The price of cheap

This newsletter was originally posted on Substack on Friday, November 26, 2021. 

It is possible we are about to snatch defeat from the jaws of victory. The post-pandemic moment hands us a historic, unique, once-in-a-lifetime opportunity on a silver platter: demographic changes will increase the pressure to improve wages and working conditions of those made vulnerable by our economy. This is especially true for essential workers in one of the fastest growing sectors of the economy, the Care Economy. If we made sure every job is a good job in this sector, we’d have the foundation for a robust and resilient middle class in the early 21st century, just as manufacturing was the basis for broad-based prosperity from the 1950s-1970s.

What could undermine these forces aligning? Public policy.

With essentially no political or policy discourse, Quebec and the federal government have opened the taps for migrant workers to fill labour shortages in the Care Economy. While we will definitely need more than just skills development of Canadian workers to fill mushrooming vacancies in a sector poised to expand due to population aging, we need to think twice about how that’s done. With Quebec setting the stage, it will take a lot of public attention and discussion to change the course of the river for other provinces who are likely to follow suit.

While no one wants to see inflation soar, the bigger the share of migrant workers in the labour market without improvement to their wages and working conditions and paths to permanence, the worse off everyone is. The pandemic revealed the health of each of us is dependent on the health of all of us. That’s as true for economic outcomes as it is for health outcomes.

The future of workers could be so bright, but it may be dimming before our eyes. Canada fully recovered to February 2020 levels of employment this September, ahead of the U.S. which is still more than 4 million jobs shy of the pre-pandemic level; but a large part of our faster growth is faster re-employment of immigrants than in the US. Statistics Canada shows employment of people born outside Canada and here five years or less is up 11% compared to two years ago (77,000 more people like this working). Immigrants here over 5 years are a little shy (-0.6%) of their employment rates from two years ago, and Canadian-born workers were down 2%. Yay to faster recovery, but are we simply creating more jobs with lower wages and fewer protections?

Here’s three reasons I’m nervous (and you should be too):

  1. Canada’s immigration system has two tracks for admitting newcomers: permanent and temporary residents. Statistics Canada doesn’t distinguish between them, but labour markets sure do. In this system, migrant workers are less entitled to, and often unable to access, minimum employment standards and labour rights. Their significant contribution to the workforce is more likely to drag wage growth because they have few protections if they ask for more. Most temporary residents can’t become permanent residents. Though a program in 2021 permitted this transition to 90,000 people as a one-time deal, it is not a permanent feature of the immigration system.
  2. As I said in my inaugural business column for the Toronto Star, the coming years will invert 40 years of labour surpluses to decades of labour shortages, because of population aging. Already job vacancies outnumber the number of unemployed in BC and Quebec. Quebec has been struggling with labour shortages for years. In August, Quebec signed an agreement with the federal government to increase the number of temporary foreign workers (whose work permits are tied to a single employer) and migrant workers with open work permits, without improvements to their labour rights. They also agreed that individual employers could double the use of migrant workers from 10% to 20% of its workforce. Workers in the care economy — ranging from personal support workers and aides in long-term care, cleaners at hospitals and childcare workers, to doctors and nurses — are targeted for this policy change. Public policy is rowing against market and demographic forces, simply to keep wages low.
  3. The Care Economy (as measured by the health/social assistance and education sectors combined) generates over 12% of GDP and over 21% of jobs, and will continue to grow in importance because of population aging. How it grows matters. It could evolve towards more commercial, privatized and for-profit care, or more publicly funded and publicly managed care that keeps a lid on prices while improving quality and ensuring decent work for all. That choice will determine whether a driver of the economy and job market delivers more care to people where and when they need it, or if this part of the economy expands like the rest: purely transactional, cash for care. Given we’re inevitably going to spend more collectively through public expenditures on this sector, is that money creating better jobs or more precarious work, for the sake of a cheap deal?

Talking about deals, here’s an irony alert: you’re receiving this letter on Black Friday, a day that is perhaps a more inclusive cultural celebration than Thanksgiving or any religious holiday. We share a lot of common ground when it comes to pleasure in getting a great deal. We may well share more in common as consumers than we do as workers or citizens.

But the search for the great deal also pits us, as consumers, against ourselves as workers. Because the only way you get a real bargain is if someone, somewhere is underpaid. What are we buying when we get a great deal? What are we selling? Food for thought on this most commercial, if not unholy, of days.