Minimum Wage Arises- $15 per Hour for the People

  By Paul Tulloch- Living Work Analytics (click here for PDF version) Introduction The Ontario Government under Premier Wynne has announced its plan to raise the minimum wage level from the current of $11.40 per hour to $15 per hour by 2019. Research from many sources have shown that over the past 30 years there has been an increasing level of income polarization. In fact, the minimum wage level over the past 30 years have barely kept pace with inflation – meaning many of the lowest paid workers have been witnessing a stagnant wage. As stated in a 2016 Statistics Canada report- “In 2013, the minimum wage was around $10 in all provinces. In constant dollars, this rate was similar to the rate observed in the late 1970s”. The Ontario government along with several other regions across North America have implemented, or are considering, a substantial raise of the minimum wage level. This of course has many in the business community up in arms. Several economists and business interest groups are making the claim that such minimum wage hikes will unfairly push their “bottom line”. They warn such actions will result in both massive layoffs and inflationary price pressures throughout the … Continue reading

Report Shows Job Growth Highest in Low Wage Industries.

  Leading pollsters have indicated that the economy has become the number one issue during the election campaign of 2015. It is not surprising, given the economy has recently entered its 2nd recession since 2007. Beyond  the headline numbers, the question arises- who can Canadians trust to build a future economy? The Harper government maintains that they  have been great economic managers and Canadians should trust them (campaigning on this logic during a recession is surely a sign of how bad things have gotten.) The following report finds that contrary to these claims the economy in terms of job growth has stagnated and become recession prone. So much so  that some of the fastest growing industries in Canada are actually rooted in industries that help the growing levels of poverty.  For example the 2nd fastest growing industry in Canada since the recession of 2007 is NAICS444 –“Rooming and boarding houses”. Also making it into  the top 30 high growth industries  are “Used Merchandise stores”, “ Community food and housing, and emergency and other relief services”. Other top growth industries are related to the increasingly privatization of the health care sector and elder care sectors. Quite ironically  there is not one … Continue reading

Employment Insurance Levels on the Rise- this is more than a “technical recession”!

The latest GDP numbers have confirmed that Canada has officially entered into its second recession in less than 10 years. Without much but denial from the federal government- many questions remain on the nature and extent of this new recession. How long will this recession last? How will it impact different sectors and regions? How many workers and families will it affect? As with most economic questions – we must look deeper into the data for clues to make such predictions. One such measure is the Employment Insurance (EI) claims data. The Employment Insurance statistics are an administrative data source.  The level of EI claims are a very sensitive indicator on the health of the labour market. The Conference Board of Canada uses EI claims as one of the single inputs of the labour market into their modelling of a  leading indicator index on the economy. The EI data is far from perfect and excludes many of the unemployed especially those in short term unemployment- but it can provide a strong timely indicator of the functioning of the economy. Given it is administrative data, it goes beyond the data quality of unemployment numbers estimated by the Labour Force Survey which are … Continue reading

A Handy Guide to Building A Progressive Economy in Canada

A Handy Guide to Building  A Progressive Economy in Canada

Piketty’s new book “Capital in the 21st Century” is all the rage amongst an economic world that rarely mentions inequality, let alone read something on it. This acceptance into such a diverse political terrain is a sign that we could be at the dawn of a new era politically, economically, socially, environmentally and  technologically or so the causal chain goes. (This is not quite what the  post-modernists had in mind- but potentially modernity reborn and rebuilt?)  In many parts of Canada there has  been little recovery since the great recession, instead a slow decline and stagnation for most workers and their families.  Similar to other times in history of economic depression that have lasted this long- the political space has changed and political parties have transformed. The right  has essentially transformed into the radical right led by the likes of Harper and his collaborators such as Brad Wall in Saskatchewan. The centering Liberals are hard to pin down- traditionally wavering to popular appeal. The NDP under Tom Mulcair has found a direction  and the heading is being crafted. Given these openings and the potential for change this is an opportune time for progressives in Canada to further develop and extend … Continue reading

The Piketty Watch- Capital In the 21st Century Meets America

The Piketty Watch- Capital In the 21st Century Meets America

There is a stir in the hopelessness of mainstream economics and politics,  a spector rising(?) and in quite visible hands at the center of that stir is a book – again called Capital- but this time by an author called Thomas Piketty- a French Economist who studies inequality and has published plenty on the subject. In a recent book he authored called Capital in the 21st Century it somehow of all places seems to have created an unusual ground swell in the USA. In fact I am sure the whack- a- mole response will soon be out in mainstream media as the book slowly meanders through the pathways of the press- Krugman gave it a nod,the  New Yorker gave it a review- and now some others seem to see some merit. If it dare take root and grow, it might just be the start of something worthwhile.   So here on LivingWork.ca I am launching the official Picketty watch- here is a Google Trend to monitor the progress. It is definitely on the rise- lets hope it will sustain. Today, the launch date- saw it correlated with the following search terms: World Bank GDP, and Inflation targets. Hmmm that might … Continue reading

The Limits of Women’s Work or Did Women just lose 400,000 Jobs- Employment Rates and the Great Recession

New Explorations into the Canadian Workforce

As part of a larger research project being coordinated by the Canadian Center for Policy Alternatives, entitled Working Across Canada, I have been volunteering my time researching various dimensions of labour markets in Canada with the intention of creating a new measure to evaluate the nature of employment quality- or as some call it at the International Labour Organization and elsewhere – a Good Jobs Index (I am not sure what to call it).  As I work through this project I thought it would be constructive to write up some of the more interesting findings that are uncovered along the way. I also thought it might be constructive to evaluate some new web based software that allow users to interact and explore data in which was loaded up for this project. This interactive aspect will hopefully allow readers a chance to dig deeper into the research and explore the data, slicing, dicing, rolling up and segmenting with ease and adventure. Just click on the included link below to interact with the data chart. (you can use the software online CLICK HERE, or you can download the reader here and use it offline.) Mainly I want to bring light to some of the data artifacts that are uncovered and try and fit some reasoning and limited analysis to the facts.

Part 1- The Limits of Women’s Work or Did Women just lose 400,000 Jobs- The Great Recession and Employment Rates in Canada

Employment, or having access to a means of the production is the key to a person’s survival and well-being within a market based economy. For women in many developed nations, the past thirty years have served as an unprecedented period of entry into the waged workforce of the formal economy. It has been heralded by some as the great exodus out of the chains of the informal economy into the “freedom” of the waged workforce- as one artist famously put it in the ‘70s, moving away from “being a slave of a slave”.

Examining chart 1 and comparing the employment rate of women over the past thirty years verifies that this transformation has been ongoing in a substantive and hurried process. Only briefly interrupted by two recessions the upwards rate of women workers into the formal economy marched steadily onward from less than 50% in the 70’s to an employment rate that has women workers now approaching that of men. After nearly thirty years of steady and consistent employment rate growth, the great recession of 2008 ravaged the economy and the velocity of change in women employment rates for prime age women aged 25-54, came to a very sudden halt. Upon hitting the employment wall- the rate has stalled for the last 6 years at a historic (non-war time) high of 77%. These past six years of stagnation has been the longest period of non- growth in the employment rate of women in more than 30 years. As we move through this unprecedented period, the question must be asked- are we witnessing a historical maximum for women’s employment in the Canadian workforce? Have we reached an upper bound of women workers in waged work?

Capture2

If we are not at this upper bound, then much of what has been written about the great recession has to be rewritten as the pundits have forgot to mention the 400,000 plus jobs that women have lost during this period. Indeed if one is to run the trend for women workers using the employment rate and its robust growth rate over the past 15 years, then we can estimate with econometric forecasting that women have lost over 400,000 jobs during the past 6 years of stagnation. (See graph and calculations using an additive model of exponential smoothing to forecast an average expected Women’s Employment Rate of 83% which equate to roughly 400,000 jobs in 2014)  Suddenly the great recession seems much more traumatic for women and turns the popular notion of a “he-session”  coined by media depicting this great recession as being more difficult for men- on its head. (to explore this data visually click here)

The debate of who lost more, is of course a loaded question chalk full of the political dimensions of bias and would simply result in the divide and conquer mentality. So rather than focus on a gender divisive debate, given the numbers, one can conclude both genders have suffered greatly but differently. As can be seen in chart 1 women’s employment rate has been growing at a much higher rate over the past 30 years than men, as women entered into the waged workforce in droves.  The employment rate for men on the other hand has slowly declined over this period in a very awkward but evidently painful recession induced jagged downward trend. Each of the three major recessions over the past thirty years has been quite painful for both genders but for men it has meant a permanent adjustment to a lack of waged work for an increasingly larger proportion of the workforce.

Starting in the 70’s the employment rate of prime aged males was averaging above 91% – then after a massive carnage of job loss  in the early 80’s recession due to high interest rates and the beginning of the neo-con assault on workers, recovered to stabilize around 87% for much of the 80’s. After which the early 90’s recession took its toll and again male workers dropped off and recovered to stabilize at a lower 85% employment rate. Facing the great recession of 2008, males were hit quite suddenly with substantive jobless and they seem to have recovered ever so slightly to stabilize again at a lower rate at 83%. Obviously, given these are prime aged workers, many have to adjust to life without employment, as either discouraged workers or in some other activity (training, house husbands, return to school, early retirement). The focal point for men has been a three decade long adjustment to a lower and lower equilibrium of life without waged work.

Considering this 30 year linear climb for women, the velocity and scale of such growth over is historic and an impressive display of the market’s ability to find such space for waged workers during a neo-liberal era of uneven economic growth. Recall in retrospect that we are witnessing an almost doubling of the labour force for women in just 30 years- yet we have still maintained an unemployment rate of below ten percent (outside of the recessions and depending on how you measure unemployment). Of course as impressive as that sounds it says very little about the quality of a high proportion of jobs that were and continue to be created for women- more on that in another paper.

Since the end of the early 90’s recession, women have been entering into waged work at somewhat slower velocity then previous periods, however the acceleration is still positive and consistent up until the great recession hit in 2008 and then it flat lined. So the logic is clearly evident, we are either at a maximum of women’s grand entry into employment- or alternatively women have suffered massive loss of forgone jobs through the recession. This does not mean women actually lost all 400,0000 jobs, as in the case of men who actually did experience plenty of job loss, but it does mean that for women the pain of the recession was in terms of lost actual and potential jobs and was differently realized then men. That is women, were not hired, but most likely would have been, given the strength of the underlying historical trend in growth of women’s employment. And that loss actually does count as a dead weight loss to society given the strength of the relationship prior to the slowdown. In summary, we need to be mindful that lost opportunities must be factored into the damage the recession unleashed. Oddly enough if we look at the participation rate of women it is does not quite reflect this notion, in terms of proportion, or fluidity. As one would have expected a large increase in unemployment to match this employment flattening trend. However unemployment falls short of that which we would have expected and is only partially made up for in the pattern that was witnessed in the participation rate. So what does that mean- it means a whole lot of women workers either left the labour market in discouragement or indeed we have reached the height of women’s entry into the workforce? It is actually a very odd finding given the timing.

So what is going on?

Given the ongoing stagnation in the economy and recessionary winds it would be premature to say that women’s historical employment rate has peaked at 77%, a full five plus points below men. So that begs the question should we expect a difference between women and men employment rates?  Is there some systemic discriminatory disincentive to waged work operating independently or dependently on gender to explain such a difference?  One could suggest differences in job quality, pay rates, precarious work, career opportunity, and/or unwaged labour demands are all undoubtedly some factors.

You can explore the data yourself. Have a look and compare different age groups, participation rates, or other aspects of the labour force and see how these measures reacted in previous recessions. Of course the employment rate is different from that of the participation rate that is often used to measure waged workers participation into the workforce. Employment rate includes discouraged workers who fall into the numerator. Also recall that we are referring to relative increases, and as the population increases we will see more women enter into employment, but given the flatness over the past six years means that employment for women is constant with the total amount of people employed.

This is indeed a very big question and only the future holds clarity for outcomes, but if this current employment rate of 77% is to become a permanent fixture of the labour market for women and we have reached a maximum, then it will unleash some very massive changes in other areas of the labour market and society. All of which have been affected by the almost constant rate of increase in women’s commodification into the waged labour of the market, and the dynamics that are intricately woven through the fabric of society.  It will mean a lot of change on many other connected issues, and will have a significant slowdown in everything from day care to food items in the grocery store. We have become so accustomed to this  large ongoing change of the women into employment, that without that growth much will have to adjust to the  relative stability of natural population growth.

If we are not at this point, then we must reconsider and rewrite that the recession had a massive impact on the employment loss for women workers, and rather than being the “he-cession” that many labelled this last recession- it will mean over 400,000 jobs will have been lost by women workers- as that is what the trend would have predicted.

(Note- the employment rates above are measured for prime aged workers, between the ages of 25-54.  Other segments of the population are not considered, but you can explore them with the data software and compare click here. Other age groups over such long historical periods have flows out of the stock of employment that produces a greater variance due to retirement, returning to school, retraining, etc. The segment of the population aged 25-54 has the highest probability to be part of the waged workforce and therefore was used to guide the exploration process. This is not to discount the experiences of other aged workers, but simply to clarify the trends and bring more focus to a labour market in transition)

projected2

China’s Relocated Poor Struggle to Build New Lives

Over the past year LivingWork.ca has been actively organizing and setting up a research network to link Canadian and Chinese applied and academic researchers. The goal of the network will be to enhance the exchange of information and shared understanding of economics and labour markets issues that each country faces. The network will engage in a variety of activities including original research, translation of the latest research documentation,  publication of materials that are mutually agreed upon  and  dissemination of information. The focus however will be to establish better communication, dialogue and exchange of ideas and experiences. As suggested  in this Radio Free Asia Video the trouble that lay ahead in China as 300 Million plus rural citizens are targeted to move to the urban is quite complicated.  More to come on this endeavor.

Great Recession’s Lack of Investment Takes it Toll as Business Innovation in Canada Drops

The continuing stagnation of investment that set in during the great recession is catching up to Canadian business as innovation by Canadian  companies in 2012 has fallen dramatically.  Statistics Canada recently released the results of the Survey of Innovation and Business Strategy and its ominous headline indicates that Innovation in Canadian businesses has fallen off by a whopping 17 percent in 2012 to a mere 60 percent of surveyed companies indicating a level of measured innovation. This lack of investment is creating an  ecosystem  of reduced innovation within the value adding infrastructure of the Canadian business sector.This inevitably leads to lower productivity as more than 1 in 5 Canadian firms between 2009 and 2012 reduced their level of innovative activity. Ultimately this translates into an increasing downward pressure on  standards of living for Canadians.  The study reads like a dark shadow falling over the whole idea of building  a higher value adding/ high wage/ high innovation  economy that many developed countries are pursuing out of this great recession.decline

Developed countries like the USA, are highly focused on reversing the off shoring trend that was the focal point of corporate strategy for two decades, and “on-shoring”- high waged jobs back inwards is the goal. This of course will mean higher degrees of innovation, new business strategies and the like. However the results of this extensive survey suggest that Canada’s corporate leaders are not only just sitting on their hands, when it comes to investment, but the most critical area of investment into innovation is being cut back. The ongoing lack of focus on innovative investment by Canadian businesses is coming home to roost and it will mean more jobs lost, more decline and lower standards of living.

inno

The question of where has all the investment gone has reached a crisis point for the Canadian economy and it is not for want of funds.  The investment conundrum famously defined by former bank of Canada governor Carney when he coined the term “dead money” was outlined  to Canada’s corporate leaders as he ridiculed them for sitting on mountains of cash. However what he failed to mention to the Canadians is much of this cash is not dead and as he full well knows, the cash sitting on corporate balance sheets is more  likely financialized into off balance sheet derivative trading. It is difficult to allocate just how much of an affect the finacialization of the economy is having on corporate investment decisions, but the  negative impact on the brick and mortar economy is real.  This due to much of the book keeping for these assets is  off balance sheet and  end up in what is known as the shadow banking sector of the economy. Not many statistics are kept on this portion of the economy, and as such not much in the way of regulation exists in the globalized casino however as the Bank of International Settlement (BIS) ,makes clear on the statistical reports the amount dollars involved in derivative vehicles is estimated at over $640 trillion dollars globally. This is up dramatically from the $400 trillion that was reported by the BIS before the finanical crisis of 2008 . So the question remains, how does the economy come out of this recessionary stagnation in terms of growth and declining worker outcomes, when investment seems to be caught up in other profitable and apparently less risky assets within the financial circuits of the economy.

A few key points should be underlined from the survey that add some qualitative and quantitative into the lack of investment question.

1) Innovation as defined and measured by the survey was significantly down from the ’07-’09 in to the ’10-’12 period by over 16% to 60.1% of firms signifying some form of innovation. Broadly speaking, this slow down in terms of innovation translates into further evidence of a slow down in investment- and most likely the most vital type of investment, when considering productivity and competitiveness which in the key areas of higher value adding. This also reflects the decline of the higher innovative  industries found in manufacturing and a continued expansion in lower innovative resource extraction industries.

2) Many progressive economists have praised such concepts as industrial strategy over the past several years for getting a foothold to climb out of this economic recession. One policy option that is critical in the formation of industrial strategy and is highly effective within a high value adding/high wage economy is targeted investment in the form of tax credits. In this study on Innovation,  firms surveyed indicated that the most critical of all government programs to support innovation are tax credits. Despite Canada’s Mr. Flaherty’s constant ideological stance of very low tax credits and as pontificated not wanting to “pick winners and losers” (which is quite a simplistic and destructive stance) it quite obvious that businesses feel this a required policy with over half of all respondents indicating that tax credits are an important determinant of innovation. Notably this is up from 34.9 percent in the previous survey period- which is highly significant as we stagger through this elongated slump.

3) Thirdly it  was quite enlightening as this survey sees through this whole notion that the Harper government has allocated a substantive amount of tax money on priming the pump on  skills shortages. However businesses reported that only a mere 7% felt that government help on training was necessary for innovation and this actually fell during this period from 19%. If indeed we were suffering through a massive skills shortage that the Tories claim, than I would imagine businesses would be ranking Training a lot higher than 7%.

Wow that last point is a zinger! How can the tories stake their entire human resource strategy on the country that there is a skills shortage when only 7% of businesses feel it is an issue. I have to say this empirical evidence surely must make the tories look again at the whole skills shortage argument it is indeed the straw man.

4) Lastly this survey again debunks the claim of small business being agile, innovative and bleeding edge as Large enterprises indicated a much higher innovation rate than small business.

Some very interesting findings.

When will this survey get cancelled??

http://www.statcan.gc.ca/daily-quotidien/140214/dq140214b-eng.htm

This business survey is the highly cut back- business enhanced/ worker and labour content subtracted version of the workplace and employee survey (WES- long live WES! It was a survey to trump all surveys and take policy to the eternal fountain of truth of higher productivity and worker outcomes! Now a shadow of itself and look at our economy since WES was cancelled in 2009). We can now call it the productivity survey for sure.

A Canoe Trip With Mel Watkins

Welcome to my first blog post and as such I would like to dedicate this post to one of my favourite economists, Mel Watkins (right up there with Karl Polanyi, Colin Leys, and Pat Armstrong). It is difficult to encapsulate the labour process of learning and how one takes in the social construction and manifestations of the prevailing learned.  Being a student of political economy for many years and attempting to engage the workings of the global economy, it was through such work and teachings of  Mel Watkins that made this journey easier. Mel’s important contributions to the Staples theory and later his work on foreign ownership and Canada’s growing reliance on foreign direct investment were of  great comfort and guidance for me. It is much easier running the rapids with a skilled canoeist in the boat. Too often in other areas one finds themselves in the cold, dark, shark infested waters. The great asset of the staples theory for me is its ability to examine linkages that are demarcated by the boundary of the firm and follow the value chain of productive processes. It is an approximate extension, and necessary outline of the circuitry of capital. Recently I finished … Continue reading