Louis-Philippe ROCHON

Associate Professor, Laurentian University

Co-Editor, Review of Keynesian Economics

Follow him on Twitter @Lprochon

With data on the performance of Canada’s labour market released today, many economists and pundits on both sides of the 49^th parallel are arguing that what seems to be emerging is two very clear and different paths for the US and Canadian economies. But that interpretation is not exactly correct.

Indeed, the US economy seems to be outperforming expectations, according to labour market data released last week, according to which the labour market is showing continued strong signs of life. In February alone, the US economy added more than 295,000 jobs, making it the 12^th month in a row where monthly job creation is at least 200,000.That seems quite remarkable, especially since job creation is widespread across all sectors and demographics, suggesting a firmly-rooted recovery. Moreover the unemployment rate has shrunk to 5.5%, which is where it stood in May 2008. Finally, as the Secretary of Labor, Thomas E. Perez, boasted last week, February marks the first time in more than 3 decades, unemployment fell in all 50 states.

What more could you say? Apparently, the US is on course for a strong growth spurt, fuelling fear of inflation, which may convince the Federal Reserve to raise interest rates sooner than expected.

But we mustn’t believe everything the man behind the curtain is saying. As always, statistics can be used to spin any good story. A closer look reveals a somewhat different story, and in fact, a story that is much closer to our own. In the end, both the US and Canadian labour markets are much closer in character than most pundits would care to admit.

Since unemployment rates by themselves do not tell the whole story, we must dig deeper to get a fuller story.

First, there is still too much part-time employment, and the current employment ratio (the ratio of employed individual to the overall labour population) is still low, at 59.3%, a full 3 points below where it stood before the recession (labour participation rate sits at a low of 62.8%). This means that there is still an important number of workers who still desire full time jobs but just can’t get them, and left the labour market discouraged.

As American economist Thomas Palley wrote recently (see here), close to 22 million American workers are still looking to work more. Clear evidence, he says, that the US is still far away from full employment. In fact, Bucknell University professor Matias Vernengo, argues (see here) that if participation rates were at the same level today than at the end of the Clinton boom years (67%), unemployment rate today in the US would be close to 12% and not 5.5% Now that’s a difference story indeed.

And then there is wage growth, which remains relatively weak. In fact, wage increases have averaged 0.01%, well below January’s 0.5% gain. So wage gains may in fact be slowing down. More importantly, February’s paltry wage gain is still way below productivity gains, which means there is no threat of inflation any time soon or on the horizon.

This brings us to economic policy. It is now widely expected that the US Federal Reserve will begin raising interest rates, and possibly as soon as June if not earlier. But would this increase be justified.

Given the relatively weak labour market still, and the lack of any inflationary pressure (some pundits see the inflation threat everywhere), a rate hike now would seem to be premature.

All this brings us back to Canada.

Recall that in January, while labour markets created more than 35,000 jobs (although I expect those numbers to be revised downward), these were all part-time and self-employment, thereby emphasizing the rather precarious nature of Canadian labour market. This followed a December where the economy actually shed jobs.

The latest job numbers for February are far from encouraging. In February, the Canadian economy again shed jobs, albeit less (1,000), but the unemployment rate increased back up to 6.8% from 6.6%. As I said before, we are heading in the wrong direction.

But there is more. I calculated the real rate of unemployment. If the labour force participation in Canada were at the same level as at the beginning of the crisis, then Canada’s real unemployment rate would be closer to 9% today.

This is as far away from full employment as we can get.

It is becoming overwhelmingly clear that both economies are suffering considerably, and both economies are still far from a sustained recovery, although Canada’s economy is doing far worse.

The Federal Reserve should not be raising rates. This is not the time. In both countries, what we need is fiscal stimulus and massive investments in public infrastructure. Unfortunately, ideological and political nearsightedness will prevent that from happening, virtually guaranteeing a prolonged period of misery.

The Ontario government has launched a review of their Labour Relations Act and Employment Standards Act. The premise is that the workplace has changed, and Ontario labour law no longer does as much as  it should to protect vulnerable workers.

The Workers’ Action Centre in Toronto took this opportunity to document the myriad ways that workers are left behind, and make 47 concrete recommendations to improve legislative protections.

What’s unique about this report is that worker’s voices are central. Throughout the report links are made between the lived experiences of workers, current labour market statistics, and thoughtful recommendations to make workers’ lives better.

One huge problem in precarious work is the downloading of risk to workers. This is done through just-in-time scheduling, overuse of part-time and temporary employment relationships, and employee misclassification. Too many “workers” are classified as self-employed, and this practice has spread into a surprising number of sectors.

A 2010 review of the construction sector in Ontario found that misclassified independent contractors cost the province $1.4B to $2.4B in WSIB, income tax, CPP, and EI payments. This doesn’t even begin to touch on the lost wages and benefits to workers. The Workers’ Action Centre report offers suggestions that put the legal onus on an employer to prove there is no employee / employer relationship, which could help stem this trend in precarious work.

Another key issue highlighted by the report is “Equal Pay for Equal Work”. One might be forgiven for thinking that this has to do with the gender wage gap (well, it’s related, as we’ll see). Workers in temporary and part-time positions earn far less money than their permanent full-time counterparts. Workers in temporary positions tend to be young workers, women, and racialized workers (which is a factor in the gender and racialized worker wage gap).

This answers the question of why we care about part-time work when the vast majority of workers ‘choose’ to work part-time. It’s because part-time and temporary workers are overwhelmingly low wage, and along with that tend to have much weaker bargaining power in all aspects of their employment.

I absolutely encourage anyone who is putting together their own organization’s response to read this report, and to support the recommendations found within. Precarious workers are counting on us to make sure the Employment Standards Act recognizes their lived reality. This is not only a show of basic solidarity, but the base upon which all worker’s protections stand.

Here is the link to a short study I have done for the Broadbent Institute on the Harper Record on Jobs from 2006 to 2014 based on annual averages from the Labour Force Survey.

Coverage in today’s Toronto Star is here.

The basic findings, that there is still a lot of slack in the job market compared to the pre recession period (especially for youth) and that there has been a heavy tilt to part time work (one in three of the new jobs), will come as no surprise to readers of this blog.

What I found a bit more surprising is that 38% of the new jobs created 2006 to 2014 were in the lowest paid occupational category – sales and service jobs – and a lot of the good jobs created (35%) were in public sector occupations. Table 4 provides a lot of detail.

The Harper government claims that “since the depths of the recession, we have created more than 1.2 million net new jobs—overwhelmingly full-time, good-paying jobs in the private sector.” They hide their poor record by using the bottom of the recession as the starting point, and clearly if we look at their tenure as a whole the tilt is NOT to well-paid private sector jobs.

LABOUR MARKET DEREGULATIONS NOT WORKING: IMF

See original CBC column here.

Recent — and potentially watershed — International Monetary Fund (IMF) documents have cast doubt on the merits of labour market deregulation of the last three decades, with important consequences for Canada. But will anyone listen?

The last 30 years have not been kind to economic growth and wealth creation.

The economic “successes” of the neo-liberal era, from roughly 1980 to 2007, pale in comparison to the three decades that followed the Second World War with respect to almost every economic variable imaginable.

One of the core arguments of the neo-liberal era, adopted at one time by the IMF and the World Bank, among other institutions, has been a belief in what economists have called labour market flexibility.

Labour market flexibility is aimed largely at making wage settlements more difficult and less generous, labour force reductions easier for the private sector, and labour union participation more difficult.

According to this argument, in a growing competitive global environment, Canadian companies have to remove any inefficiency in the labour market, especially any that could stifle the private sector’s quest for flexibility and profits.

So efforts have taken place over the last three decades to make labour markets more flexible: A push toward term or temporary contracts, a de-emphasis on job security, laws that made participation in unions more voluntary. And the Harper government has been an active and willing participant in this misplaced quest for labour market flexibility.

The private sector labeled labour unions as disruptive and detrimental to their bottom line: Wage gains were too high and unions too powerful, thereby making it too difficult to “restructure” hiring practices to make Canadian companies competitive (a fancy way to say it was difficult to fire people).

In reality, of course, this was an awful idea in terms of economic theory and economic consequence. In terms of building social peace between labour movements and the private sector, it was no good, either. The attack, however, has been carried out largely on the backs of working Canadians. And now we have proof.

In twin reports, the IMF revisits the question of the success of these policies.

In what can only be labeled a gigantic mea culpa, the IMF now claims that these policies have failed — and miserably, at that.

In two reports, the IMF carefully lays out the empirical evidence and it ain’t good.

In one of them, dated March 2015, the IMF argues that the decrease in unionization rates has largely fed the increase in incomes of those at the top.

Subsequently, for its April 2015 edition of the World Economic Output (WEO) report, which featured data from 16 G20 countries, the IMF concludes that there is no evidence that the neo-liberal deregulatory reforms had any positive impact on labour markets and economic growth.

These painful deregulatory policies, often imposed by force, have had no impact on total factor productivity.

It took courage for the IMF to arrive at these conclusions, and it reminds me of John Maynard Keynes, who famously once said, “When the facts change, I change my mind. What do you do, Sir?”

To its credit, the IMF looked at the evidence and admitted they had been wrong.

The IMF reports are just some in a series of recent reports from reputable institutions casting doubt on the whole neo-liberal era. Some of us have been arguing these same issues for years, concluding this era was one colossal failure, not only for the economy as a whole, but also for workers and their families.

In a recent report echoing the IMF findings, the Economic Policy Institute in Washington argued that there is a direct correlation between the decline in unionization rates in the U.S. and the decrease in the share of income going to the middle 60 per cent of working Americans (more or less, the middle class).

Evidence against the panoply of policies imposed on developed and developing countries over the last three decades is growing.

This requires a full rethinking of economics and economic policies, which is already well underway in many countries, led in many instances by students disillusioned with the teaching of economics. For instance, I have just returned from a conference in Vienna hosted by intelligent students looking for better solutions, and attended by over 200 students.

Many political parties in power, however, still refuse to acknowledge these findings, and continue with the same policies that largely contributed to the 2007 crisis.

It’s time we demand an end to policies that work against working Canadians, and in the process, we must demand from our governments better policies that share gains more broadly.

Louis-Philippe Rochon is an associate professor of economics at Laurentian University in Ontario, and the co-editor of the Review of Keynesian Economics.

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.

Tuition Fees

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%

Wage Inequality

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 10^th percentile, median is the 50^th, and ‘high’ is the 90^th.

While not perfect, let’s consider the 10^th 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.

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.

Canada’s immigration reforms have pivoted from family reunification to economic immigration, with a focus on new permanent residents who have high educational skills and/or high net worth.

What most people don’t realize is that our intake of foreign workers has almost doubled since 2006—right through the recession, amidst rising unemployment rates, and with no recovery for young workers.  But almost all of the net new growth is driven by the escalating use of temporary foreign workers, not permanent economic immigrants.

Canadian businesses have turned to these workers for a variety of reasons, including legitimate shortages in certain pockets of the labour market, inadequate workplace training, and a desire to cut costs.

The Disney story that so riled Americans is almost a perfect mirror image of a 2013 story that alarmed  Canadians about practices at the Royal Bank of Canada. We’ve since learned the hiring of temporary foreign workers is a routine thing at Canadian banks and far beyond the finance sector.

The distinction between policies that encourage permanent or temporary newcomers is critical to Canada’s future and the future of a world dogged by population aging.

All the advanced industrialized nations are aging. Japan is first, but South Korea and China, and virtually every European country, are right behind. Canada is among the most rapidly aging societies because of our relatively large postwar baby boom.

Our labour shortages, now limited to booming pockets of the economy, will become endemic as baby boomers retire in droves, which will happen long before the robots take over.  In the meantime, economic migrants are becoming the tail that wags the dog of economic development and the evolution of nations.

Recently, the UN Refugee Agency noted that 59 million people were displaced in 2014 by violent conditions where they live, the highest number of displacements on record, and the fastest single year of growth.  These numbers do not include the displacement of peoples because of climate change, which is a growing phenomenon as well. Nor do they include rising numbers of international students and professionals who go abroad to seek greater opportunity.

Pushed or pulled, people are on the move as never before. So is capital.

For the last three decades, nations have tried to become magnets for money, in the hopes of drawing investments that create growth and jobs. For the next three decades, nations with aging populations will need to be magnets for both capital and labour, just to maintain standards of living.

The stakes are high. We are establishing the terms of the game for decades to come, for migrant workers and citizens alike.

There is perhaps no more fundamental test of policy success or failure than how labour force needs will be met in the coming years.

Will newcomers be invited in as “guest” workers or as citizens-in-the-making?  This is a new issue for Canada, and an increasingly contentious one.

Numerous policy announcements meant to quell concerns have done little to change the trends. No one has answered the core question: Why are temporary foreign workers good enough to work, but not good enough to stay?

Professor Smith is right — Canada has the potential to become a superpower, a country the world regards with respect and envy for its economic, social and political strength.

But it won’t get there by relying on the permanently temporary.

This piece was first published in the Globe and Mail on July 6, 2015 (July 7 print edition).

Armine Yalnizyan is senior economist at the Canadian Centre for Policy Alternatives, and business columnist for CBC Radio’s Metro Morning. You can follow her on twitter here.

Cet après-midi, j’ai fait une présentation au Child & Family Homelessness Stakeholder Summit, organisé par Chez Toit, à Toronto. Ma presentation, illustrée de diapositives, peut être téléchargée ici. Pour accompagner la présentation, je vous ai préparé la liste suivante: « Dix choses à savoir sur l’itinérance au Canada. »

1. Les tentatives de dénombrer les personnes en situation d’itinérance ont généralement été intermittentes, mais il est raisonnable d’affirmer que l’itinérance au Canada a connu une croissance importante entre 1980 et 2000. Sur une base quotidienne à Toronto, il y avait environ 1,000 personnes par nuit séjournant dans les refuges d’urgence pour les personnes sans-abris en 1980. En 1990, ce chiffre avait doublé. Et dix ans plus tard, il y avait doublé encore pour s’élever à 4,000. Le chiffre de 4,000 par nuit, à Toronto, est demeuré relativement constant au cours des 15 dernières années, même s’il a légèrement augmenté à la suite de la récession de 2008-2009, un phénomène sur lequel j’ai déjà écrit içi. (Certes, le nombre de personnes vivant dans des refuges d’urgence pour les personnes sans-abris sur une base quotidienne est un indicateur plutôt étroit de l’itinérance. Selon la Société canadienne d’hypothèques et de logement, environ 13% des ménages canadiens ont un « besoin impérieux en matière de logement; » pour le Nunavut, le chiffre est un énorme 39%.)

2. Bien qu’il soit difficile d’établir un lien de causalité, je pense que des hypothèses relativement sûres peuvent être faites sur certains des principaux contributeurs à l’itinérance. Les chercheurs sont généralement prudents sur l’utilisation du terme causalité—en fait, il y a des tensions de longue date entre les disciplines académiques sur quelles approches méthodologiques sont nécessaires pour l’établir. Les statisticiens, par exemple, croient généralement que des essais randomisés contrôlés (ERC) sont nécessaires pour établir un lien de causalité; mais comme David Freedman a fait valoir, les ERC sont souvent «impossibles ou contraires à l’éthique» (Freedman, 1999, p. 255). Les chercheurs prudents préfèrent plutôt s’exprimer par des phrases comme: « Ces facteurs ont probablement contribué à cet effet, » ou « Je pense qu’il est probable que ceci a causé cela. » C’est dans cet esprit que je voudrais suggérer qu’il y a probablement trois principaux facteurs qui ont contribué à l’itinérance au Canada: 1) les facteurs macroéconomiques (en particulier le chômage); 2) les changements à notre système de protection sociale (y compris une diminution de la disponibilité de logements sociaux, voulue par le gouvernement); et 3) la conception et l’administration des politiques dont le but spécifique est de répondre directement à l’itinérance (souvent désignés comme des «réponses» à des systèmes sans-abri).

3. L’itinérance a des ramifications profondes sur la vie des enfants. Comme j’ai écrit en 2012: «Deux études ont été faites à Toronto sur l’effet du logement sur les enfants qui ont dû être mis en charge de l’assistance publique.  Les résultats des deux études indiquent que, dans un cas sur cinq, l’ état du logement de la famille était un facteur dans l’admission temporaire dans l’assistance publique. Ces résultats de la recherche de Toronto indiquent également que, dans un cas sur 10, la situation du logement a retardé le retour à la maison de l’enfant» (Falvo, 2012, p. 14). Une autre recherche estime que, sur une base annuelle à Toronto seulement, environ 300 bébés sont nés de mères qui sont sans abri. (Bien sûr, l’itinérance peut avoir des conséquences profondes sur la vie des adultes aussi. Pour en savoir plus, voir cette étude de 2007).

4. Le rôle du gouvernement fédéral du Canada dans le financement et du logement pour les personnes à faible revenu et des programmes pour les personnes sans-abri a varié considérablement au fil du temps. Les provinces et les territoires consacrent beaucoup plus de leur propre argent au logement pour les personnes à faible revenu lorsque le gouvernement fédéral mène. Ainsi, un nombre considérable de logements sociaux pour les Canadiens à faible revenu ont été construits à partir du milieu des années 1960 jusqu’au début des années 1990. Depuis le début des années 1990, relativement peu de lodgements sociaux ont été construits au Canada. Je tiens également à noter que la valeur annuelle, ajustée à l’inflation, du financement fédéral pour les personnes sans-abri d’aujourd’hui vaut seulement 35% de ce qu’elle valait en 1999.

5. Chaque province / territoire ne répond pas à l’itinérance de la même manière. Alors que beaucoup plus de logements subventionnés pour les personnes à faible revenu se construisent lorsque le gouvernement fédéral mène, les provinces et les territoires ne répondent pas toujours aux initiatives fédérales de financement de la même façon. Par exemple, entre 2002 et 2013, trois fois plus de logements subventionnés ont été construits en Alberta (sur une base par habitant) qu’en Ontario. Je dirais qu’ une force majeure derrière cette différence provient de la bonne performance économique de l’Alberta au cours de cette même période par rapport à celle de l’Ontario.

6. Bien qu’un chercheur attentif soit prudent en discutant ce qui provoque l’itinérance, je pense que nous savons beaucoup de choses sur ce qui la résout. Dans de nombreux cas, une personne qui séjourne dans un refuge d’urgence pour les personnes sans-abris le quitte, sans importantes ressources publiques. Dans certains cas, elle pourrait trouver un logement sans beaucoup d’aide publique; dans d’autres cas, la famille et les amis peuvent lui fournir une assistance à court terme—par exemple, un soutien financier, un canapé pour dormir, etc. (Pour en savoir plus sur la durée de séjour dans des refuges d’urgence pour les personnes sans-abris dans un échantillon de villes canadiennes, voir cette étude écrite en 2013.) Les chercheurs et les défenseurs des sans-abri en général ne considèrent pas les séjours à court terme un grand défi pour la politique publique—le plus grand défi est dans le cas des personnes qui séjournent dans des refuges d’urgence pour les personnes sans-abris (et en dehors) pour des périodes de temps plus longues. Même ici, cependant, je dirais que ce qui constitue une réponse politique efficace de la part d’un gouvernement n’est pas un mystère.

En effet, dès le milieu des années 1980, les petits organismes sans but lucratif de l’Ontario (et peut-être dans d’autres provinces aussi) ont trouvé le succès dans la construction de logements subventionnés pour les personnes qui avaient vécu la vie de sans-abri à long terme—ils l’ont fait en offrant du soutien professionnel pour aider ces locataires à vivre de façon autonome dans ces unités. Cettte approche est connue sous le non de logements supervisés—à Salus (un organisme à but non lucratif à Ottawa) il est connu aujourd’hui sous le nom de logements avec soutien. L’émergence de logements supervisés en Ontario est due en grande partie à la forte sensibilisation due à des groupes communautaires. Cela comprenait: le Singles Displaced Persons Project; le mouvement consommateur / survivant; le slogan «homes not hostels; » la fondation de Houselink Community Homes; et la fondation de Homes First Society.  Les conditions d’éligibilité pour de tels logements varient d’un fournisseur à l’autre. Dans de nombreux cas, le locataire n’a pas à prouver sa préparation pour le logement avant de recevoir un logement. En fait, Homes First Society a obtenu son nom parce que ses fondateurs croyaient que, pour ces locataires, il était nécessaire d’avoir une résidence avant d’aborder d’autres défis (santé mentale, toxicomanie, emploi, etc.).

Aujourd’hui, chercheurs, praticiens et défenseurs appellent cette approche «logement d’abord». Et très récemment, un heureux ERC de «logement d’abord» a été mené dans cinq villes canadiennes. (J’ai déjà écrit à propos de cette étude ici.)

7. Il y a plusieurs façons de rendre les logements disponibles pour les ménages à faible revenu; toutes impliquent le secteur privé à des degrés divers. Parfois, lorsque le gouvernement subventionne des logements pour personnes à faible revenu, il fournit de l’argent à une entité à but non lucratif qui développe, possède et exploite des unités. D’autres fois, le gouvernement fournit une subvention aux propriétaires (soit à but lucratif ou à but non lucratif); en échange de la subvention, le propriétaire accepte de louer des logements à un taux réduit pour une période de temps déterminée (par exemple, dans certains cas, pour 10 ans). Et d’autres fois, le gouvernement fournit de l’argent (souvent connu comme une indemnité de logement ou allocation de logement) pour les locataires à faible revenu qui louent alors une unité d’un propriétaire à but lucratif. Parmi les trois approches possibles, j’ai une préférence pour l’option où une entité à but non lucratif développe, possède et exploite des unités (et je l’ai déjà écrit à ce sujet ici). Cela dit, je pense qu’il y a une place pour les trois approches, selon le contexte local.

8. Certaines juridictions, pour répondre á l’itinerance, ont utilisé des systèmes sophistiqués d’ information.  De nombreuses organisations au service des personnes sans-abri à Calgary recuellient des renseignements sur leurs clients dans une base de données appelée Homelessness Management Information System­—système également utilisé dans de nombreuses villes américaines. Des renseignements concernant le client (âge, état de santé, statut d’emploi et statut du logement) sont entrés dans la base de données quand un apport initial est effectué. Plus tard, alors que le client reçoit des services, des renseignements actualisés sont entrés de nouveau; dans le cas de certains programmes, des évaluations de suivi sont effectuées tous les trois mois. Dans le cas de certains types de programmes, il y a à la fois des évaluations de sortie et, après fermeture, des évaluations de suivi. Tous les renseignements en matière de vie privée sont soumis à la législation provinciale. Ces données, une fois recueillies, sont utilisées de façons diverses. Par exemple, certains organismes les utilisent pour fournir des services de gestion de cas pour les clients. En outre, les bailleurs de fonds sont en mesure d’évaluer la performance de chaque organisation par rapport aux repères (c-à-d, le pourcentage de clients qui reçoivent un logement après une période de temps spécifique).

9. En ce qui concerne la prévention et la réponse à l’itinérance, la capacité du gouvernement de générer des revenus revêt une grande importance. Les gouvernements utilisent généralement des revenus générés par l’impôt pour financer à la fois les logements sociaux et d’autres programmes sociaux importants. Lorsque les recettes fiscales diminuent, de nombreux gouvernements ont moins d’argent à consacrer à ces programmes. Depuis le milieu des années 1990, les recettes fiscales au Canada (mesurées en pourcentage de notre produit intérieur brut) ont diminué sensiblement. Si cette tendance ne se renverse pas bientôt, il sera très difficile pour de nombreux gouvernements (provinciaux, territoriaux et municipaux) d’investir dans des programmes sociaux importants.

Il y a actuellement un mouvement qui préconise l’augmentation des impôts; il est dirigé par Alex Himelfarb, ancien greffier du Conseil privé. Alex et son fils Jordan ont récemment co-édité un livre qui preconise une taxation plus élevée au Canada.

(Remarque: selon certaines écoles de pensée, ce n’est pas nécessaire pour un gouvernement souverain avec sa propre monnaie de taxer davantage afin de financer les dépenses sociale. Pour plus de renseignement sur cela, lire ici.)

10. Au cours de la prochaine décennie, le Canada verra probablement une augmentation substantielle de l’itinérance chez les aînés et chez les peuples autochtones (Premières Nations, Métis et Inuits). Les personnes aînées et les peuples autochtones sont de plus en plus nombreux comme un pourcentage de la population totale du Canada. En outre, le pourcentage de personnes âgées vivant sous la mesure de faible revenu de Statistique Canada a augmenté considérablement depuis le milieu des années 1990. Je pense que tout cela fait qu’il est probable que ces deux groupes vont commencer à croître en tant que pourcentage des populations sans-abri du Canada.

–

Les personnes suivantes m’ont aidé à préparer le présent blogue: Maroine Bendaoud, Lisa Burke, George Fallis, Greg Suttor, Francesco Falvo, Louise Gallagher, Ali Jadidzadeh, Lisa Ker, Jennifer Legate, Kevin McNichol, Richard Shillington, Blake Thomas et Mike Veall. Toutes les erreurs sont les miennes.

This afternoon I gave a presentation at Raising the Roof’s Child & Family Homelessness Stakeholder Summit in Toronto. My slide deck can be downloaded here. To accompany the presentation, I’ve prepared the following list of “Ten Things to Know About Homelessness in Canada.”

1.Efforts to enumerate persons experiencing homeless have generally been spotty, but it is reasonable to assert that homelessness in Canada saw substantial growth in the 1980s and 1990s. On a nightly basis in Toronto, there were about 1,000 persons per night staying in emergency shelters in 1980. By 1990, that figure had doubled. And ten years later, there were 4,000 persons per night staying in Toronto’s emergency shelters. The Toronto figure of 4,000 per night has remained relatively constant for the past 15 years, though it has ‘edged up’ in the aftermath of the 2008-2009 recession—a phenomenon which I’ve previously written about here. (Admittedly, the number of persons living in emergency shelters on a nightly basis is a rather narrow gauge of homelessness. According to Canada Mortgage and Housing Corporation, approximately 13% of Canadian households are in “core housing need;” for Nunavut, the figure is a whopping 39%.)

2. Though it’s difficult to establish causation, I think relatively safe assumptions can be made about some of the major contributors to homelessness. Researchers are generally careful about using the term causation—in fact, there are long-standing tensions among academic disciplines as to what methodological approaches are required to establish it. Statisticians, for example, generally believe that randomized controlled trials (RCTs) are needed to establish causation; but as David Freedman has argued, RCTs are often “impractical or unethical” (Freedman, 1999, p. 255). Rather, careful researchers are more likely to say things like “these factors have likely contributed to this effect,” or “I think it’s likely that this effect caused this to happen.” And with that in mind, I’d like to suggest that there are probably three major factors that have contributed to homelessness in Canada: 1) macroeconomic factors (especially unemployment); 2) changes to our social welfare system (including a decrease in the availability of government-subsidized housing); and 3) the design and administration of policies whose specific intent is to respond directly to homelessness (often referred to as ‘systems responses’ to homelessness).

3. Homelessness has profound ramifications on the lives of children. As I wrote in 2012: “Two studies have been done in Toronto looking at the role of housing with respect to children in care. Results of both studies indicate that the state of the family’s housing was a factor in one in five cases in which a child was temporarily admitted into care. Results from the Toronto research also indicate that, in one in 10 cases, housing status delayed the return home of a child from care” (Falvo, 2012, p. 14). Other research estimates that, on an annual basis in Toronto alone, approximately 300 babies are born to mothers who are homeless. (Of course, homelessness can have profound ramifications on the lives of adults as well. For more on this, see this 2007 study.)

4. The role of Canada’s federal government in funding both housing for low-income persons and programming for homeless persons has varied considerably over time. Provinces and territories spend much more of their own money on housing for low-income persons when the federal government leads. Thus, a considerable amount of subsidized housing for low-income Canadians was built from the mid-1960s through to the early 1990s. Since the early 1990s, comparatively little subsidized housing has been built for low-income persons in Canada. I should also note that the annual, inflation-adjusted value of federal funding for homelessness today is worth just 35% of what it was worth in 1999.

5. Not every province/territory responds to homelessness in the same way. While much mores subsidized housing for low-income persons gets built when the federal government leads, provinces and territories don’t always respond to federal funding initiatives in the same way. For example, between 2002 and 2013, three times as many subsidized housing units were built in Alberta (on a per capita basis) than in Ontario. I would argue that a driving force behind this differential stems from Alberta’s strong economic performance during this same period relative to that of Ontario’s.

6. Though a careful researcher will be cautious in discussing what causes homelessness, I think we know a lot about what solves it. In many cases, a person who stays in an emergency shelter will ‘exit homelessness’ without substantial public resources. In some cases, they might find housing on their own; in other cases, family and friends may provide them with short term assistance—e.g. some financial support, a couch to sleep on, etc. (To learn more about lengths of stay in homeless shelters in a sample of Canadian cities, see this 2013 study.) Researchers and advocates for the homeless generally don’t view such short-term stays as a major public policy challenge—the bigger challenge is in the case of persons who stay in emergency shelters (and outside) for longer periods of time. Even here though, I would argue that it’s hardly a mystery as to what constitutes an effective policy response.

Indeed, as early as the mid-1980s, small non-profit organizations in Ontario (and possibly in other provinces as well) found success in building subsidized housing for persons who had experienced long-term homelessness—they did so by providing professional staff support to help such tenants live independently in those units. This was (and still is) known as supportive housing. The emergence of supportive housing in Ontario happened in large part due to strong advocacy by community-based groups. This included: the Singles Displaced Persons Project; the consumer/survivor movement; the slogan “homes not hostels;” the founding of Houselink Community Homes; and the founding of Homes First Society. Conditions of eligibility for such housing varied from one provider to the next. In many cases, the tenant did not have to prove ‘housing readiness’ before being offered a unit. In fact, Homes First Society got its name because its founders believed that its tenants needed homes first before addressing other challenges (i.e. mental health, substance use, employment, etc.).

Today, researchers, practitioners and advocates refer to this approach as ‘housing first.’ And very recently, a successful RCT of ‘housing first’ was conducted in five Canadian cities; I’ve previously written about that study here.

7. There are several ways of making housing available to low-income households; all of them involve the private sector to varying degrees. Sometimes when government subsidizes housing for low-income persons, it provides money to a non-profit entity that develops, owns and operates the units. Other times, government provides a subsidy to landlords (either for-profit or non-profit); in exchange for the subsidy, the landlord agree to rent units at a reduced rate for a specified period of time (e.g. in some cases, for 10 years). And other times, government provides money (often known as a housing allowance) to low-income tenants who then rent a unit from a for-profit landlord. Of the three possible approaches, I personally have a preference for the option where a non-profit entity develops, owns and operates the units (and I have previously written about this here). Having said that, I think there’s a place for all three approaches, depending on local context.

8. Some jurisdictions have used sophisticated information management systems as part of their efforts to respond to homelessness. Many organizations serving homeless persons in Calgary enter client information into a database called the Homelessness Management Information System, a system that is also used in many American cities. Client-level information (such as age, health status, employment status and housing status) is entered into the database when an initial intake is done. While the client is receiving services, updated information is entered again; in the case of some programs, follow-up assessments are done every three months. In the case of some program types, there are both exit and post-exit follow-up assessments completed. All information-gathering is subject to provincial privacy legislation. There are many uses for the data once it’s gathered. For example, some organizations use the data to provide case management services to clients. Also, funders are able to assess each organization’s performance against benchmarks (i.e. percentage of clients who receive housing after a specific period of time).

9. When it comes to both preventing and responding to homelessness, the capacity of government to generate revenue matters a great deal. Governments typically use revenue generated from taxation to finance both subsidized housing and other important social programs. When tax revenue decreases, many governments have less ability to spend on such programs. Since the mid-1990s, tax revenue in Canada (measured as a percentage of our Gross Domestic Product) has decreased substantially. If this trend doesn’t reverse itself soon, it will be very challenging for many governments (especially provincial, territorial and municipal governments) to invest in important social programs. There is currently a move afoot by some Canadians to increase taxes; it is led by Alex Himelfarb, former Clerk of the Privy Council. Alex and his son Jordan recently co-edited a book that calls for the need for higher taxation in Canada. (Note: according to some schools of thought, it isn’t necessary for a sovereign government with its own currency to tax more in order to finance more social spending. While keeping in mind that such an approach would be most relevant to Canada’s federal government—and much less relevant to provincial, territorial and municipal governments—readers can read more about one such school of thought here.)

10. Over the course of the next decade, Canada will likely see substantial increases in homelessness among both seniors and Indigenous peoples (First Nation, Métis and Inuit). Seniors and Indigenous peoples are growing as a percentage of Canada’s total population. Further, the percentage of seniors living below Statistics Canada’s Low-Income Measure has grown substantially since the mid-1990s. I think all of this makes it likely that both of these groups will begin to grow as a percentage of Canada’s homeless populations.

–

The following individuals were very helpful in helping me prepare the present blog post: Maroine Bendaoud, Lisa Burke, George Fallis, Greg Suttor, Francesco Falvo, Louise Gallagher, Ali Jadidzadeh, Lisa Ker, Jennifer Legate, Kevin McNichol, Richard Shillington, Blake Thomas and Mike Veall. Any errors are mine.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ain’t nobody got time for that.

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

Over at the Behind the Numbers web site, Allan Moscovitch, David Macdonald and I have a blog post titled “Ten Things to Know About Federal Income Support for Low-Income Seniors in Canada.”

The blog post argues—among other things—that if the age of eligibility for Old Age Security were to move from 65 to 67, the percentage of Canadians aged 65 and 66 living in poverty would see a very substantial rise.

The post is based on a recent chapter we’ve written for How Ottawa Spends, an annual publication of Carleton University’s School of Public Policy and Administration.  In the chapter, we estimate the rise in poverty with the help of Statistics Canada’s Social Policy Simulation Database and Model.

The link to the blog post can be found here.

Over at the web site of the Calgary Homeless Foundation, I’ve written a blog post titled “Ten things to know about Canada’s guaranteed annual income debate.”

Points raised in the blog post include the following:

-There are people and groups on both the left and right of the political spectrum who favour a Guaranteed Annual Income (also known as a “basic income”).

-One reason for support on both the left and right is that there is considerable discrepancy in terms of how generous the benefit should be.  This also makes it challenging to estimate its annual cost.

-It’s not clear what the desired outcome(s) of such a scheme would be.  This too may depend on which advocates/proponents you talk to.

-The implementation of a Guaranteed Annual Income would require a considerable amount of intergovernmental cooperation.

The link to the full blog post is here.

This fall, Canada’s Parliament will debate a proposal to expand the Canada Pension Plan (CPP).  And over at the Behind the Numbers web site, I’m co-author of a blog post titled “Ten things to know about the CPP debate.” The blog post’s other co-authors are Allan Moscovitch and Richard Lochead.

Points raised in the blog post include the following:

-CPP covers a smaller percentage of a retired person’s income than similar schemes in most OECD countries.

-CPP helps reduce poverty in Canada, but it doesn’t provide any of its beneficiaries with sufficient retirement income.

-CPP’s former Chief Actuary has proposed an expanded CPP scheme that would almost eliminate the need for private pension schemes in Canada.  This proposal has been virtually ignored by most of Canada’s elected officials and journalists.

The link to our full blog post is here.

Over at the web site of the Calgary Homeless Foundation, I’m co-author of a blog post titled “The Federal Role in Poverty Reduction.”

Points raised in the blog post include the following:

-Canada’s Minister of Families, Children and Social Development has been tasked to lead the development of a Canada Poverty Reduction Strategy.

-Total public social spending in Canada (as a % of GDP) is well below the OECD average.

-Our current federal government has already taken several important initiatives pertaining to poverty reduction.

-Measures our current federal government could take to further reduce poverty in Canada include bringing in a national early learning and child care framework/strategy, expanding the Working Income Tax Benefit, implementing universal pharmacare and providing more funding for affordable housing.

-Macroeconomic policies that could assist with these endeavours include deficit financing, increasing personal income taxes for high-income earners, increasing corporate income taxes, and addressing inequities in our tax-expenditure system.

-Any poverty reduction strategy should be undertaken in partnership with First Nations, Inuit and Métis peoples.

The link to the full blog post is here.

This year’s Alternative Federal Budget (AFB) was released on March 9. I was proud to be the primary author of its housing chapter (that chapter is available in English here and in French here).

The first AFB exercise began in 1994, with the first AFB being published in 1995. That involved a joint effort between the Canadian Centre for Policy Alternatives (CCPA) and CHO!CES: A Coalition for Social Justice.

Here are 10 things to know:

1. Job creation has always been a major focus of the AFB. People need employment to earn income and live fulfilling lives. New jobs also creates important goods and services that help the rest of us prosper. And the more people are working, the more taxes they pay, and the less we (as a collective) have to spend on poverty reduction initiatives (such as social assistance). The type of jobs that get created matter too, as do working conditions; indeed, it’s important that people be happy in the workplace. Finally, who gets jobs matters —think gender, think racial diversity, think Indigenous peoples, think persons with disabilities.
   

2. The AFB has always proposed a redistribution of income. This year’s document, for example, proposes a transfer of income (through our tax and transfer system) from households in the top six income deciles to those in the bottom four deciles; households in the top decile would the largest ‘loss,’ and households in the bottom decile would receive the lion’s share of the transfer. The AFB proposes to do this in part by closing tax loopholes for companies and high-income individuals. It also proposes to make our income tax system more progressive and to spend more on important social programs. This proposed transfer of income is illustrated in the figure below (which I’ve ‘cut and paste’ from the Macroeconomic Policy chapter of this year’s document).

3. Gender equality has always been one of the AFB’s major priorities. According to Paul Leduc Browne, the project has always “stressed policies to both recognize the importance of unwaged labour (domestic and volunteer work) and to increase the participation of women in wage labour. These included investment in child care, but also changes to the unemployment insurance, social assistance, family allowance, and pension programs” (Leduc Browne, 2003, p. 40). The following bar graph from this year’s AFB illustrates the estimated, direct financial impact of this year’s AFB on gender (this too has been ‘copied and pasted’ from the document’s Macroeconomic Policy chapter).

4. In the mid-1990s, the project had a strong focus on monetary policy.[1] At that time, the Bank of Canada had raised interest rates to the point where holders of financial wealth did well (because they got good rates of return on their savings). But these high interest rates also made it expensive for both businesses and governments to borrow money to create new jobs; it also made it expensive for all orders of government to service public debt they’d already incurred. All of this resulted in slow economic growth, high unemployment and immense pressure on social programs. (For more on this, see this 1993 report co-authored by the late Mike McCracken.)

5. The AFB has always had an impact on public policy, even in the early years. Every year, for example, AFB working group members have briefed members of the Liberal and New Democratic Party (NDP) caucuses at the federal level.[2] According to Paul Leduc Browne: “[I]n the earlier years, the finance minister himself always read our budget; until 1999, we had a meeting with him each year after the publication of our alternative budget” (Leduc Browne, 2003, pp. 41-42). More recently, it’s abundantly clear that the Trudeau Liberals’ 2015 campaign platform was strongly influenced by the previous year’s AFB. In fact, staff at the CCPA estimate that 30% of the previous year’s AFB found its way into the Trudeau Liberal platform.

6. The forecasting done for the AFB has proven more accurate than that done by the federal government. As Bruce Campbell notes: “The AFB gained credibility within policy circles and the media not only for its sophisticated fiscal framework, but also for its accurate predictions of emerging budgetary surpluses between 1999 and 2004. Year after year our forecasts were much more accurate than those released by the Department of Finance, which tried to hide the surplus—money that could have been put back into social programs…” (Campbell, 2015, p. 26). This helped spur the creation of the Parliamentary Budget Officer, which the AFB had recommended.

7. This exercise brings together like-mind people across the country and across sectors. As Paul Leduc Browne writes: “The project has brought together a wide range of groups and individual citizens from many sectors of civil society: labour, students, women, churches, anti-poverty groups, Aboriginal organizations, child care, health care, education, housing, farm coalitions, environmental organizations, international development NGOs, and other social and economic justice groups” (Leduc Browne, 2003, p. 37). Bringing together people and groups also means encouraging healthy debate and tensions. “The important point is that such tensions are healthy; I feel we were fortunate to experience them” (Leduc Browne, 2003, p. 41).
8. This exercise has done an excellent job of embracing bilingualism and partnering with Quebec-based contributors. The full document has always been published in both English and French (the 187-page French version is available here). Given the length of the document, that shows a very strong commitment to empowering French-speaking audiences and bridging what has sometimes been referred to as Canada’s “two solitudes.” What’s more, Quebec-based unions and civil society groups have participated in the project.

9. There have now been alternative budgets in five Canadian provinces. Those provinces are British Columbia, Saskatchewan, Manitoba, Ontario and Nova Scotia. Most of these efforts have been coordinated by the CCPA. There have also been municipal alternative budgets, including in Halifax and Winnipeg.

10. Soon, Alberta will have its first alternative budget. As I’ve discussed elsewhere, a group of volunteers recently took an initial step toward an alternative budget for Alberta. Building on a series of discussions with individuals in the province’s nonprofit sector, labour movement and advocacy sector, we produced a document seeking to provide a foundation for moving toward an alternative budget. We hope this becomes an annual exercise in Alberta, and we hope the project’s scope increases each year.

The author wishes to thank Bruce Campbell, David Macdonald, Gayle Rees, Erika Shaker, John Smithin and Armine Yalnizyan for invaluable assistance with this blog post. Any errors are his.

[1] Admittedly, monetary policy is not, strictly speaking, a budget issue (Bruce Campbell notes this here). However, budgets (and alternative budgets) provide an opportunity to discuss the main contributors to unemployment.

[2] I’m told that, while in opposition, members of the Liberal caucus paid more attention to the AFB than did members of the NDP caucus.

Allan Moscovitch and I have co-authored a blog post that looks at the history of child benefits in Canada.

Points made in the blog post include the following:

-Child benefits can reduce both poverty and homelessness.

-When child benefits began in Canada after World War II, one major motivating factor for the federal government was to avoid recession. Another was to fend off social unrest (i.e. Canada’s growing labour movement and the growing popularity of the CCF).

The full blog post can be read here.

I’ve just written a blog post about the fiscal situation of Canada’s ‘oil rich’ provinces (i.e., Alberta, Saskatchewan and Newfoundland and Labrador). It consists of a summary of key points raised at a PEF-sponsored panel at this year’s Annual Conference of the Canadian Economics Association.

Points raised in the blog post include the following:

-The price of oil is impossible to accurately predict, and there’s no guarantee it will rise to past levels.

-Each of Canada’s ‘oil rich’ provinces should therefore find other ways of financing future spending.

The full blog post can be found here.

The 2017 OECD Employment Outlook provides an assessment of member country performance in terms of the quantity and quality of employment as judged by a new set of key indicators.

Overall, we do well in terms of job quantity. The employment rate (the proportion of the working age population with jobs) stands at 72.5% compared to an OECD average of 66.4%. However, the Scandinavian countries rank higher for this indicator (eg Sweden, 75.5%.)

It is interesting to note that the employment rate in the United States is, at 68.7%, just a bit above the OECD average. Poor job quality does not provide an obvious boost to jobs.

The gap between the employment rate of prime age men and disadvantaged groups (each of youth, older workers, young mothers, persons with disabilities) is slightly below average in Canada, but well below leading countries.

The annual gender earnings gap in Canada is slightly worse than the OECD average of 39.0% – women earn 39.7% less here than do men, compared to a gap of 24.4% in Sweden. And unlike most other countries, progress in closing the gender gap has stalled.

Where we fare especially badly is in terms of low income. The low income rate for the working age population (percentage with incomes below one half of median annual income) is 12.8% in Canada compared to an average of 10.6% for the OECD, and just 9.4% in Sweden and 6.7% in Denmark.

Canada could and should be doing much better.

http://www.oecd.org/els/oecd-employment-outlook-19991266.htm

I’ve just written a blog post about social assistance in Alberta.

Points raised in the post include the following:

-It’s very difficult to quality for social assistance in Alberta (this is also the case in all other provinces and territories). Reasons why are discussed in this previous blog post of mine.

-In the 1990s, there were changes to the rules governing social assistance in Alberta. From that point on, it became even harder to qualify for social assistance in Alberta.

-In Alberta, persons experiencing homelessness are not eligible to receive some forms of social assistance.

The full blog post can be accessed here

This is a guest post from Rod Hill, a Professor of Economics at the University of New Brunswick, Saint John campus. A previous version of this post first appeared in the New Brunswick Telegraph Journal.

In a report this month for the Halifax-based Atlantic Institute for Market Studies (AIMS), entitled “An Alternative to Employment Insurance”, Justin Hatherly proposes replacing the Employment Insurance (EI) system. A look at the proposal quickly reveals how unsatisfactory it is.

Instead of EI, Mr. Hatherly wants individuals and employers to contribute to Personal Security Accounts (PSAs). These accounts would be the property of the individuals, which they could draw upon in certain circumstances in the event of unemployment. The funds would be invested in the stock market by an independent board.

In effect, he is proposing to eliminate EI while expanding the current Registered Retirement Savings Plan (RRSP) system with some compulsory contributions, while restricting the withdrawal of those additional funds.

He writes “Persons who lose work through no fault of their own can draw 55 percent of their wages [up to the insured maximum] for 24 weeks, provided they had contributed for 960 hours” (about 24 weeks of full-time work). “Those who left their prior employment voluntarily would be ineligible” – but why deny them access to their own savings? Quitting a job get a better one is something to be encouraged.

Crucially, “those with insufficient savings receive benefits from a common fund financed by general revenue. However, they incur a negative balance and must pay back the government before contributing to their PSA” to be eligible for further withdrawals or loans.

AIMS is proposing that individuals should rely entirely on their own savings or borrowed money to survive during a period of unemployment.

Every insurance system, public or private, has the feature that those who experience a bad outcome (a house fire, a car accident, a health crisis, layoff, and so on) have benefits that are paid by those who have not (yet) experienced a bad outcome. That is the whole point of insurance. Risk for everyone is reduced as risk is pooled across the whole population.

Instead, Mr. Hatherly is inviting people to ‘self insure’ like people do if they fail to buy house insurance. We all know how that turns out if your house burns down.

A few lengthy periods of unemployment would be no more pleasant. When people self-insure, they bear the entire risk themselves. Those with high and steady incomes may be able to shoulder that risk, but most people, particularly those with lower incomes, would not.

I did a calculation to see how this system would work. Someone earning $50,000 a year and making contributions of 4 percent could take 6 years to accumulate enough resources to cover the proposed maximum withdrawal from their Personal Security Accounts. (Under the current EI system, such a person would be guaranteed a minimum of 36 weeks of benefits, not the 24 in the AIMS scheme.)

This assumes that the invested funds would grow steadily. When the last recession began in 2008-2009, the national unemployment rate rose from 6.1 percent to 8.3 percent, while the Toronto Stock market index fell by more than 40 percent. If unemployed workers had been relying on Personal Security Accounts, their funds would have been decimated at the time they needed them the most.

In his report, Mr. Hatherly notes that even unemployment might not diminish the Personal Security Accounts very much because of “restrictive conditions on benefit withdrawal and duration” – a point which underscores the inadequacy of his proposal for maintaining income and spending after job loss.

An important feature of EI is that benefits and the spending they support kick in quickly where and when layoffs occur. This helps shorten recessions by maintaining total spending.

Mr. Hatherly is right about one thing. With workers left to support themselves during periods of unemployment, they will have an incentive to find employment quickly – assuming, as he seems to, that jobs are available. (Particularly in recessions, the number of people looking for work far exceeds the number of job openings.)

However it’s better for both workers and employers if people to take time to find a job well suited to their skills. As well, a lack of income support during unemployment would increase the bargaining power of employers and push down wages.

No one would argue that the existing EI system is perfect. A much criticized feature is its division of the country into regions where eligibility criteria and benefit duration vary greatly.

In those with the lowest unemployment rates, typically urban areas, a minimum of 700 hours of work are required to be eligible for only 14 weeks of benefits. A minimum of 1820 hours (about 46 weeks of full-time work) are needed for 36 weeks of benefits.
In regions with the highest unemployment rates, 420 hours of work gives eligibility for 32 weeks of benefits. The result is a permanent subsidy to regions of high unemployment and inadequate access to EI benefits for many in urban areas. Just because the unemployment rate is low does not mean that it is easy to get a job. Many people are increasingly stuck in ‘precarious work’, temporary or part-time with no job security.

Any change to this system towards one with greater national uniformity would have to be done gradually to avoid undue hardship in high unemployment regions. It would be best done in conjunction with other changes to income supports, such as guaranteed minimum incomes, an idea governments are now seriously considering.

However, but AIMS’ radical proposal to scrap Employment Insurance completely and to leave individual workers on their own to bear all the risk of unemployment is not an improvement.