of pot laws has been accompanied by a slight decline in usage by youth and a reduction in traffic fatalities. And thousands of jobs have been created.
So the case for legalization is that it shines daylight on an activity for which there is already widespread civil disobedience; it cuts organized crime out of the picture; could drive new innovations in health; creates new centres of economic activity; and provides revenues to governments, while reducing or reallocating public expenditures arising from criminality.
Here is the link to buy a new book, Canada After Harper, edited by Ed Finn and with an introduction by Ralph Nader, just published by Lorimer.
Most Canadians know that Stephen Harper has had a tremendous impact on the country since becoming prime minister in 2006. But few have the in-depth knowledge of how far his transformation has gone — what has already been done, and what the consequences will be in the future.
This book brings together Canadian experts in a wide variety of areas. They document key changes put in place by the Harper government. There have been dramatic changes in education, health care, women’s rights, science and research, guiding the economy, labour unions, water and natural resources, and aboriginal affairs. Most of these measures have been designed to be difficult, if not impossible, to reverse.
Readers will for the first time grasp the breadth and depth of the Harper attack on institutions, policies, and programs that embody values and principles shared by most Canadians. Each chapter documents the dangers of a government fixated on the needs of corporations and the one percent, blinded to our environmentally unsustainable lifestyle, and expanding surveillance and security measures to intimidate and threaten opponents.
The contributors to this book believe that engagement in public affairs by the citizenry can trump the power of the elites and the giant corporations who are the winners of the Harper era. As activists in public life, they propose strategies and measures to create a Canada that champions fairness, social justice, real democracy in our government institutions, action to reverse global warming, and a constructive role in world affairs.
The contributors to this book come from every corner of Canada: David Suzuki, Maude Barlow, Joyce Nelson, Peter Robinson, Andrew Jackson, Scott Sinclair and Stuart Trew, Lynne Fernandez, Linda McQuaig, Colleen Fuller, Kate McInturff, Nora Loreto, Larry Kuehn, Ed Finn, Art Manuel, Duff Conacher, Alex Himelfarb, Kevin Page, James Turk, Trish Hennessy, and Murray Dobbin
Associate Professor, Laurentian University
Co-Editor, Review of Keynesian Economics
Follow him on Twitter @Lprochon
Mr. Harper and the Conservatives never miss an opportunity of reminding Canadians that we should vote for them in October in order to ensure economic prosperity in the future. At the heart of this argument is the belief that they are the best equipped political party to manage the Canadian economy. Yet a new study arrives at the very opposite conclusion: Mr. Harper’s government has the worst economic record of all federal governments in Canada since 1946 (Oops I said history before, mea culpa!).
The first major election promise from the federal Conservatives: a permanent home renovation tax credit. On the surface this looks like an astute manoeuvre, given that home renovation has been booming in recent years. Canadian Press called the proposed credit a “big budget campaign promise,” but on closer inspection it is pretty underwhelming.
Estimated at $1.5 billion per year, Canadians won’t see this new credit for some time. In part that is because of the weak Canadian economy and correspondingly weaker federal budget position, stubbornly headed for deficit this year in spite of bold claims made by the feds at budget time. This election promise is not likely to happen until at least 2017, if not later.
The inspiration for the proposed credit is the 2009 “stimulus” budget, which brought in a temporary credit, although with a higher ceiling of $10,000 worth of work. At least in 2009 the intention was to stimulate new work (although there were likely many free riders, those who would have done the work anyway). For a new credit the effect will be the opposite: households will delay home renos in 2016 so they can claim the credit in 2017 (or whenever).
It is also notable that a home renovation tax credit benefits already affluent home owners, those who least need a tax break. More than 30% of Canadian households are renters, so this tax break means nothing to them. Another portion of homeowners, including those with hefty mortgages, are not likely candidates either.
But even for those who are homeowners, the credit is capped at $5,000 worth of work, meaning a maximum tax savings of $750. For those contemplating any serious renovation, this credit will be only of modest help – unless you spread your reno across multiple years.
When you look closely, it is puzzling why this should be a priority at all for our federal government. It is similar to the crass tax credit politics we see with children’s sports and arts programs. Where exactly is the pent-up demand for home renovations that cannot go ahead without that extra $750?
If stimulating the housing sector is the objective, how about committing federal funds for construction of new affordable housing. $1.5 billion per year would be a great first step at a time when housing affordability is a top issue for families.
Harper’s economics and geocentrism
Associate Professor, Laurentian University
Co-Editor, Review of Keynesian Economics
What a month it’s been. While the first half of 2015 has not been kind to Canadians and the economy, July has proven to be worse.
On the economic front, we have had a tumultuous month capping a tumultuous first half of the year. When Bank of Canada governor, Stephen Poloz, described Canada’s economy as ‘atrocious’, little did we know how atrocious it was going to get.
The Bank of Canada cut its benchmark interest rate two weeks ago to nearly record lows, now just 0.5%. In the face of an oil shock and other weakness, monetary policy is expected to do the heavy lifting of beating an economic funk. Today’s move reflects a poverty of economic policy from the ruling Conservatives and much of the political class.
Harper has been adamant that Canada’s downturn—now very likely a recession, about which his own Finance Minister remains in denial—is the result of global forces. There’s nothing that can be done to counteract a host of external problems but to button down. The best a government can hope for is to maintain a fabled fiscal discipline.
However, there’s a disjoint between saying that policy couldn’t have been used to avert downturns like this one and screaming bloody murder anytime someone raises the prospect of even mildly activist, redistributive, old-school social democratic economic policy. If current policy is that ineffective, then perhaps it’s high time to try something else? “There’s nothing we could have done” is just a fatalistic cover for political choices. Read more »
Speculation is intense that the unofficial election campaign we have already been experiencing for several months, is about to become official: Ottawa is awash in rumours the writ may be dropped as early as this weekend, setting the stage for months of promises, accusations, and photo-ops.
As always the economy will be the top issue. But with recent bad news, Conservative hopes of cashing in on their reputation as “the best economic managers” have suddenly become faint. Four straight months of falling real GDP, terrible export and investment numbers, and growing consumer pessimism, make their traditional chest-thumping seem starkly at odds with the painful reality confronted by most Canadians. On September 1 we will learn if Canada is actually in an official recession (defined as two consecutive quarters of negative GDP growth). Even if we’re not, our performance has been perpetually disappointing.
However, this gap between triumphalist rhetoric and grim reality did not suddenly appear. In fact, the evidence has been piling up for years – long before the current slowdown – that Canada’s economic performance under the Harper Conservatives has been uniquely poor.
To further investigate this dissonance, I have worked with my Unifor colleague Jordan Brennan to compile an exhaustive empirical comparison of Canada’s economic record under the Harper government, and compared that record to previous postwar Prime Ministers. The full 64-page study was released today, and is available here. Read more »
Harper-economics lead to a Harper-recession and now to a Harper-deficit
Associate Professor, Laurentian University
Co-Editor, Review of Keynesian Economics
Confirmation federal government finances have fallen back into deficit raises more questions about Harper’s image, now more myth than reality, as a sound economic manager.
A deficit of course was inevitable once you accept Canada has fallen into a Harper-recession: negative growth and falling revenues make a deficit a sure thing. This comes as no surprise to many of us who had predicted as much.
Mr. Harper’s recession
Associate professor of economics, Laurentian University
Co-Editor, Review of Keynesian Economics
Short of a miracle, Canada is officially in recession, which I predicted back in January. But this recession was wholly avoidable had Mr. Harper and his government abandoned their wicked policies of austerity in favour of a growth-oriented fiscal expansionary policy. Bottom line: this is a Harper recession.
This is a guest blog post from Doug Chaudron:
British journalist Johann Hari recently gave a TED talk, provocatively titled “Everything you think you know about addiction is wrong.” See the 15-minute talk, and find Hari’s biography, at http://tinyurl.com/o5kp779.
Some key points made by Mr. Hari in his talk include these: Current approaches to treatment don’t seem to work well; taking “addictive” drugs doesn’t always result in addiction; rats given appealing alternatives to drug use rarely become drug users; creating social connectedness and opportunities might work better than punishing addicts.
The speech is quite engaging, and for me depressing. The depressing part is that the research (e.g., Alexander’s Rat Park) and the conceptual alternatives he discusses have been well known in the addictions business for decades. So, there is nothing new here, and it’s depressing to learn that the speaker, and TED Talks organizers, thought that this was news. It’s not news at all. At the time of my retirement from Toronto’s Centre for Addiction and Mental Health, in 1999, Rat Park and related conceptual alternatives had been discussed for about 20 years.
Equally, even more, depressing is that the concepts have not “penetrated” the addiction-treatment industry. For an equal number of decades, research has shown that: shorter treatment is as effective as, or more effective than, longer treatment; outpatient treatment is as effective as, or more effective than, inpatient treatment; treatment by modestly-trained counselors is as effective as, or more effective than, treatment by heavily-trained experts; and brief interventions are as effective as, or more effective than, extensive and intensive interventions. But the treatment industry continues to prescribe long-term, intensive, inpatient treatment delivered by highly-trained experts.
I therefore wish that Mr. Hari would stop worrying about finding a new understanding of addiction (at which he has not succeeded), and instead worry about why the best information is not being used. As it turns out, there has been research on this issue. Of course there is the inertia of ideology, but research also leads to the discovery that the less-effective forms of treatment involve the making of more MONEY by their providers than the proven alternatives. Surprise, surprise…
Greece and the death of economics, and democracy, and civility, and so much more
Associate Professor of Economics, Laurentian University
Co-editor, Review of Keynesian Economics
Irrespective of whether it was total capitulation, there are already a multitude of analyses trying to decipher what (and how) exactly happened in Greece and whether it could have been avoided. Countless opinions will be offered as to who is to blame.
My sense is that this Greek tragedy could not have been avoided no matter the level of strategy involved: what was suppose to happen, happened exactly the way it was suppose to. The truth is, it was unavoidable and the one lesson we learned was that the power of finance trumps democracy, every time. What the Left now need to do is how to reverse this, which is not an easy thing to do. Afterall, the whole purpose of the Occupy movement is to do just that. So the Left has a lot of soul searching to do.
Evidence continues to mount regarding Canada’s lousy economic trajectory, and there is now a pretty broad consensus among Canadian economists that the economy was likely in recession in the first half of the year. That’s not a sure thing, of course: we won’t know until September 1 if second quarter GDP grew or shrank. Read more »
Posted by Armine Yalnizyan under Conservative government, demographics, economic growth, employment, globalization, immigration, labour adjustment, labour market, migrant workers, population aging, skill shortages.
July 7th, 2015
It’s only been a couple of weeks since Disney, that most iconic of American companies, moved to displace all its home grown techies with low-cost foreign temporary workers. But the company had to beat a hasty retreat in the face of an outpouring of criticism.
Amid the deluge of commentary this story triggered about where America is headed, blogger and finance professor Noah Smith turned his eyes north and gave Canada a mighty shout-out in a column for Bloomberg, Canada: Tomorrow’s Superpower.
Professor Smith rightly pointed out that, among the attributes that will make any nation great in future, immigration policy is key. But in his haste to explain what’s right about Canada’s policies, he skipped over the part of the story where we’ve begun to ape what’s wrong about the American way: a growing reliance by business on temporary “guest” workers. Read more »
Revisiting my top ten predictions
Associate Professor, Laurentian University
Co-Editor, Review of Keynesian Economics
In early January 2015, I published on CBC my ‘Top Ten Predictions’ for the year (see here). Here we are half-way through 2015 and I thought I would revisit these predictions to see how I fared.
Well, not bad actually.
My predictions were:
Posted by Nick Falvo under education, employment, inequality, Job vacanices, labour market, post-secondary education, skill shortages, student debt, unemployment, user fees, wages, young workers.
July 3rd, 2015
What follow is a guest blog post from Glenn Burley:
If Science, Technology, Engineering and Mathematics (STEM) and professional fields like medicine, law, and dentistry are the so-called golden ticket to a good job in today’s labour market, what does that say about the current and future health of our economy?
The myth of the ‘skills gap’ in Canada is persistent. Along with increasing levels of student debt and a labour market in which good jobs are increasingly hard to find—especially for young people—this myth leads public discussion on employment to blaming individuals for their education choices. According to some, the only way to secure a decent job and address the labour market’s ‘skills gap’ is by studying in STEM fields.
Despite numerous contradictory reports, and even a degree of government back-pedaling, the skills gap narrative continues to hold considerable weight in public discourse. Most attempts to dispel the myth focus on general employment trends, noting a lack of wage evidence for a shortage of these qualifications, but not heavily focusing on the wage story.
The myth is also driving post-secondary education policies under the guise of encouraging students to study in fields that will “guarantee good jobs and high wages” and is used to justify significant year over year increases to tuition fees in STEM and professional programs (law, dentistry, medicine, etc.). In an attempt to dispel this myth, let’s tackle both arguments by looking at the actual wages these fields have earned from 1997 to 2013, as this was the largest set of data available at that time from the Labour Force Survey (LFS).
I relied on custom LFS data, which provided the median hourly wages for the most specific and closely related National Occupation Classifications (NOC-S), from 1997 to 2013 to the STEM and professional fields I was interested in:
- C01: Physical Science Professionals
- C02: Life Science Professionals
- C03: Civil, Mechanical, Electrical, and Chemical Engineers
- C06: Mathematicians, Statisticians, and Actuaries
- C07: Computer and Information Systems Professionals
- E01: Judges, Lawyers, and Quebec Notaries
- D0-D1: Professional Occupations in Health, Nurse Supervisors, and Registered Nurses (more focused data for doctors and dentists were not available)
Starting out, I assumed both that incomes in STEM fields would be increasing fairly consistently and that these increases would be surpassed somewhat by increases in tuition fees. While I was largely correct in the tuition vs. wages assumption, it turned out the wage data on its own tells some very interesting stories.
Three clear points have emerged from the data:
- Tuition fee increases are outpacing wage gains
- There are cases where STEM and professional fields have seen their wages decrease when adjusted for inflation
- Income inequality within the STEM and professional fields is very significant, but the general narrative about these fields assumes that everyone ends up in the top 10%
Taken as a whole, I believe the data show that the push for more STEM degrees is not only exaggerated, but highlights the poor short-term and long-term employment prospects for Canadian youth.
As public funding for post-secondary is eroded, the costs have been downloaded onto individuals through user fees. In most provinces, tuition fees increase annually at rates well above inflation for STEM and professional programs.
Between 1997 and 2013, tuition fees for these programs increased by between 38% (general science) and 202% (dentistry). These figures are national averages that have been adjusted for inflation.
Tuition fees in math and technology remain among the lowest in the fields examined (59.4% increase), mainly due to their more ‘core’ nature. Engineering, with one foot in the STEM pool and the other in the ‘professional field’ pool, has seen larger increases (69.8%) than the other STEM fields, but not nearly as much as other professional programs.
Medicine, dentistry, and law, with their largely unregulated tuition fees, have seen unparalleled increases. In 2013-14, the national average for a year of law school was just over $10,000 (up 156.4%); a year of medical school was over $12,000 (up 137.7%); and a year of dentistry school was over $17,000. These figures do not include ancillary, lab, or equipment fees, which can be upwards of $10,000 per year at some schools; let alone the cost of living.
Wages Since the Recession
We still often hear that if you get a STEM degree, you’ve got a golden ticket in today’s economy. Professional fields are generally thought of as safe ways to earn high salaries. These ideas are used to excuse ever-increasing tuition fees for these programs, because—the argument goes—it’s no big deal, you’ll more than earn it back!
The reality is that, since the recession, wages in these fields are not that golden.
In the physical sciences, national median wages have increased by an average of 11.9% when adjusted for inflation. However, this figure hides two of the most surprising figures I encountered: Since 2008, median wages in the physical sciences have decreased in both Alberta and British Columbia, by 2.5% and 21.4%, respectively.
The changes to the national median wages for the remaining fields examined, from 2007 to 2013 (pre-recession), and 2008 to 2013 (during the recession), adjusted for inflation are as follows:
- Life Sciences: +1.2%, +2.8%
- Technology: -0.5%, -0.4%
- Engineering: +6.3%, +8.8%
- Math: +35.8%, +21.4%
- Medicine: +6.1%, +4.2%
- Dentistry: +6.1%, +4.2%
- Law: +6.8%, +8.1%
Stagnation and decreases in wages since the recession don’t necessarily mean the wages are low. The Canada Job Bank, which uses outdated information, provides a low, median, and high wage point for employment classifications used in the LFS. The ‘low’ refers to the 10th percentile, median is the 50th, and ‘high’ is the 90th.
While not perfect, let’s consider the 10th percentile (a.k.a. low wage, a.k.a. median of the bottom 20%) as an “entry level” wage. Unsurprisingly, these “entry-level wages,” both at national and provincial levels, are much lower than the wages that get talked about as part of the “golden ticket” narrative.
In 2013, “entry level” wages for these fields ranged from a low of $36,380 in Life Sciences to a high of $58,874 in Math. If someone graduates with above-average student debt, wages in this range can get a person close to qualifying for the Repayment Assistance Program—the program designed by the Canada Student Loans Program to help graduates who have difficulty repaying their loans.
Median wages at the national level ranged from a low of $67,787 in Physical Science, to a high of $115,850 as a Doctor/Dentist. While aligning a little more closely with the public narrative, even the median wages in these fields can come up well short of the “advertised” promise.
The most notable finding was just how far the top 10% of earners in the fields were from even the median earners. The top 10% of wages in the fields ranged from $113,790 in Life Sciences, to $340,917 in Medicine/Dentistry. While these wage figures are much more in line with the promises being made to young Canadians, they are obviously far from the norm.
When the high wages were compared to the median wages, the level of wage inequality is quite apparent. In Law and Technology, high earners earned approximately 58% more than median earners, and had the lowest level of inequality. At the other end, high earning dentists and doctors earned 194% more than the median.
Not only is the narrative misleading young Canadians into thinking they’ll walk into top earning wages in their field, it fails to mention that those top wages are far from the reality for the majority of workers in those fields.
STEM as the Canary in the Mine
After reviewing the data, I was left with a question: if these fields are truly the best fields for young Canadians to enter, what does that say about the state of our economy?
In almost all of the fields examined, wage decreases since the recession are visible in at least one province—and in one case, the national median has decreased. In almost all cases, this misleading narrative advertises a wage that is only earned by people in the top of the field. In almost all cases, income inequality within the field is significant.
With the increasing costs needed to get the credentials to enter these fields—not to mention that some of these fields require graduate degrees to obtain some of the best-paying jobs—and with the growing prevalence of precarious employment, a troubling trend becomes evident.
Based on the data, it’s becoming clear that we may have more than a “skills gap” myth to dispel; we may have an “economic recovery” myth as well.
This week marks the official publication release of the second edition of Economics for Everyone: A Short Guide to the Economics of Capitalism. In this blog I explain my motivations in writing the book, and promoting critical economic literacy more generally; the commentary was originally published by Pluto Books (the international publisher). The book is released in Canada by the Canadian Centre for Policy Alternatives, and is available for purchase here: http://economicsforeveryone.ca/buy-book/. The e4e website contains many free resources and teaching materials for anyone who wants to undertake their own course in popular economics. Read more »
The costs of climate change are piling up, and can no longer be ignored. 2015 is poised to be a landmark year, with a new global treaty on climate to be signed in Paris. In contrast, the Harper decade succeeded in stalling any meaningful climate action. The PM’s record is not just of neglect, but of moving the yardsticks backwards in both the international arena and within Canada.
Climate change is primarily caused by human use of fossil fuels (coal, oil and natural gas) for energy, whereas extraction and export of those fossil fuels is central to the Harper government’s economic strategy. With political roots in Alberta and the oil patch, it is no surprise that the Harper government champions the oil sands.
In its minority days, the Harper government felt obliged to at least pay lip service to climate change. In 2007, then Environment Minister John Baird released “Turning the Corner: An Action Plan to Reduce Greenhouse Gases and Air Pollution,” which promised “tough industrial regulations.”
No such regulations have yet to appear for oil and gas, the source of one-quarter of Canada’s industrial and commercial GHG emissions. At best, one can point to the transportation sector, where the Harper government has followed the lead of the Obama administration’s higher fuel efficiency standards for vehicles. Measures to address pollution from coal-fired electricity generation, on the other hand, carve out existing plants from any action until 2030.
If anything, climate policies have provided the PM a well-spring of rhetorical attacks. During the 2008 election campaign Harper took aim at Liberal leader Stephan Dion’s proposal for a carbon tax, calling it a “tax on everything” that would “screw everybody across the country.” With new attention on climate change in 2015, the PM recently returned to script, calling carbon pricing a “tax grab,” thus framing the preferred climate action instrument of many in small-government, anti-tax terms.
Within months of achieving a majority government, PM Harper pulled Canada out of the Kyoto Accord, a move that undermined the first global treaty aimed at constraining carbon emissions. More recently, in the lead-up to the Paris climate conference, Canada could not be bothered to meet a deadline for submitting greenhouse gas reduction targets.
One of the Harper government’s top foreign policy goals has been to seek approval of the Keystone XL pipeline through the United States. Amid popular resistance and delays from the Obama administration, the Harper government battled for new pipelines to the BC coast, to supply the Chinese market. Then-Natural-Resources minister Joe Oliver defined this as “an urgent matter of Canada’s national interest” in an open letter that smeared concerned citizens as radicals in the service of US interests.
If anything, Oliver’s letter in early 2012 appears to have backfired, triggering widespread opposition in BC to pipelines and tankers, most notably Enbridge’s Northern Gateway project. The Harper government’s response has been to up the ante, approving the project, while using Canada Revenue Agency audits to intimidate critics in the environmental movement and beyond (my organization has also been singled out for audit).
Contrary views were also silenced. National Energy Board reviews of fossil fuel mega-projects no longer welcome public input, and in any event are not subject to scrutiny with regard to their climate impact. The National Roundtable on the Environment and the Economy, which had a habit of pointing out the credibility gap between government rhetoric and action, was shut down.
PM Harper’s record is thus one of relentlessly tearing down barriers to new fossil fuel development. This is perhaps best characterized by the 2012 omnibus bill, which among other things, dismantled environmental regulations that might affect oil sands growth, and accelerated approval processes for new pipeline and tanker projects.
In the courts, the Harper government has fought tooth and nail against the legal challenges posed by First Nations affected by oil sands development. However, fierce opposition from First Nations may be the undoing of Harper’s oil sands ambitions, as their rights are constitutional in nature and cannot be over-run by fiat.
More potent than pipeline protests, the collapse of oil prices starting in July 2014 dealt a critical blow to Harper’s economic plan. Saudi Arabia’s decision to no longer constrain production, and thus let world oil prices fall, has exposed Canada’s weakness as a high-cost producer.
Another looming shift will come from action on climate change, with an estimated four-fifths of Canada’s proven oil reserves needing to stay underground. The fossil fuel divestment movement is also having an impact, making fossil fuels into the new tobacco, and challenging a business model incompatible with a habitable planet.
Energy and climate have been central to the story of the Harper decade. In the end, history may render PM Harper’s central strategy of making Canada an “energy superpower” a failure.
We’re coming up to a Federal Election, and one where “The Economy” will likely be a central battlefield. As such, we’re going to hear many claims and counter-claims that support the view that Stephen Harper is either the Greatest or Worst Prime Minister ever.
One point of contention is wages. Part of the problem are the units of measurement and analysis – hourly, weekly, or annual earnings, total vs. market income, median vs. average. So this post is a bit of a stream of conciousness graphing of the ways that we measure income, and what that means.
We often see graphs of total average wages, rather than median wages or other distributional analysis.
By both the Labour Force Survey (self-reported) and the Survey of Employment and Hours (payroll data), average wages have risen consistently since 2001 (as far back as this iteration of SEPH goes).
When we look at all wages, we miss some important dynamics – women’s labour force participation and education rates have dramatically changed over the past 30 years. So that’s going to have an impact on wages. This isn’t a new observation, but it’s often overlooked. SEPH tables don’t disaggregate based on sex, though, so this analysis is often missing. (At least sex isn’t available from the free tables on CANSIM).
Annual median earnings only goes up to 2011, because SLID has been replaced (sigh). Still, what it shows is falling annual earnings for men in the middle of the income distribution, and only modest increases for women.
Have taxes and transfers helped? For sure. We still see pretty stagnant income for men in the middle of the distribution, but a more significant increase for women.
Note that total income in SLID includes EI, Worker’s Comp., Social Assistance, inheritance, returns on investments, pensions, as well as gov’t transfers such as GIS or the Canada Child Tax Benefit.
Full Year Full Time Workers
One other major difference between weekly earnings and annual earnings is whether or not you collect that money every week for the whole year. SLID gives us a picture of what proportion of workers were employed full-time for the whole year.
Since the 1990’s there has been a decline in the proportion of workers who work full-time for the whole year, again, more pronounced for men.
Median vs. Average
The second issue is that averages obscure growing inequality. Following the recession of the 1990’s, there was a marked divergence in men’s average and median annual earnings.
Women’s average and median annual earnings have diverged as well, but here the median is experiencing growth, just at a slower pace than those at the top.
The final word?
Men’s wages have definitely stagnated, and household income boosts from women earning more and working more may be near an end. Also: inequality matters.
(Note on how Statistics Canada arrives at this measure: In order to take into account the economies of scale present in larger households, the household after-tax income is transformed to express the household after-tax income per adult equivalent. All the persons of the population are ranked from lowest to highest by the value of their adjusted household after-tax income. Then, the ranked population is divided into five groups of equal numbers of units, called quintiles.)
Note: All graphs are adjusted for inflation.
Associate Professor, Laurentian University
Co-Editor, Review of Keynesian Economics
In its recent report released in early June, the International Monetary Fund (IMF) has made some startling policy announcements: given the general depressed economic condition in the world economy, now is not the time to pay down the national debt if that implies sacrificing economic growth. This advice was aimed notably at Canada: worry about deficits later.
This is quite a remarkable statement from an institution that is better known for defending austerity and so-called neo-liberal policies of free markets. Indeed, in the 1990s, the IMF tied financial aid to many developing countries to the adoption of a series of specific neo-liberal policies that imposed harsh reforms on them that only worsened their already fragile economies.
Canada’s first-quarter GDP report was not just “atrocious,” as predicted by Stephen Poloz. It was downright negative: total real GDP shrank at an annualized rate of 0.6% (fastest pace of decline since the 2008-09 recession). Nominal GDP fell faster (annualized rate of 3%), as deflation took hold across the broader production economy (led, of course, by energy prices).
This sets the stage for a politically explosive second-quarter report, which will be released by Statistics Canada on September 1. The official definition of a recession is two consecutive quarters of negative real GDP growth. This definition, of course, is utterly arbitrary: it can feel like a recession in the economy (with rising unemployment, poverty, and pessimism) even if real GDP is sluggishly expanding. Nevertheless, if the second quarter number is also negative, then by that conventional definition, Canada will be in a recession — just in time for the federal election campaign.
What are the chances of that happening? Here I parse the odds: Read more »
In our Climate Justice Project, our research has stressed structural changes and collective action to lower carbon footprints rather than individual behavioural change. The ability of many actors to respond to incentives like a carbon tax is constrained by their circumstances. Suburban households often have no realistic option but to keep driving. Renters have little agency over energy efficiency investments where they live. Even for concerned homeowners, the area of energy efficiency is plagued by market failures in information, such that profitable investments often go unrealized in favour of the status quo.
We also make the case that effective and fair climate action is also good industrial and employment policy. There is lots of work that needs to be done, and this should be embraced as part of a national project. We advocate divestment from fossil fuels and re-investment in green infrastructure and services. Done well, the shift off of fossil fuels can provide additional benefits in terms of health and well-being, economic security and much lower inequality.
A growing body of research into well-being and happiness tells us to look beyond money and consumption. While income matters a great deal at lower levels – when one is poor, a little money makes a big difference – but once basic needs are met, higher income does not necessarily translate into gains in happiness. Research points to substantial benefits to be had from a more equitable distribution of wealth – inequality manifests in weaker performance on a range of social and health indicators. Social fairness in terms of income and employment distribution may, in fact, be vital for achieving the changes required for a transition to a sustainable economy.
Some key insights into well-being relevant to a new conception of “the good life” include (key references at end):
Full employment and decent work – Unemployment has been shown to have huge negative consequences for our well-being, and is one of the biggest sources of unhappiness. Even the employed in a society are unhappier in an economy with high unemployment, particularly those with weak job security. The quality of the work we do also affects our well-being because it gives us purpose, a challenge and opportunities to develop relationships with others. Work not only provides income, but it helps to sustain social relationships. Thus, full employment policies offer gains that span across having work, decent income, and reduced social inequality, and a green jobs program that promotes work that has meaning and purpose is precisely the type of work that contributes to higher levels of well-being.
Time use and work-life balance – Finding a suitable balance between work and life is a real challenge for Canadians, and especially so for working parents. The amount and quality of leisure time is important for well-being, due to physical and mental health benefits, whereas long work hours may harm our health and increase stress. Time pressures from work can also reduce time available to families, for caring work and volunteering. Increased sharing of work and reduced work hours could both reduce unemployment and increase leisure time. Saving time from reducing long commutes can also liberate time and increase well-being.
Community and social cohesion – The most important sources of happiness seem to include having close relationships with family and friends, helping others, and being active in community, charitable, and political activities. In large urban areas, participation in community and thus the ability to psychologically flourish can be constrained by social isolation and loneliness. Countries with a high degree of social equality, trust, and good governance show to be the happiest in the world. In fact, the quality of governance and the rule of law matter more for life satisfaction than a household’s income. Investment in public goods and infrastructure (broadly defined to include access to nature/parks, arts and sports facilities, and other public spaces) can encourage more social cohesion, suggesting that we must renew our sense of public space and invest time and money in shared goals for healthy social participation.
These findings have led to a growing understanding that too narrow a focus on GDP is a flawed approach to well-being. One major report to the French government from two Nobel laureates in economics argues that progress should be understood by assessing a diverse array of well-being indicators to capture a more comprehensive understanding of people’s lives, spanning key areas of: health, education, environment, employment, material comfort, interpersonal connectedness and political engagement.
The Canadian Index for Wellbeing (CIW) was launched only recently in 2010 as a counterweight to the gross domestic product numbers. It aims to measure and track the quality of life of Canadians and is comprised of 64 indicators. The CIW has demonstrated that Canadians’ quality of life has not kept pace with the country’s economic growth from 1994 to 2008, where although GDP grew 31%, CIW rose only 11% in the same period. A key reason is that Canadians are spending less and less time on healthy social and leisure activities, and the state of the environment has declined.
This growing body of research is broadly consistent with the notion of climate action and climate justice. As the 2012 World Happiness Report comments:
The environmental debate could be importantly recast by changing the fundamental objectives from economic growth to building and sustaining the quality of lives, as assessed by those whose lives they are. This will depend crucially on the human capacity for cooperation … people gain in happiness by working together for a higher purpose. There can be no higher purpose than promoting the Earth’s environmental balance, the well-being of future generations, and the survival and thriving of other species as well. Sustainability is an instrumental goal, because without it, our health and prosperity are bound to collapse. But environmental sustainability is also an end goal: we care about nature, we care about other species, and we care about future generations.
*Hat tip to Noelani Dubeta for research assistance.
R Wilkinson and K Pickett. The Spirit Level: Why More Equal Societies Almost Always Do Better.
Jackson, T., 2009. Prosperity Without Growth. London: Earthscan.
Layard, R., 2005. Happiness: lessons from a new science. London: Penguin Books.
Marks, N., and Shah, H., 2004. A well-being manifesto for a flourishing society. The power of well-being. London: New Economics Foundation.
Johnson, E., Sharpe, A., Ghanghro, A., and Kidwai, A., 2011. Does Money Matter? Determining the Happiness of Canadians. Centre for the Study of Living Standards.
OECD, 2012. Better Life Index: Canada.
Bok, D., 2010. p.209. The Politics of Happiness: What Government Can Learn from the New Research on Well-Being. New Jersey: Princeton University Press.
Is another recession on its way?
Associate Professor, Laurentian University
Co-editor, Review of Keynesian Economics
Canada’s economy shrank in the first quarter by a whopping 0.6%. Is this the beginning of a new recession?
Recessions of course are defined as two consecutive quarters of negative growth. Now we learn today that Canada’s economy shrank between January and March, the biggest decline in GDP since 2009, and the first contraction in the last four years. In fact, the economy contracted in all three months. It is even more dramatic when you think that Q4 2014 registered a growth of 2.4%!
Louis-Philippe Rochon is associate professor of economics at Laurentian University and co-editor of the Review of Keynesian Economics.
Originally published by CBC. See here.
In its April budget, the federal government announced it had succeeded in balancing the budget. Such an achievement, however, will prove to be at best a Pyrrhic victory. History shows austerity and balanced budgets never work and only doom our economies to more misery.
The Austerians, as American economist Rob Parenteau calls them, are clearly winning the policy war.