Every year when International Women’s Day rolls by, I can’t help but reflect on power, how it’s shared, and how women use the power they have. This year, I am struck by women’s power to reduce inequality, and not just to help ourselves. Women are key to reducing income inequality.
It’s been dubbed the girl effect, more powerful than the Internet, science, the government, and even money.
Canada is actually a poster girl (sorry) for the truth that education and hard work can transform not just lives but societies.
Look around the world and you’ll see a tight relationship between the level of income inequality in a nation and the proportion of women who work in the paid labour force, as the OECD chart unequivocally shows. (For more, see here.)
There is no simple link between inequality and growth, but we know the more talent you can unleash and develop, the more you can change the course of a community and its history. Often hard times are what unlock doors.
Every recession is a “he-cession”: men lose more jobs than women in a downturn because the first thing to slow is the production in goods-producing industries that are typically male-dominated (mining, forestry, construction, manufacturing). Every early stage of recovery is a “she-covery”: men who lose $30 an hour jobs wince at accepting $15 an hour offers, but women grab them to make sure the bills get paid.
This is a story about women’s determination and effort, but it’s also a story about public policy.
Canadian women propped up the economy during the Second World War and in response to each recession thereafter.
Women’s share of the Canadian job market has climbed steadily, in response to economic calamity:
o 17 percent in 1931
o 22 percent in 1951
o 34 percent in 1971
o 47 percent in 1991
o 50 percent in 2011
It’s just over 50% today. We’re trailing men in self-employment, but that, too, is changing.
Women now play a bigger role in the paid labour force in Canada than in the United States, and we tend to get paid better than our American counterparts, helping us offset inequality more here than there. Why?
Possibly because we have wanted, and have been able to afford, more education (65% of Canadian women over 25 have a post-secondary degree, compared with 40% of U.S. women). Or maybe the fact that we have more communities that offer subsidized child care. We need way more affordable child care and post-secondary opportunities, but we have more access to these critical supports in Canada than the U.S..
The trouble is, we’re pedalling faster to stay in the same place, and our strategies are running out of time. Median household incomes have barely held the line in the last 35 years – which is, sadly, a better trajectory than in the U.S. But “household incomes” now usually means two workers, not one; and this generation of workers is far more educated, as a cohort, than households in the 1970s.
The “work harder” nostrum has been taken seriously by Canadian women, who have warded off deeper inequality for the past 35 years. But it’s a time-limited option, not available for the next generation. Female employment rates increased by 40 per cent over the past 35 years. Among women of child-bearing years (25 to 44 years old) it went up a whopping 56 per cent.
It’s simply not mathematically possible to find the same boost in the coming years. Women are already working almost as much as men. (See Chart) There’s no “reserve army of labour” left in the kitchen.
We’re left with a basic equality: everyone only has 24 hours a day. How we use our allotment depends on how the market values our time and effort, and how public policy supports or plays against us.
Women have used their willpower and their staying power to improve the odds for themselves and their families. They’ve run out of time. So has the idea that Canada doesn’t have to worry about income inequality.
If the next generation is not to lose ground, businesses and governments are going to have to do more heavy lifting too. It’s not just women’s work.
International Women’s Day is a great day to think about these things. It shouldn’t be the only day.
Armine Yalnizyan is Senior Economist at the Canadian Centre for Policy Alternatives. You can follow her on Twitter @ArmineYalnizyan.
This piece was originally published at the Globe and Mail’s online Report on Business feature, Economy Lab.
Acceptance or rejection of genetically modified food has tended to be analyzed with respect to the attitudes of consumers. But the attitudes of producers matter. For example, western grain farmers have mostly accepted GM canola and most rejected GM wheat. Emily Eaton of the University of Regina explores why in a new book Growing Resistance: Canadian Farmers and the Politics of Genetically Modified Wheat. Wheat was a superstaple with a long history, with deep roots in the economic livelihoods of prairie farmers, in agrarian protest and politics. A message bound to please the staple theorist/historian.
Tom Palley has an interesting piece on his blog re differing approaches to the theme of secular stagnation, drawing a distinction between Marxist and structural Keynesian perspectives. As he notes, neo liberals such as Summers have got on the bandwagon without really exploring in depth the roots of the problem.
This afternoon I spoke on a panel on university governance at a conference titled Future U: Creating the Universities We Want, organized by the Ontario Confederation of University Faculty Associations. Also presenting on the panel were Professor Glen Jones and Professor Claire Polster.
My speaking notes can be downloaded at this link.
Points I raised in my presentation include the following:
The Basics. Typically in Canada, a university has both a board of governors (BoG) and a senate. The former (which was the focus of my presentation) has responsibility for both “administrative and fiscal matters,” while the latter has responsibility for “academic matters.”
Internal vs. External Members. Approximately one-third of a university’s BoG members usually consists of “internal” members (i.e. students, faculty and staff). The other two-thirds of a BoG’s members typically come from outside the university community, and are sometimes referred to as “external” members. External members are not democratically elected; rather, they are either appointed by government or by the board itself. On this basis, I would argue that Canada’s House of Commons, all provincial/legislative assemblies in Canada, public school boards and most membership-based non-profits are more directly accountable to their constituencies than are university BoGs.
External Members. One advantage of having external members on a BoG is that they often bring expertise on various topics, including finance, auditing, capital projects and communications. However, a drawback of external members (in my opinion) is that they sometimes are quite distant from some of the day-to-day concerns of a university. For example, it is quite common for the external members of a university’s BoG to consist of high-income individuals. This may make it challenging for some of them to fully appreciate concerns such as student debt and working conditions of cleaning and maintenance staff. They may also arrive to the BoG without a nuanced understanding of what has transpired on campus in the previous 20-30 years (notwithstanding the fact that, in many cases, they may have been a student at that university at one point).
Information Flow. As Robert F. Clift has pointed out, a university’s president (i.e. the university’s most senior staff person) is very much in control of what information makes its way to a university’s BoG. It is therefore important for BoG members to make a presence on campus, read campus newspapers, and talk to students, staff and faculty.
Access to Board Members. Many BoGs in Canada feature very basic information about their members online. However, in many cases, contact information is not available for BoG members at a university’s web site. If contact information were available online for university BoG members, I think that would encourage members of the university community to contact BoG members from time to time; and I think this could lead to at least four possible outcomes. First, this would make it harder for the university’s president to contain the flow of information to each BoG member. Second, if contact information of BoG members were publicly available, BoG members would have to be ‘on their toes’ more often (answering e-mails, for example). Third, if contact information for BoG members were publicly available, some campus groups might ‘spam’ BoG members with unsolicited e-mails from time to time (for example, when protesting a decision by the University’s president or the BoG itself). Fourth, if members of the campus community had easy access to individual BoG members, cracks in the BoG’s official messaging (i.e. the ‘party line’) might be exposed from time to time.
Inner Boards. If a BoG is not careful, an ‘inner board’ (consisting of, say, four or five BoG members) can emerge, effectively relegating the rest of the BoG to the status of an advisory committee. This appears to be what happened at Concordia a few years ago.
Meeting Minutes. I think BoGs need to be careful about the kinds of minutes they keep. In particular, I would argue that there is a drawback to keeping minimalist versions of meeting minutes. For example, if a meeting lasts two hours and includes several important debates, it is possible for the recording secretary to produce just one or two pages of minutes from the meeting; such a minimalist version of the minutes might capture attendance, motions made and decisions taken. But it is also possible for the recording secretary to produce much more detailed minutes that include an overview of what key points were raised during debate and by whom. I think the latter approach lends to increased board transparency. Any university BoG that is serious about board transparency has a rather clear path it could take: it could simply direct its recording secretary to produce a detailed version of minutes of each meeting.
Oil is a staple. Honey isn’t. That’s the point.
The odd coupling comes from Bill McKibben’s most recent book, which is titled “Oil and Honey.”
Oil is crude. Honey is sweet. That says it all.
The central point that McKibben is making is that oil is global and honey is local, and that the disruptive climate change that is taking place, while worsened by oil, is tipping the scales against the global and toward the local.”
McKibben writes: “we need new local economies if for no other reason than that they will weather the coming storms a little bit better. In place of our two-big-to-fail systems of banking and energy and agriculture, we need squat, hardy, scaled-down versions.”
Private-sector investment intentions are only 1.3% higher this year, a far cry from the growth of after-tax corporate profits. Yesterday, Statistics Canada reported that net profits were 17.3% higher in the fourth quarter of 2013 than in the fourth quarter of 2012.
While construction investment is expected to stagnate, the bright spot is that companies plan to invest 3.9% more in machinery and equipment in 2014. But even that increase is not particularly impressive compared to the growth of corporate profits.
Continued weak private-sector investment confirms that no-strings-attached corporate tax cuts are not working and should be reversed. The additional revenue could be used to fund needed public-sector investment.
All the recent talk about the Canada’s shrinking middle class and rising income inequality got me thinking that it might be a good time to take a fresh look at a somewhat neglected economic concept: the labour share of income. The labour share of income hopes to measure the portion of the economic pie going to workers. The inverse of the labour share is the profit share or, to use some “old-fashioned” language, capital`s share. Indeed, the whole idea of deriving and comparing income shares has that grizzled Marxist – or Smithian, though few harken back to this aspect of Smith’s legacy – ring to it. Decades of “end of history” hurrah-optimism heralding the end of economic struggles relegated the analysis of income shares to dark, rarely-visited corners of public debate. The still-unresolved global economic crisis, increasing attention to runaway economic inequality and a renewed understanding of the economy as a sphere of conflict have, however, created space for tools like the labour share to once again garner deserved notice.
One way to think about income shares is as the distribution of broad economic power. While relative bargaining power caches out locally in complex ways, big aggregates like income shares, especially as they change over time, can tell us something as well. In particular, combining some facts about how wages are distributed within the labour share with changes in the labour share itself can shed light on long-run trends like increasing inequality and middle-class stagnation. Read more »
Here is a guest post from Paul Pugh, from Thunder Bay, who provided us a couple of years ago with some interesting and encouraging data about Uruguay’s incremental successes in building a more inclusive, sustainable economic and social model. In light of The Economist’s surprising choice of Uruguay as its first-ever “country of the year,” we asked Paul to reprise his commentary. Here are his impressions. Thanks Paul! Read more »
Yesterday I tweeted this:
Gap will raise minimum hourly pay
Walmart “looking” at support of min wage raise
In honour of the momentum, I am posting the piece I wrote for Economy Lab a while back, and including the numbers that drive the chart that attracted quite a lot of attention.
There is a good reason why the minimum wage has fired up so much debate lately. It has to do with how a “trickle-away” recovery has dogged so many advanced economies since the 2008 global crisis hit.
For most people today, growth is happening somewhere else, for someone else. The result is a crescendo of frustration.
The accompanying chart shows relative rates of recovery in Canada for capital and labour, and for top earners and others, since the recovery began. The most rapid post-crisis improvement has been enjoyed by Canada’s primary stock market, the Toronto Stock Exchange. Although it hasn’t yet surpassed its 2008 record high, the TSX has risen 81 per cent since 2009. Canadians, as a group, are a lot richer: The value of equity is up by $2-trillion since 2009. Profits have been rising faster than gross domestic product and GDP growth has outpaced wage growth since 2009. (If you double click on this chart, you can see it in a larger format.)
Within the wage share of the economy – which includes everyone from chief executive officers to servers – only the average top-1-per-cent earner saw enough income growth to outpace inflation between 2009 and 2011. (Statistics Canada hasn’t yet published 2012 data for top earners.) The further down the income ladder you go, the smaller the income increase. Average incomes have grown more rapidly in Ontario than Canada-wide for top earners and the bottom 50 per cent alike; but so has inflation. (The consumer price index grew by 9.3 per cent in Ontario since 2009, 8.3 per cent Canada-wide.)
Hourly wages provide a more up-to-date assessment of recovery. In Ontario – where the minimum-wage debate is raging – the average industrial wage (everyone from bosses to barmaids) increased by $1.87 an hour from 2009 to 2013, an 8.2-per-cent rise. The minimum wage rose by 75 cents (7.9 per cent), but that increase happened in 2010. Inflation has since stripped away its purchasing power.
The 2008 financial crisis brought income inequality to the centre stage of public discourse. Talk of curbing the rising share of top-level incomes has been likened to threatening class warfare. Everyone agrees there is no easy solution to replacing the good jobs, wages, benefits and pensions lost in recent years. Raising the minimum wage is, then, perhaps the most acceptable and ready measure on the menu of ways to reduce income inequality, while materially improving the lives of some people. Bonus points for not costing the taxpayer more.
Ontario raised the minimum wage by 75 cents in each of 2008, 2009 and 2010 – right through the recession – but then stopped. The longer you leave something unchanged, the hotter the debate to change it.
Since 2010, the debate itself has changed. It’s changed most over the past year, in the wake of accelerating wildcat strikes by unorganized fast-food and retail workers in the United States. It’s changed during the course of a six-month study of the minimum wage in Ontario.
Talk has turned from minimum wages to living wages. A growing share of workers are finding themselves in jobs at or near the legal minimum; jobs that are not a stepping stone to something else, but their meal ticket for the foreseeable future. In the United States, the people on the street say they need $15 an hour. In Ontario, the target is $14.
Why $14? We explain in the Canadian Centre for Policy Alternatives paperMaking Every Job a Good Job, where we argue that the target value for the minimum wage should be 60 per cent of the average industrial wage ($14.75), a goal to be achieved by regular increments of 75 cents. (If we had continued to raise the minimum wage since 2010 by 75-cent increments annually, we would have reached $14 next year.)
Bold, yes, but less dramatic than the path trod by Ontario Progressive Conservative Premiers John Robarts and Bill Davis, who quadrupled the minimum wage from 1961 to 1984.
Perhaps a generational change is afoot. Certainly momentum is escalating.
U.S. President Barack Obama announced last week that he will use his executive powers to raise the federal minimum wage by 40 per cent, to $10.10, for government contractors. In 2013, five states raised their minimum wage. Thirty more will do so in 2014.
Ontario announced last week that the minimum wage will rise to $11 in June and that it will tie annual increases thereafter to inflation, integrating the key element of predictability that Premier Kathleen Wynne hopes will “depoliticize” the minimum-wage issue.
But the issue is unlikely to go away yet, for four reasons:
- The provincial “solution” locks in the minimum wage’s purchasing power in 2010, the time of the last increase. Inflation adjustment is likely not enough. Future increases of 13 cents an hour or less won’t cover rising housing and transit costs. Cue more agitation.
- A growing body of evidence shows that raising the minimum wage can be good for employers too (improving productivity + reducing recruitment costs = better bottom line), and has less impact on job loss than we thought.
- Raising the minimum wage could trigger more business. Improving the purchasing power of those who spend every penny they make could boost the economy, from the bottom up. Remember: Employers don’t create jobs, customers do.
- 2014 is an election year in Ontario. The Progressive Conservatives’proposal to make the province Canada’s first to adopt “right-to-work” (-for-less) laws is sure to ignite debate about how to split economic growth between profits and wages.
Making sure the minimum wage doesn’t stray far from 60 per cent of the average wage is smart policy, and an emerging objective in many nations. It’s just one way to tackle market-driven inequality, but a potent signal that governments agree: Everyone’s work contributes to economic growth, and everyone – including the lowest paid – should benefit from it.
I posted this on CCPA’s BC Policy Note blog but others across Canada should pay attention to BC’s quest for LNG gold. I’d also recommend this comparison of the Quebec and BC budgets by Michal Rozworski, which highlights the stubborn emphasis on natural resource development in both budgets. It’s like the tax cut culture has so permeated Canadian politics that our political class cannot see beyond the lure of resource revenues to pay for essential services. Bad fiscal policy and bad environmental policy, not even good policy in terms of job creation, but seemingly good politics in the Age of Stupid.
About that LNG Prosperity Fund
BC Budget 2014 contains some new information about how the province intends to pay for all of the ponies BC children have been promised from LNG riches. Alas, there is not much there – a three page text box that mostly restates the hype on LNG – and from what has been revealed it looks a whole lot like the “competitiveness” of the industry (read: low taxes, few regulations) will trump achieving lasting benefits for British Columbians.
Here’s the pertinent information about the proposed LNG Income Tax from the budget (pp 51-53):
The LNG Income Tax will be a two-tier income tax with a Tier 1 tax rate of 1.5 per cent and a Tier 2 tax rate of up to 7 per cent (final rate to be determined and confirmed in legislation) … A description of how the two tiers will operate is as follows:
- The Tier 1 tax rate of 1.5 per cent applies to an operator’s net proceeds (revenue less expenses) after commercial production begins. The amount of the Tier 1 tax rate that has been paid can be deducted from the Tier 2 tax.
- Net income for purposes of the Tier 2 tax will be net proceeds less up to 100 per cent of the capital investment account (as described below). As such, the Tier 2 tax rate is not effective until the capital investment account is depleted. The costs associated with constructing an LNG facility will form the basis of the capital investment account.
The budget discussion uses an illustrative example of a 12 million tonne of LNG per year facility. This works out to 576,000,000 mcf (thousand cubic feet) of gas. Now, to get LNG to market in Asia, the break-even cost is estimated to be about $9-10 per mcf. The hopes of the BC government rest on getting $16 per mcf — this $6 price margin is the unstated assumption in the Budget text box. At $16, the Tier 1 works out to $52 million per year in BC government revenues, which is consistent with Chart 2 on page 52 (even though the chart is just supposed to be an illustration). At that price, it takes about three years to pay off the $10 billion price tag for a new facility.
Starting in year 4, the Tier 2 tax would kick in (assuming it is the full 7% stated as the top end), which would raise $242 million (there is something odd and unexplained happening in year 4 of the Chart 2 but these numbers are otherwise consistent with it). However, the catch is that the company would be able to deduct past Tier 1 tax paid (that $52 million times three years). So in years 4 and 5, BC would net ($484 million less $156 million), or $328 million over two years. Thereafter the full $242 million per year would come in to provincial coffers.
My back of the envelope (no discounting and assuming the same margin over the life of the LNG plant)looks like this: BC would get about $6.3 billion in LNG income tax over 30 years of operation for a 12 Mt facility. That’s just one facility, and the BC government is hopeful for about five; if so, this would raise about $30 billion (assuming they are the same size as the illustration). That’s a lot of money, but much less that the $100 billion promised by Premier Clark, and less than half of the $65 billion in total provincial debt that LNG is supposed to pay off. Maybe I’m missing something that has not been announced — regular corporate income taxes that would also be applied to the industry or upstream natural gas royalties — much of this remains clear as mud.
Here is the bigger problem: it is very unlikely that BC will be able to get the high end price of $16 currently seen in Japan. The case of Japan is unique, as a country that switched off its nuclear capacity after the Fukushima disaster. Much of its energy gap has been filled by LNG, pushing pre-Fukushima prices of about $10 up to the $16 that has BC officials salivating. Japan is likely to restore the vast majority of its nuclear capacity pending regulatory reviews. And if (when) they do, the bottom drops out of world LNG markets, because Japan buys about one-third of the total supply. This cuts right to why BC has had such a hard time landing final investment decisions for LNG.
Like the herd mentality that drove North American prices way down due to innovations in shale gas fracking and horizontal drilling, the same herd is now looking to Asia. Already, capacity under construction and in the design and engineering stage would double LNG supply once they come on-line. And BC is among others who, combined, would almost double the supply again. That supply-demand mix means Japan, Korea and China will be able to negotiate prices much lower than $16, perhaps closer to $12. And at $12, the revenues coming to BC would only be about one-third ($80 million per year and $2 billion over 30 years for one 12 Mt plant) of what is presented in the Budget text box.
Bottom line: BC’s LNG is expensive, with greenfield construction of liquefaction plants, new pipeline(s), shipping terminals and capacity. Other new capacity is brownfield, i.e. adding capacity to existing sites or conversion from import facilities to export ones. It is those plants that will have better luck scoring profitable deals in Asia due to better economics. While China and other potential Asian customers have growing energy demand, they want cheap energy, and that means coal, which is much cheaper than LNG.
So for all the talk about LNG, we still have more hype than hope in BC.
There were two announcements this week around E.I. – both framed as “being more responsive to local labour market conditions”. What that really means is that in the three territories and Prince Edward Island, access to E.I. will become more difficult in urban areas.
Employment Insurance is divided into 58 separate economic regions, and access to benefits, as well as benefit duration, depend on the unemployment rate in your economic region. This implies that one’s need for E.I. varies based on the local unemployment rate.
The announcements this week have added four new economic regions to E.I., splitting the three territories and PEI into two regions each – one mainly urban, and one mainly rural.
The differences are quite stark – in areas with unemployment over 13% one only requires 420 hours or 12 weeks of full-time work (assuming 35 hrs per week) to access a minimum of 26 weeks of benefits. Where the unemployment rate is 6% or lower, one requires 20 weeks of full-time work to access a minimum of 14 weeks of benefits.
Being shut out from E.I. means that you are shut out from training benefits administered through Labour Market Development Agreements (LMDAs). This is even more relevant since the federal government has drastically cut funding to training for those not eligible for EI when they gutted Labour Market Agreements to fund their Canada Job Grant.
In Charlottetown and surrounding area, workers will now need between 630 – 665 hours to qualify for a minimum of 17 weeks of benefits. The rest of PEI sees a measly increase in their minimum number of weeks from 23 to 26 – and no increase in their maximum duration of benefits.
In the Northern territories, it means that when there are layoffs at the mine, some folks will qualify for more E.I. benefits based on where their address is.
This change shows a fundamental lack of understanding of the nature of the labour markets in the North, and in PEI. It punishes urban workers, and hardly benefits rural ones. This is a petty change, and exactly what we have come to expect from this government when E.I. is concerned.
The Progressive Economics Forum is pleased to announce Lars Osberg as the Winner of the 2014 Galbraith Prize in Economics. Our selection committee included past winners Mel Watkins, John Loxley and Mike McCracken, plus Lana Payne and Linda McQuaig. Lars has accepted the Prize and will deliver the Galbraith Lecture at the Canadian Economics Association meetings in Vancouver, BC on Saturday May 31. Thanks to our judges and to the Galbraith family.
Below is Jim Stanford’s nomination of Lars Osberg, which does a great job to summarize his extensive career.
I would like to nominate Lars Osberg for this year’s Galbraith Prize.
Lars holds the McCulloch Chair in Economics at Dalhousie University.
The nomination reflects both the quality and value of Lars’ scholarship, but also his consistent personal commitment over the years in contributing to more intellectual diversity and collegial debate within the economics profession. He has also always maintained a high degree of policy engagement in his work as an economist, participating actively in policy debates and implementation at both the federal and provincial levels. Finally, he served several terms as Chairperson of the Economics Department at the Dalhousie University, and played a leading role in building its reputation as a critical-thinking, heterodox-friendly, high-quality place for both undergraduate and graduate education.
The main foci of Lars’ academic work include:
· Income distribution: its determination, and broader economic and social effects; and more recently analyzing the determinants of social attitudes toward inequality.
· Measurement of wealth, consumption, and social well-being, including the development of innovative new quantitative indices of well-being.
· Macroeconomic and monetary policy, including considerable research work exposing and critiquing the flawed theoretical and practical dimensions of Canada’s failed experiment with ultra-hard-money macro policies in the late 1980s and early 1990s.
· Labour economics and the functioning of labour markets, including new microeconomic models which help to explain labour market segmentation, exclusion, and inequality.
Lars has made a substantial personal contribution to community service within his profession, including serving as chair of his department since 2006, and as supervisor and mentor for many graduate students (including supervising a dozen PhD graduates, and scores of MA graduates, including assisting them with job placement).
Lars was the President of the Canadian Economics Association in 1999-2000, and gave a now-famous lecture on the causes and consequences of inequality at the 2000 CEA meeting in Vancouver was that a rich and critical synopsis of both the state of current thinking, and the need to challenge economics to develop a more fulsome and honest understanding of the issue.
Lars has worked in a voluntary capacity to assist with the development of important research networks and institutes aimed at fostering a more critical and diverse approach to economic and policy issues, including:
· International Association for Research in Income and Wealth
· Centre for the Study of Living Standards
· Canadian Centre for Policy Alternatives: Nova Scotia Branch
Lars is a Research Fellow for the CCPA nationally, as well.
Earlier in his career Lars worked for several years in Tanzania, advising non-profit economic development initiatives there.
One of Lars’ most important and valuable traits is his willingness to engage in honest, collegial debate with economists of all stripes. He has viewed it as of the utmost importance that progressive economists do not become estranged or ghettoized from the rest of the profession (often we do this to ourselves). Early in the formation of the PEF, which he gas supported continually, he urged us to make sure that our CEA panels and other events be inclusive and open to debate from all comers. This non-sectarian commitment to a fair contest of ideas, has served both Lars, and the community of progressive economists which he has done so much personally to foster, very well indeed.
Here is a link to Lars’ complete CV:
Respectfully submitted by Jim Stanford
This morning I gave a presentation to a church group in Ottawa on affordable housing and homelessness. My slides can be downloaded here.
Points I raised in the presentation include the following:
-Though government provides subsidies to some low-income households for housing, it is important to be mindful of the considerable funding available for Canadian homeowners as well (including for high-income homeowners). For example, there is no taxation on the capital gains raised from the sale of a person’s primary residence. On an annual basis in Canada, this tax exemption costs the public treasury almost $2 billion.
-Though private developers can (and sometimes do) build rental housing without government subsidy, it is only profitable for developers to do this when tenants are able to afford rather high monthly rent levels. In Toronto, newly-built, private apartments might require a monthly rent of $1,500 (in the case of a large one-bedroom unit, or a small two-bedroom unit). For a household to afford such rent levels (without spending more than 30% of their gross monthly income on rent) that household would have to earn at least $60,000 a year. For some households, this is feasible. But for many households, this is not.
-Average rent levels are lower than rent levels required for newly-built units (in other words, typically, as apartments age, they become cheaper for tenants). For example, in Toronto, average rent for a large one-bedroom or small two-bedroom unit is about $1,200. But even this rent level is considerably beyond the reach of many households.
-In most Canadian jurisdictions, social assistance (i.e. welfare) benefit levels include money to help the household pay rent. However, these levels are (typically) considerably below average market rent levels. Though there are some apartments available at lower-than-average rent levels, there are typically very few available that are, say, more than 15% lower than average rental levels. In other words, while’s possible to rent at below-average rent levels, it is generally not possible to go much lower than average rent (in Canada).
-Some low-income households are fortunate enough to live in social housing, where rent levels are subsidized (and where tenants typically do not have to pay more than 30% of their gross monthly income on rent). Every Canadian jurisdiction that I’m aware of, however, has considerably more people in need of of social housing than it does social housing units. In Ottawa, the median wait time for social housing for families with children is more than three years; for single adults (without dependents) it is more than five years. And across Ontario, fewer than half of households earning less than $20,000/yr. are fortunate enough to live in social housing.
-These wait times for social housing can have important repercussions for children. Research has been done in Toronto on the role of housing when it comes to children in care. This research suggests that the state of a family’s housing is often a factor leading to a child being temporarily admitted into care. Moreover, the same research argues that a family’s housing status often delays the return home of a child who is in care.
-Canada’s ‘rate of social renting’ (i.e. %age of households in social housing) is about 5%. This is considerably below the OECD average. In England, the rate is 18%. In Sweden, it’s 32%. In the Netherlands, it’s 34%.
-In some cases, a lack of affordable housing can lead to homelessness (that is, it can lead to people sleeping in emergency shelters or sleeping outside). And as Dr. Stephen Hwang has argued, homeless persons “often develop health disabilities that are more commonly seen in people who are decades older.” Homeless persons also die much more quickly than housed people.
-In a Toronto study, more than one-third of homeless persons reported having been physically assaulted in the previous 12 months. In the same study, one in five homeless women reported having been sexually assaulted in the previous 12 months.
-In the past several years, it has been common to hear senior levels of government in Canada profess their belief in the Housing First approach to homelessness. This means they are publicly stating that an effective way to fix homelessness is to provide immediate access to permanent housing for homeless people (as opposed to insisting that such individuals ‘rehabilitate’ before being offered permanent housing). However, as I’ve blogged about before, this is not the same thing as agreeing to provide sufficient funding for such housing.
This blog’s unofficial slogan has been “Tomorrow’s conventional wisdom, today.” After this week’s Conservative backpedaling on income splitting, we may need to change it to “Today’s conventional wisdom, seven years ago.” Or we could just stick with “You read it here first.”
My first-ever blog post, Income Splitting Redux, argued that this tax policy “would benefit an affluent minority at the expense of important public programs and create a disincentive for women to engage in paid employment.” I made the same case in an opinion editorial published in The Ottawa Citizen seven years ago this month and revived it during the last federal election campaign.
That critique now seems to have garnered widespread agreement, even though the numbers are a bit less dramatic for the Conservative platform proposal to allow spouses with children to shift up to $50,000 for tax purposes than for unlimited income splitting between spouses.
Recessions are always harder on young workers, but we are nearly five years out from the end of the last recession and there is still no recovery in sight for young workers.
The paid internships announced in this budget (some of which is previously announced spending) will only reach a maximum of 2,500 individuals per year, less than 0.5% (half of one percent) of unemployed young workers, and addresses a fraction of the need.
Between October 2008 and January 2014, there was an increase of 100,000 unemployed young workers (15-29), so that there are now 540,000 unemployed young workers. Even more startling, over 350,000 young workers left the labour force over that period. It has been estimated that between 150,000 and 300,000 young workers participate in unpaid internships each year in Canada.
One-third of young workers are employed part-time, and many are in low wage, temporary, and otherwise insecure employment. Too many young workers are underemployed – either unable to secure enough hours of work or lost on the margins of the labour force. I calculate underemployment for young workers 15-29 to be around 23% for 2013.
Leading up to the budget, there was hope that this government would realize the depth of this crisis for young workers, and take decisive action. Unfortunately, what we have is a selection of small and largely ineffective announcements. Funding paid internships for highly employable young workers in high demand fields is a shocking non-solution to a very real crisis. If fields are in high demand why do we need to subsidize the hiring of young people for internships?
As has been the case in other recent federal budgets, most of what is contained in the budget is not new money, rather rehashing of previous announcements or re-allocated spending. Overall, there is only $51 million in new money for next year for education and training initiatives – that is a mere drop in the bucket.
For a comparison on the scale of the solution proposed, this government allocates $40 million over two years toward paid internships, yet has spent $473 million on Economic Action Plan ads.
General Training Initiatives
On a positive note, this budget makes modest efforts to help apprentices through several targeted programs:
Apprentices and EI
- The EI waiting period will now only apply to the first period of an apprentice’s classroom training, and be waived for subsequent training. However, EI claims for apprentices will not be pre-approved, which leads to significant delays in receiving benefits for many apprentices.
- A new initiative – but not new government money – will now allow employers to top-up apprentices EI benefits (while they are in-class training) to 95% of their normal wage similar to existing maternity leave top-up.
- Employment Insurance Awareness Initiative for Apprentices, spending to let apprentices know that they may be eligible to receive EI while on approved training.
Canada Apprentice Loan Program – $100 million in interest free loans to first time Red Seal apprentices through the Canada Student Loans Program. Apprentices will be able to access up to $4,000 per period of technical training, and should help 26,000 apprentices per year. Only available for Red Seal trades and only for apprentices registered in their first Red Seal trade. This is a good step but it likely wont have a big impact in terms of improving apprenticeship completion rates.
Investing in Apprenticeship Technical Training a pilot project to examine innovative ways to deliver technical training and reduce non-financial barriers to apprenticeship completion. This includes remote learning and e-learning, as well as in-class simulators.
However, on youth unemployment we find mostly token measures. The federal government’s Youth Employment Strategy barely touches the tip of the iceberg for struggling young workers in Canada. This budget announces several initiatives that sound great, but are unlikely to address structural issues facing young workers today and in the future.
Canada Accelerator and Incubator Program adds $10 million per year for 4 years to previously announced funding, for total funding of $100 million. For-profit and non-profit organizations will bid for funding to mentor young entrepreneurs. New money won’t start to flow until 2015-16.
Internships in High Demand Fields – $30 million over two years for an Industrial Research Assistance program, which will fund science internships in small and medium sized enterprises. $10 million over two years will be administered by the Youth Employment Strategy. In total, this will employ 1,500 post-secondary graduates each year for two years. This is largely ineffective spending, as it is focused on high demand science and tech fields where post graduates have been more successful finding work compared to other young workers.
Supporting paid internships in small and medium sized businesses by reallocating existing Youth Employment Strategy funds of $15 million per year, to fund a maximum of 1,000 internships for recent post-secondary graduates.
Eliminating Vehicles from Canada Student Loan Assessment There is currently a $5,000 exemption limit for vehicles when students list their assets on a Federal Student Loan Application. Students will no longer have to list the value of their vehicle, at an expected annual cost of $7.8 million per year. This claims to be aimed at rural students, but mostly benefits wealthier students.
A Missed Opportunity
The budget is a matter of choice. Clearly, the choices presented today confirm that the federal government does not want to take advantage of its current fiscal position to invest in productivity, training, and helping to create good jobs while ensuring Canadian workers’ income security today and in years to come.
This budget stays the course – a course that is undeniably the wrong course for Canada. This budget mostly re-allocates spending, rather than making new investments where they are critically needed. A grab bag of boutique measures and unproductive corporate tax cuts are paid for with continued austerity. This is not a budget that will help create jobs for workers of any age in 2014.
Here’s the first section of the budget summary and analysis I’ve prepared for CUPE.
The full version is on-line on CUPE’s website at http://cupe.ca/economics/missing-action-federal-budget-2014 together with CUPE’s press release at: http://cupe.ca/economics/federal-budget-2014-help-hurt-canadian
Missing In Action: Federal Budget 2014 CUPE Federal Budget 2014 Summary and Response
Conservatives ignore pressing economic needs with a Do-little budget
Using more of their doublespeak, the Harper government calls the 2014 federal budget “The Road to Balance: Creating Jobs and Opportunities.” Little could be further from the truth. Instead it’s a budget that glosses over the problems facing Canadian workers and continues to kill jobs and stifle economic growth. ‘Missing in Action’ are significant positive measures needed to improve the lives of Canadians by increasing good job opportunities, improving public services or ensuring decent retirement incomes
Instead this budget further reduces and re-aligns spending and increases tobacco taxes and revenues in some areas. These will bring the deficit down to a projected $2.9 billion this coming year with a $6.4 billion surplus expected in 2015/16. The deficit for this year is small enough to be below the $3 billion cushion for risk, which means the federal government will probably declare a surprise surplus so they have more money available to promise tax cuts and other expensive goodies in next year’s budget before the 2015 election.
It’s a clear sign this government has nothing left to offer Canadians in terms of positive measures to improve the economy.
At a time when our economy is faltering, more than 1.3 million remain officially unemployed and millions more have given up looking for work or are struggling in precarious and underpaid jobs to make ends meet, Canadians needed clear positive direction to improve the economy.
UPDATE (Feb. 12): Carol Goar reports this statement on page A17 of today’s Toronto Star. To add your signature to it, please e-mail your name, title and institution to Mario Seccareccia at email@example.com
Statement by 70 Canadian Economists Against Austerity
We, the undersigned, strongly urge the federal government to stop implementing fiscal austerity measures just to achieve its political goal of budgetary balance by 2015.
Since the mid-1990s, we have witnessed an era during which, under the influence of the same economists who had also advised the deregulation of the financial sector in the US, Canada, and other G20 countries, government policies brought the international economy to the edge of economic meltdown in 2008. After initially implementing a series of necessary fiscal stimulus measures to prevent the Canadian economy from slumping into depression, the current government did a policy U-turn and, at the time of the G20 Summit in Toronto in 2010, decided to go back to the pre-2008 era of targeting balances and budgetary surpluses. This turnaround occurred despite the fact that employment rates remained, and continue to stagnate, below pre-recession levels.
We believe that such austerity policy is terribly misguided. Not only are cuts in government spending completely inappropriate in the current context, but also the primary macroeconomic concern of the federal government ought to be the achievement of high levels of incomes and full employment for all Canadians, rather than the attainment of an elusive political target of budgetary balance that condemns the Canadian economy to remain stuck in a state of long-term stagnation. Unlike the countries of the Eurozone, as a sovereign country with its own national currency and a floating exchange rate, Canada faces none of the constraints on spending that prevent Eurozone governments from engaging in deficit-spending to stabilize their economies. Read more »
The Olympic motto may be “Faster, Higher, Stronger,” but Canada’s employment growth is slower, lower and weaker going into the winter games.
Of the 29,000 Canadians who supposedly gained employment in January, 28,000 reported being self-employed. Only 1,000 found jobs paid by an employer.
While self-employment includes some high-income professionals and entrepreneurs, the jump in self-employment in the context of a poor job market suggests that many Canadians are trying to eke out income through contract work because employers are not offering paid positions.
The other troubling trend is that 21,000 Canadians dropped out of the labour force altogether in January. While their departure reduced the official unemployment count, it reflects a lack of job opportunities rather than an improvement.
Next week’s federal budget should make an Olympic effort to spur economic growth and create jobs by investing in needed public services and infrastructure.
My union Unifor is currently undertaking an important “Rights at Work” campaign, which involves a national tour of meetings with our officers and local leaders and stewards, followed by a membership canvass and community outreach effort, all aimed at beating back the current attack on fundamental labour rights coming from conservatives at all levels in Canada. Read more »
Posted by Nick Falvo under debt, demographics, economic risk, education, employment, household debt, Indigenous people, inequality, post-secondary education, social policy, student debt, student movement, taxation, unemployment, user fees, young workers.
February 6th, 2014
This afternoon I gave a presentation to Professor Ted Jackson’s graduate seminar course on higher education, taught in Carleton University’s School of Public Policy and Administration. The link to my slide deck, titled “The Political Economy of Post-Secondary Education in Canada,” can be found here.
Points I raised in the presentation include the following:
-Tuition fees have been rising in Canada for roughly the past three decades. Yet, individuals in the 25-44 age demographic have the highest levels of household debt in Canada. This raises an important question: Is it good public policy to be saddling this demographic with more debt?
-Post-secondary participation has increased quite significantly in the past half century. Yet, not all groups participate in post-secondary education (PSE) to the same extent. For example, in Ontario, students from low-income households, students who are Aboriginal, students with disabilities and students from families with no prior history of PSE participation participate at significantly lower rates than the rest of the population. This raises another key question: to what extent do high tuition fees exacerbate these gaps?
-In the aggregate, the ‘return on investment’ from PSE is favourable to students. But, again, not all people fare equally well. Some people appear to derive no return on investment at all from PSE; but (virtually) all students have to pay high tuition fees up front. This raises yet another question: how fair is it to make all students pay high tuition fees up front if they are not all going to gain financially from the investment?
-Over the past decade, there has been a significant rise in enrollment from international students at Canadian universities. This is especially the case for students coming from China and India. I believe that the major reason for this increase stems from the considerably higher tuition fees paid by international students at most Canadian universities. This raises more questions: Are Canadian universities exploiting vulnerable students from the Global South? If yes, would there, in effect, be less exploitation if these students paid lower tuition fees?
-Research looking at the British Columbia context (done by Iglika Ivanova) suggests that, as a group, university students more than ‘pay back’ to the public treasury the cost of their university education through taxation after graduation (in part because university graduates are more inclined to be employed and be paying more taxes than others). This raises (yes) more questions: If, as a group, university graduates more than ‘pay back’ the cost of their university education to the public treasury through taxation, why should they also pay up front via high tuition fees? Isn’t this, in effect, a form of ‘double taxation?’
Numbers season is over but good inequality data is still missing. January sees us regularly bombarded with a whole range of economic statistics about the previous year. GDP growth: likely 1.7%, low but looking brighter for next year. Unemployment: 7.2%, low but lots of workers leaving the job market altogether as the employment rate stagnates. Inflation: 1.2%, low but deflation risks under control. “Low, but” is the theme of the year for the average Canadian. For the super-wealthy, however, the story is quite different. Indeed, if Canada had an official Luxury Index or reliable data on inequality, the numbers would be through the roof! Lacking either, this post will be a seriously light-hearted stab at proxy measures that show just how well Canada’s crème-de-la-crème are faring in our very unequal recovery.
Inequality is not measured with nearly the same zeal as other important economic variables – especially when it comes to wealth, rather than merely income (though we should shortly receive relatively new data on the distribution of wealth from Statistics Canada; for now, some evidence of recent trends is visible in the a recent article by the PEF’s Armine Yalnizyan). In addition, the income-based measures of inequality that we do have are biased downward. For example, they do not include capital gains and other streams of income that come from accumulated wealth. This is a particularly important omission since our much-vaunted “recovery” is being driven by rising asset prices and profits as well as asset concentration rather than job growth and shared well-being. At the same time, governments have cut taxes in ways that make the tax system more regressive and cut public spending, the combination of the two exacerbating inequality even more.
On the other end of the spectrum to cuts in public services, luxury spending has grown substantially in recent times. A Luxury Index that tracks this trend would be an interesting proxy for inequality – one that if anything undervalues its true extent as the rich spend proportionately less on consumption than the rest of us simply because they have so many resources.
This is quite interesting. If you read the short section from the recent IMF Staff Report on Canada under point 16, it is quite clear that the IMF Staff think that, with growth significantly under potential, the federal Budget should be brought back to balance more slowly than is now the plan. It strikes me as unusual that they flag up a difference of view with Department of Finance officials.
The staff report goes a bit further than the resulting IMF recommendation that expansionary fiscal policy be used if the economic situation should significantly deteriorate.
The hype on LNG has grown to staggering proportions. I have not had much time to debunk all of the government’s grotesque exaggerations and outright falsehoods. But Christy Clark’s claim that BC is “doing the world a favour” by exporting LNG to Asia made me write this oped, which got picked up in today’s Vancouver Sun:
Is LNG B.C.’s big favour? It’s unlikely exports will reduce global greenhouse gas emissions
Is British Columbia “doing the world a favour,” as Premier Christy Clark put it, by developing a liquefied natural gas export industry? Or is this just wishful thinking from a government that has abandoned its law on reducing carbon emissions to pursue LNG riches?
Natural gas is a cleaner burning fossil fuel than coal, in terms of carbon pollution as well as other emissions that lead to smog and acid rain. In the United States, substitution of gas for coal in electricity generation has led to declining carbon emissions in recent years. So it is plausible the same could be true for Asia, enabling essentially unlimited LNG exports in the name of climate action.
For B.C.’s LNG exports to lower global emissions, they would need to be part of a deliberate effort to use natural gas as a transition fuel, linked to displacement of coal use in countries such as China, along with a strong regulatory framework to minimize leaks and source renewable power for operations. This is far from the Wild West mentality currently in place on the North Coast.
First, will LNG be a substitute for coal at all? A number of independent projections show a growing appetite in China for all energy sources, including renewables, nuclear and fossil fuels. A new international treaty to constrain carbon emissions, now under negotiation, could change this dynamic in 15-20 years. For now, LNG is anticipated to pile on top of China’s growing coal consumption, rather than displace it.
The transition to natural gas in the U.S. came as a result of record low gas prices in North America. But at the much higher price the B.C. government and the industry expect Asia to pay, coal is way cheaper than LNG. That is, if LNG is to displace coal based on economics, B.C. will need to accept much lower prices and abandon its fantasy of a $100-billion prosperity fund.
Another challenge to the premier’s argument is that LNG may displace other sources of power, in particular nuclear power in Japan. As evident in the 2011 Fukushima disaster, nuclear has major risks. On the other hand, nuclear’s carbon footprint is negligible, so if Japan decides to shift its nuclear capacity to LNG, global carbon emissions would rise.
Leakages also undermine the case for LNG as a transition fuel. Natural gas is primarily methane, a greenhouse gas 86 times more heat-trapping than carbon dioxide over a 20-year period. Leakages of only 1.2 per cent are enough to erase claims of having an advantage over coal.
Typically, from wellhead to final combustion, including processing and transportation, leaks of about two to four per cent are standard. Those leaks can be much higher for fracking operations, the technology that will be used to supply B.C.’s LNG industry.
Strong regulations could reduce the amount of leakage, and allow B.C. to produce the “cleanest LNG in the world,” an aspiration of the B.C. government. If LNG proceeds, such regulations must be part of the deal, even if they impose additional costs on the industry. But B.C. cannot regulate LNG once it leaves port, so leakages will likely erase natural gas’s carbon advantage.
The big picture is that global warming is primarily caused by extracting carbon from underground and putting it into the atmosphere. The government’s LNG ambitions would double or triple the amount of gas extracted in B.C., the equivalent to adding tens of millions of cars to the roads of the world.
B.C.’s estimated marketable gas reserves, if combusted, would be equivalent to 10.6 billion tonnes of carbon dioxide, or about one-third of worldwide annual emissions from burning fossil fuels. It is hard to square LNG with the pressing need to constrain carbon on a global basis.
Pursuing an LNG industry amounts to doubling down on fossil fuels, precisely at the moment when extreme weather events are starting to have significant financial impacts. In our era of climate change, global energy supply must ultimately look beyond fossil fuels, and into renewables and conservation.
A government with its eyes on the future would be leading us down that path. If B.C. really wants to do the world a favour, it must leave most of that natural gas in the ground. Instead, B.C. should drive new investment into low-carbon technologies and infrastructure, and in doing so would create more jobs and leave a sustainable legacy for our grandchildren.
Today’s fourth-quarter report indicates that PotashCorp paid “provincial mining and other taxes” of $194 million on potash sales of $3 billion in 2013. In other words, Saskatchewan’s resource surcharge and potash production tax amounted to just 6.5% of the value of potash sold.
Adding the basic Crown royalty (which PotashCorp includes in “cost of goods sold”) and subtracting New Brunswick potash suggests that Saskatchewan is collecting no more than a dime per dollar of potash extracted from the province.
PotashCorp’s guidance for 2014 projects “provincial mining and other taxes” not as a percentage of potash sales, but as a percentage of potash gross margin. While Saskatchewan’s resource surcharge is 3% of sales, the potash production tax’s statutory rate is 35% of mine profits (i.e. gross margin).
Yet PotashCorp predicts that both payments combined will actually amount to between 16% and 18% of potash gross margin this year. The old excuse for such low royalties was that potash companies were making large investments in Saskatchewan (which the provincial government allowed them to write off at 120%).
But PotashCorp has completed its major investments. Far from expanding, it is laying off workers. So, why does it expect to pay only about half of Saskatchewan’s potash production tax rate?
The biggest problem is that potash companies enjoy an endless holiday from Saskatchewan’s potash production tax on all tonnes in excess of the average sold in 2001 and 2002. The solution to Saskatchewan’s upcoming budget crunch is to close such loopholes in the provincial royalty structure.
UPDATE (Jan. 31): Quoted on page D1 of today’s Saskatoon StarPhoenix and Regina Leader-Post.
Jim Stanford recently pointed out that many of the conservative economists who had defended the overvalued loonie have quickly shifted to applauding its depreciation.
The Government of Saskatchewan may be making a similar conversion on the road to Damascus. When federal NDP leader Tom Mulcair expressed concern about Dutch disease, premier Brad Wall denied that the high exchange rate was hurting Canadian-based exporters.
But on Friday, the Regina Leader-Post reported online:
[Provincial] deputy labour minister Mike Carr said that a lower exchange rate, through its ability to stimulate sales of Canadian-produced goods, including, significantly, agricultural and mineral products of the kind produced by Saskatchewan, historically has tended to help the province and its workers . . .
So, the Wall government’s position is that the high loonie was not curtailing Canadian output and employment, but a lower loonie will help expand Canadian output and employment? It doesn’t believe in Dutch disease, but it wants the cure. Read more »
The past 18 months have seen real wages increase in Canada. (Yes, I double-checked.) Indeed, real wages have gone through two distinct phases of growth since the financial crisis hit the global economy in 2007. This may be surprising as we have been accustomed to hearing about the stagnation of real wages and the “decoupling” of wages from productivity gains over the decades preceding the crisis.
These real wage gains, however, are not that surprising once we take a look at the behaviour of inflation since the crisis. Stephen Gordon has taken a look at this over at Maclean’s; below, I offer another, somewhat different, perspective.
For much of the five-year period, inflation has been below the Bank of Canada’s two percent per year target. This despite record low interest rates. Normally, the story goes, lower interest rates are a spur to economic activity, driving businesses to invest and expand and households to increase spending. The increased activity then generates rising prices. This story has not panned out in recent Canadian experience.
While low interest rates have led consumers to take on record levels of debt, the rebound in business investment has been somewhat tepid. For now, the corporate sector has largely taken advantage of easy money at low interest rates to issue corporate bonds and refinance loans, pay out dividends to shareholders and expand an ever-growing stockpile of cash (now totalling over $600 billion). With high profits largely unaffected by the crisis, corporations are happy to watch asset prices rise and play the waiting game to see how the “recovery” of the economy looks in the longer-term. Monetary policy and fiscal austerity measures have combined to enable this scenario.
Consumers, on the other hand, have not had the luxury of being so patient. Rising housing prices stemming from overall asset inflation and the continuing deterioration of public services are only some of the factors driving households to take on credit and spend. The current easy credit bonanza has contributed to the continuing rise in Canadian household debt, unabated since the crisis and now at over 160% of income.
In a small, open economy like Canada’s, many other factors are also at play in setting macroeconomic conditions, stemming from our relationship to the rest of the global economy. For example, a slower but continuing commodity boom since the crisis that has, until very recently, maintained an elevated Canadian dollar has also contributed to keeping imports cheap and inflation down. Taken altogether, these trends have resulted in often below-target inflation and the post-crisis periods of low inflation has, as a result, coincided with periods of real wage growth.
The picture of average hourly real wages and inflation since 2010 can be neatly divided in two: one phase of higher, near 3%, inflation that saw falling average real wages and a second phase of lower, around 1%, inflation during which average real wages rose.
For workers it seems, the crisis has had a silver lining. As usual, however, there are several complicating factors behind this simple graph. First of all, while the unemployment rate has been slowly falling since the crisis, the last three years have also seen the employment rate drop to an even greater degree and stagnate. So even as our unemployment rate falls, our growing population and stagnant employment mean that Canadians are increasingly dropping out of the labour market completely. A not insignificant group of demoralized workers has left the labour force rather than even try to participate in the wage boom. Read more »
Another column by Gwyn Morgan in the Globe and Mail and another case of a 0.1 percenter telling the rest of us to “Do as I say, not as I do.”
This time, it’s Gwyn recycling trash from the CFIB and Fraser Institute to claim defined benefit pensions for public sector workers are too generous and are simply unaffordable, and that governments need to “defy union resistance to pension-plan changes by all available means, including back-to-work legislation and imposed contracts that reflect fiscal realities. And the strongest tool available is the reduction of union monopoly power through private-sector contracting of public services.”
Does this guy ever look in the mirror to do anything more than admire his own magnificence –and perhaps maybe consider the contradictions in his columns or his own absolute hypocrisy?
Yet, this is the same Gwyn Morgan who retired as an executive of Encana Corp in 2006 with a defined benefit pension worth $26.5 million then, paying out $1.77 million a year (see page 23 of EnCana’s 2007 Annual Information Circular). EnCana can somehow continue to afford to pay defined benefit pensions for its executives while requiring its workers to assume all the risk with defined contribution schemes.
At that time, Morgan still held over $10 million worth of EnCana stock options for which he would only pay half the ordinary tax rate, saving him personallyanother $2 million in tax — but does he ever suggest governments should close the billion dollar stock option tax loophole, restore corporate tax rates, or increase resource royalties to deal with “fiscal realities”? No, never.
Morgan of course went on to greater things: a fail bid to become Harper’s patronage czar, on the board of the Fraser Institute, the “Manning Centre for Democracy”, HSBC and chair of the board of SNC-Lavalin. During this time at SNC-Lavalin senior company executives and officials (allegedly) engaged in corruption and bribery around the globe, including in Algeria, Libya, and at the McGill University Health Centre Hospital P3 (together with Arthur Porter, who Harper appointed as chair of Canada’s Security Intelligence Review Committee). This was enough to get his former right-hand man CEO Pierre Duhaime arrested, SNC-Lavalin banned for ten years from contracts by the World Bank, and Canada to the top of the charts on the World Bank’s corrupt companies list. But does Morgan ever assume personal responsibility for that? Never. Instead he takes a few more hundred thousand per year as well as tax-preferenced stock options and carries on.
I could go on and on, but if there were a Petulant (and hypocritical) Plutocrat of the Week award for Canada, Gwyn Morgan would surely drive, walk and run away with a lifetime achievement award.
Update: The Globe published a letter from CLC president Ken Georgetti using some of this information:
Update 2: Gwyn Morgan received the Petulant Plutocrat of the Week from the US e-newsweekly Too Much, published by the Institute for Policy Studies in Washington, DC.
Since my embedded links don’t seem to work, here’s the link to Too Much, an excellent on-line weekly of excess and inequality and below is their commendation.
“Nothing seems to upset Gwyn Morgan, the retired Canadian oil and gas CEO and fracking pioneer, more than public employees with pensions. Earlier this month, in his national newspaper column, Morgan fulminated against the expending of tax dollars “on extravagant public-sector benefits.” Privatizing public services, he went on to suggest, just might free taxpayers from the scourge of public employee pensions that pay out defined benefits. Morgan himself just happens to enjoy a defined-benefit pension from the natural gas giant Encana that pays him $1.77 million a year. Canadian public employee pensions currently average $24,000 annually. In his spare time, Morgan sits on the board of a major right-wing think tank that America’s Koch brothers help bankroll.”
Congratulations and well deserved, Gwyn: you are truly world-class!
The details of the Progressive Economics Forum’s 2014 Student Essay Contest are now online.
The submission deadline is May 5.
Please put up this poster to promote the contest.
The debate over increasing the minimium wage, so clearly necessary to lift working incomes above the poverty line (not to mention boost consumer spending power), is heating up in many provinces. Predictably, free-market theorists are pushng back (as they have since the concept of minimum wages was first invented over a century ago). Here is a useful summary of recent evidence assembled by Michal Rozworski, an economist and blogger based in BC (he’s on Twitter @MichalRozworski ). Read more »
The long-overdue depreciation of Canada’s currency is gathering steam. The dollar lost 8 cents against its U.S. counterpart, in fits and starts, over 2013. It’s lost another 2 cents since the start of 2014, and negative sentiment about the currency is accumulating among financial analysts and traders.
Indeed, once the expectation that the loonie will fall becomes entrenched among enough of the red-suspendered trading set, that belief quickly becomes self-fulfilling. Speculators who think the loonie will fall, sell or short the asset to take advantage of that fall, and this only accelerates the decline. So we can expect the dollar to continue weakening – perhaps faster and further than would have seemed possible until very recently. Read more »