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The Progressive Economics Forum

Hudak job cuts impact on communities

Today the Ontario Federation of Labour and CUPE Ontario published calculations I prepared of how Ontario Conservative leader Tim Hudak’s promise to eliminate 100,000 public sector jobs will be felt at the local level, on cities and communities across the province.

The original OFL release provides info on the magnitude of these impacts for the 15 largest census metropolitan areas across Ontario, for which labour force survey figures are available, a second release has the impacts for smaller communities, while CUPE Ontario has put a map on-line  that shows the impact for all the metro areas and a number of smaller cities and towns (or “census agglomerations”).   Below I include some details on how the numbers were calculated and provide the impacts for the full list of communities.

These job cuts–more extreme than  under Mike Harris–would be devastating for many communities.   As I outlined in a previous post, if the elimination of 100,000 public sector jobs plus the spin-off jobs led to an equivalent increase in unemployment, Ontario’s unemployment rate would reach 9.7% (based on an increase from current rates)– the highest in 20 years.

But the impacts would be even greater for particular communities.  What this analysis shows is if public sector jobs are eliminated proportionally, the impacts would be especially severe for mid- and smaller-sized cities and towns in the province–and could lead to double-digit unemployment rates in many.

For example, if the cuts were implemented proportionately, Kingston could see an increase in its unemployment rate by 3.8 percentage points up to 10.2%; Peterborough up by 3.2% to 14.8%; Oshawa up by 2.9% to 9.9%; Guelph up by 3.2% to 10.4% and Greater Sudbury up 3.2% to 9.4%.

This is because, perhaps contrary to the perception of many, public sector employment actually tends to be proportionally higher in mid- and smaller cities than in larger cities.  These public sector jobs are also an important source of economic stability in these communities because the jobs are more stable and are decently, or at least more equitably, compensated.   The cruel irony is that the smaller cities and towns that are often a base of Conservative strength would be most damaged by the deep cuts Hudak is planning.

The impacts of public sector job cuts of this magnitude would be at odds with the way Hudak and his Conservatives are trying to sell them: as cutting “100,000 jobs in the bureaucracy” that would have little impact on front-line services or local communities.

The reality is the large majority of public sector workers are front-line workers.  According to Statscan data over 400,000 Ontarians work in education (locals schools, universities, colleges and trades schools); about 236,000 work in health care and social services (hospitals, community clinics, residential care); about 275,000 for local governments; and about 40,000 for provincial crown corporations such as Hydro, the LCBO etc.

In fact, there were only ~90,000 employed in the core provincial public service.  This includes the classic government worker or “bureaucrat” that Hudak loves to disparage, but it also includes many others, including provincial police, judicial employees, and those working for agencies, boards and commissions.

So there’s no question: the cuts Hudak would implement would result in significant cuts to front-line public services and would have a major impact on communities across the province.  Even prominent conservative columnist Tasha Kheiriddin (formerly director with the Fraser Institute and Canadian Taxpayers Federation) recently wrote she won’t vote for Hudak because she realizes he will cut public services her autistic daughter needs.

(While Hudak claims only private sector jobs create wealth, private sector industries and companies can often be more bureaucratic with higher administration costs than the public sector.  For example administrative costs in the US private health care system are about three times the administration costs in Canada’s largely public system).

How these job impact figures were calculated

These figures are based on the most detailed employment by industry and occupation figures that are readily (and freely) available for communities in Canada: data from the National Household Survey (NHS).

From this I calculated employment in public sector industry groups at the four-digit (most detailed) level for the 48 “Census Divisions” (CDs) in Ontario (from NHS Table  99-012-X2011052) and separately for the 42 different Census Metropolitan Areas (CMAs) and smaller Census Agglomerations (CAs) (from NHS table 99-012-X2011034).

16 different industry groups at the 4-digit level were included, with most of the employment from these in education, health care and social services and public administration, but excluding employment in federal and aboriginal public administration.   However, I included in this local, regional and municipal public administration because Hudak was reported as saying he would also force municipalities to cut jobs.

From these totals of provincial and municipal broader public sector employment by community, I subtracted the NHS figures for employment of nurses, doctors and police officers (commissioned and non-commissioned) (From NHS tables 99-012-X2011051 and 99-012-X2011033) for each of these communities as Hudak said these jobs wouldn’t be cut.   This provided net totals for the public sector workforce by community that would be affected by these cuts.

This analysis assumed then that the cuts would be made proportionate to these levels of public sector employment across the province.  Hudak hasn’t provided any other details on how specifically the cuts would be implemented except to admit that they would definitely affect front-line services and mean fewer teachers.

And because the loss of these direct jobs have multiplier effects through the loss of their spending in the local community and beyond, the total impacts also include an estimate of the spin-off effects on private sector employment, using a multiplier of 0.67, as explained in my previous post.

The increase in the unemployment rates was calculated for the 15 Ontario CMAs for which Statistics Canada publishes Labour force Survey figures using the April 2014 seasonally adjusted figures from Cansim Table 282-0116.

These are of course estimates.  No one knows what the impacts ultimately will be, but they are the most accurate estimates I could calculate based on the most detailed data readily available and making reasonable assumptions.   Hudak has of course built his campaign around a claim that he’s going to create a million jobs through things such as corporate tax cuts, etc.   The credibility of those claims will be the topic for a subsequent blog post.

The following two tables provide these results: the first for the 15 largest cities (Census Metropolitan Areas) for which labour force survey data are available; and the second the public and private sector job losses for all the larger cities (CMAs) as well as the smaller cities and towns (CAs).

Estimated job losses and increase in jobless rate from Hudak’s public sector job cuts for the 15 largest cities (CMAs) in Ontario

City (CMA)

Job losses

Increase in unemployment rate

Resulting jobless rate (based on April 2014 rate)

Ontario

167,000

2.3%

9.7%

Ottawa

11,159

1.9%

8.8%

Kingston

3,333

3.8%

10.2%

Peterborough

2,057

3.2%

14.8%

Oshawa

6,134

2.9%

9.9%

Toronto

62,892

1.8%

9.6%

Hamilton

10,555

2.6%

9.0%

St. Catharines – Niagara

5,301

2.5%

10.7%

Kitchener – Cambridge – Waterloo

6,142

2.0%

8.8%

Brantford

1,782

2.4%

9.4%

Guelph

2,480

3.2%

10.4%

London

7,116

2.7%

10.7%

Windsor

3,964

2.4%

10.8%

Barrie

2,547

2.2%

9.4%

Greater Sudbury

2,785

3.2%

9.4%

Thunder Bay

2,460

3.8%

9.6%

 

 

Estimated impact of Hudak public sector job cuts on Ontario cities and towns

City or town (CMA or CA)

Public sector job cuts

Spin-off private sector job losses

Total job loss

% of provincial total job losses

Cornwall              471              316              787

0.5%

Hawkesbury                82                55              137

0.1%

Ottawa          6,682          4,477        11,159

6.7%

Brockville              322              215              537

0.3%

Pembroke              231              155              386

0.2%

Petawawa                60                40              100

0.1%

Kingston          1,996          1,337          3,333

2.0%

Belleville              686              460          1,146

0.7%

Cobourg              150              101              251

0.2%

Port Hope              155              104              258

0.2%

Peterborough          1,232              825          2,057

1.2%

Kawartha Lakes              716              480          1,196

0.7%

Wellington              250              168              418

0.3%

Oshawa          3,673          2,461          6,134

3.7%

Ingersoll                99                67              166

0.1%

Toronto        37,660        25,232        62,892

37.7%

Hamilton          6,320          4,234        10,555

6.3%

St. Catharines – Niagara          3,174          2,127          5,301

3.2%

Kitchener – Cambridge – Waterloo          3,678          2,464          6,142

3.7%

Brantford          1,067              715          1,782

1.1%

Woodstock              263              176              439

0.3%

Tillsonburg                86                58              144

0.1%

Norfolk              452              303              755

0.5%

Guelph          1,485              995          2,480

1.5%

Stratford              256              171              427

0.3%

London          4,261          2,855          7,116

4.3%

Chatham-Kent              764              512          1,277

0.8%

Leamington              271              181              452

0.3%

Windsor          2,374          1,590          3,964

2.4%

Sarnia              618              414          1,032

0.6%

Owen Sound              330              221              551

0.3%

Collingwood              133                89              222

0.1%

Barrie          1,525          1,022          2,547

1.5%

Orillia              293              196              489

0.3%

Midland              310              207              517

0.3%

North Bay              751              503          1,254

0.8%

Greater Sudbury          1,668          1,117          2,785

1.7%

Elliot Lake                78                53              131

0.1%

Temiskaming Shores              134                90              223

0.1%

Timmins              448              300              748

0.4%

Sault Ste. Marie              808              541          1,349

0.8%

Thunder Bay          1,473              987          2,460

1.5%

Kenora              203              136              339

0.2%

 

 

Enjoy and share:

Comments

Comment from richard
Time: May 22, 2014, 4:40 pm

Rural ontario is primarily conservative.Thank god for that. The cost of the ontario government has bankrupt us. A family of 4 is on the hook for 100,000 dollars .The loss of a few civil servants(ie double dippers) would probably increase employment .Maybe those NUMBERS should be included in your study.

Comment from Toby Sanger
Time: May 22, 2014, 5:40 pm

It’s a convenient fantasy that there are a hundred thousand civil servants who could be eliminated without negatively affecting public services or local communities, but it’s simply not true–and even arch conservatives such as Hudak and others admit that.

Comment from Paul Tulloch
Time: May 23, 2014, 12:13 am

People forget that public service is an investment with assets and general welfare to be shared by all- it is the great equalizer. It keeps the middle class in the middle and those below a helping hand to get into the middle class. Especially in the smaller communities- and especially in Northern Ontario- where the boom and bust has always been short of public sector jobs that help smooth out the economy and also provide much needed services.

These are investments in the future- better education, healthcare, roads, communications, public space, parks, etc. We are witnessing the private sector interests, and the neo con assault on public sector – to cut taxes to starve the public services increasing the pressure on budgets and reducing the quality of services- hence opening a space for the private sector to invade the public realm. It is a sign of the weakness of the current economic system- that instead of paying workers and growing the economy, the corporate interests would rather empower right wing- tea party type governments like HUDAK to push for their agenda in opening up the public sector to profit.

I am not saying the public sector is perfect, but with reduced budgets and strained resources, it is getting more difficult to deliver on its goals. Sadly it will cost many of these smaller communities very dearly especially when the next downturn comes. Without these government services and the employment these services bring it will mean so very drastic structural changes for towns and smaller cities.

Great work Toby

Comment from richard
Time: May 23, 2014, 8:18 am

Do any of you economist ever look at the cost of our Ontario Government 65 BILLION $ and work that into your equations? I live and see the over abundance of municipal duplication of employment .It is a pandemic of waste.EVERYTIME you turn around they are hiring ing ,buying new equipment.For what? Services haven”t inproved since I MOVED here 30 yrs ago. So please stop fear mongering .Maybe these 100,000 thousand laid off bureacrats can cash in on early retirement (55) and recieve some rediculous severance package.Every business needs to restructure once in a while.

Comment from Paul Tulloch
Time: May 26, 2014, 4:53 pm

One more point I wanted to make- I believe the multiplier for government jobs in terms of the downstream indirect jobs and connection to private sector is being underestimated. I believe 0.67 is a very low multiplier so you are being very conservative in this estimate. I have done a bit of research and the literature seems to suggest from 1.5 up to almost 3.0 jobs per government worker (depending on the sector of government)

There are quite a few estimates but the average I am getting for Government sector, mainly US research suggests at least 2.0 jobs per government worker. Also note that some research suggests this parameter estimate is sensitive to slackness in the economy- the more slack the tendency this multiplier has to be higher. Also it has differing impacts on size of community.

Here is on good study- there are several others.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CDgQFjAC&url=http%3A%2F%2Fpages.wustl.edu%2Ffiles%2Fpages%2Fimce%2Fnathanjensen%2Fusing_multipliers_to_measure_economic_impacts.pdf&ei=6KeDU5iQA-rE8QGw_YGwDg&usg=AFQjCNFS1N_elz4MOkVIBID0QS53dV85sA&sig2=RWZU9sPBqp5ba9bPJHYArg&bvm=bv.67720277,d.b2U&cad=rja

Comment from Paul Tulloch
Time: May 26, 2014, 10:07 pm

Lets just say your work is a bit of a conservative estimate- but well done and not scare mongering- if you wanted to scare monger you could have lifted those estimates higher with different multipliers.

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