Categories
Employment Financial security Governance Poverty

Why minimum wage policies are ineffective: A brief overview, plus Ontario retail sector example

Chart 1 Change in hours and wages, Retail trade, Ontario, 1983-2014*
Chart 1 Change in hours and wages, Retail trade, Ontario, 1983-2014
Source(s): CANSIM tables for Survey of Employment Payroll and Hours (SEPH), Statistics Canada. (See Note 6)

Encouraged by recent initiatives in relatively more prosperous US jurisdictions (Seattle and San Francisco), Canadian labour groups, particularly those out west (BC and Alberta), have taken to calling for dramatic minimum wage hikes. These labour groups cite research they interpret to mean that min-wages do not affect (dis)employment, and assert that mandated wage hikes will help address income inequality and/or alleviate poverty. Unfortunately, the min-wage research to date does not support this assertion. That may have more to do with the challenge of distinguishing between min-wage and other effects. Perhaps the best approach is not to try to discern the direct effect of min-wage policy at all, but rather infer it from broader labour market trends.

Categories
Financial security Poverty Social security

Fraser Institute pension aversion: ORPP unnecessary, according to FI. Quite necessary, according to reality.

Chart 1: Sources of incomes among the over-65s

Income_sources-over_65
Source: Pensions at a Glance 2013 – OECD and G20 Indicators (PDF), The Organization for Economic Cooperation and Development (OECD)

It’s like the Fraser Institute can’t help itself

Proposed Ontario pension plan unnecessary
Charles Lammam and Sean Speer, The Fraser Institute May 2, 2014

Ontario’s recent budget included the Liberals’ proposal for a mandatory government pension plan modelled after the Canada Pension Plan. The proposal, however, is largely based on the faulty assumption that most Canadians are not adequately prepared for retirement.

Who says it’s faulty? Well, certainly not the 33% of Canadians over age 55 who are concerned they do not have enough money saved for retirement, according to a recent ING Canada survey. Nor the 49% of Canadians over age 65 who remain at work because they can’t afford to retire, according to a Canadian Association of Retired Persons (CARP) survey (PDF).

Regarding the ”generous’ pension benefits provided by the Canadian government: Spending on public pensions and government retirement benefits account for only 4.5% of Canadian GDP, whereas the OECD average is 7.8% of GDP. Public transfers account for 39% of Canadian seniors’ gross income, compared to the OECD average of 59%.

Who needs actual seniors or statistics to speak to the necessity of public pension enrichment when Canadians have the Fraser Institute…

Categories
Aboriginal - First Nations Civil liberties Justice Poverty Race and ethnicity

The sorry state of Canadian civil liberties: ‘Hurricane’ passes as his adopted country regresses

Rubin-Carter-0421

 Rubin ‘Hurricane’ Carter dead at 76: Former professional boxer became an advocate for the wrongly convicted
Mark Gollom, CBC News Apr 20, 2014

The extensive record clearly demonstrates that the petitioners’ convictions were predicated upon an appeal to racism rather than reason, and concealment rather than disclosure.

Wrongful Convictions in Canada (PDF)
Kent Roach, University of Cincinnati Law Review 2012

… the Canadian experience is of interest because in recent years an increasing number of wrongful convictions arising from guilty pleas have been discovered. This phenomenon suggests that the unknown number of wrongful convictions may be much larger than many have appreciated. In other words, wrongful convictions may result not only from contested trials, but from the majority of cases in which accused plead guilty…

How many wrongful convictions in Canada are never detected? Even if the error rate resulting in wrongful convictions in Canada was exceedingly small, there may be large numbers of undiscovered  wrongful convictions, given that about 90,000 criminal court cases result in a person being sentenced to custody in Canada each year. An error rate of only 0.5% would result in approximately 450 wrongful convictions a year

Two-thirds of cases in adult criminal court result in  convictions on the basis of guilty pleas, but given the recent evidence of  innocent people making both irrational and rational decisions to plead guilty, it cannot be assumed that all those in Canada who plead guilty  actually are guilty. The prosecution terminates most of the remaining third of criminal cases. Only 3% of cases result in an acquittalsuggesting that criminal trials only reject a very small percentage of all prosecutions.

That ‘error’ rate is not only 0.5%. And those ‘errors’ tend to overwhelmingly accrue against socio-economically disadvantaged Canadians: Aboriginal / First Nations, visible minorities and low-income individuals. That they’re also far more likely to be charged and denied due process is just another unfortunate ‘error’. Or not.

It would seem the vast majority (2/3) of criminally accused are pleading guilty as they perceive little chance of receiving a fair trial. That a statistically insignificant (3%) share of Canadian criminal cases result in acquittal underscores that in Canada – despite efforts to portray the country as progressive, governed by the rule of law and due process, without prejudice – an accused is not just de jure ‘guilty until proven innocent’, but de facto guilty.

On the bright side, at least Canada doesn’t have the death penalty… yet.

And the Canadian government wonders why it has no credibility when it criticises other nations’ human rights records…

Categories
Financial security Governance Poverty

Guaranteed income: An insightful analysis on Al Jazeera

Update: Al Jazeeera has uploaded the full video, linked below

Income for all
Could adopting unconditional basic income end poverty?
The Stream, Al Jazeera, March 20, 2014

The linked Al Jazeera broadcast discusses the recently revived notion of a guaranteed basic income, with particular reference to the Swiss plebiscite on the subject. It was a commendable effort by The Stream’s young hosts, touching on both the potential benefits and drawbacks of the proposed programs while making judicious use of both its panelists and social media (an example of digital broadcast media done right).

Categories
Financial security Governance Media Poverty Transparency

2011 NHS: A few notes on the Income release

Inevitably, media sources will cite the 2011 NHS income data, set for release tomorrow, as a realistic portrait of Canadian household and individual incomes. It will not, and could not, be owing to the nature of the source survey. The following provides a brief overview as to why the 2011 NHS income data will be unreliable.  The role of income data in the federal government’s decision to cancel the long-form Census is also discussed.

Categories
Aboriginal - First Nations Environment Governance Poverty Race and ethnicity Transparency

DataLibre: Axed federal advisory web sites available on Archive.org, but not Library and Archives Canada

The previous post got us thinking, why not look up the other federal advisory agencies and councils that were recently axed

First Nations Statistical Institute (FNSI)

National Council of Welfare (NCoW)

National Roundtable on the Environment and the Economy (NRTEE)

National Council on Visible Minorities (NCVM)

Readers are encouraged to visit Archive.org’s Wayback Machine and let us know what other interesting deleted or modified Government of Canada sites and pages they find.

wayback

All the referenced web sites were supposed to be archived at Library and Archives Canada. Of the four listed above, only NCVM and NRTEE are archived, the latter 6 years older than Archive.org’s. Perhaps something to do with those cutbacks at Library and Archives, which just so happened to coincide with the elimination of the referenced advisory councils…

Before getting too excited, archived web sites have very limited functionality. Things like forms and search functions don’t work. So, for example, data searches won’t work.

Nevertheless, Archive.org’s efforts are commendable. This site does not endorse nor have any affiliation with the agencies or firms mentioned on its pages. That said, readers who find Archive.org’s pages useful may wish to consider contributing to the organisation’s efforts.

Readers may also wish to inquire of their federal MP re the missing and out-of-date Library and Archives Canada web archives.

Categories
Governance Poverty Transparency

DataLibre: NCoW welfare income data tables, 1986 to 2011

Thanks to the good people at Archive.org for making available a copy of the National Council of Welfare (NCoW) page, as it was last seen on June 18, 2012.

The linked tables show the average income of social assistance beneficiaries by household type and province / territory of residence, expressed in constant (2011) dollars.  The sums apparently include all applicable social transfers to each household type, not just provincial social assistance.  For more information, readers may wish to consult Welfare Incomes 2009.

Will update if/when beneficiary count data by province and territory is available.

Categories
Employment Financial security Media Poverty

Q: How does a McDonald’s employee get by in the new Mconomy? A: By getting a second McJob, according to McDonalds

Kudos to ThinkProgress for catching this. In case it gets removed, below is a copy of the McDonald’s employee Budget Journal (see p.4)

Of interest to Canadian readers: Even though the same McDonalds employee’s U.S. dollar (USD) income in Canadian dollars(CAD) would leave a Canadian McDonalds employee even further behind, that same worker wouldn’t be considered poor in Canada. According to the official Canadian low-income cut-off table, that McDonalds employee’s income should be more than sufficient for two.

Categories
Employment Financial security Governance Poverty Transparency

June 2013 LFS: Comparing the Canadian and U.S. unemployment and labour underutilisation metrics

As repeatedly mentioned on these pages, analysing the monthly movements of the Labour Force Survey (LFS) is a fool’s errand. The monthly LFS data is notoriously unreliable. Now that the standard errors are included with the LFS monthly releases, readers can evaluate it themselves. Notably, the June 2013 industry-level data is useless, the standard errors exceeding the monthly changes pretty much all the way down the list.

This semi-regular LFS blurb will touch on general concepts and historical trends. This month, given the U.S. Federal Reserve Chairman’s recent comments on using unemployment as a benchmark in the FMOC decision to turn the corporate welfare (err… ‘quantitative easing’) tap off and the subsequent reaction on both sides of the border, a comparison of the U.S. and Canadian unemployment data may be worthwhile.

Context

Over the last 30 years, innovation in automation, competition in international freight, reduction in trade protection and little progress harmonising international labour (incl health, safety, human rights) standards has encouraged Western manufacturers to off-shore their operations to lower-wage locales.  Over the last two decades, advances in information and communication technology (ICT) have encouraged the off-shoring of not only low-skill call centre jobs, but just about every high-skill professional service imaginable, from software development to financial and radiological imaging services. As Paul Krugman recently realised, the ‘re-shoring’ trend is bringing back mostly automated operations with few if any jobs.

This has led to what one could (and will, in a future write-up) argue is a permanent structural shift in many Western industrialised economies. Hundreds of thousands of jobs lost in manufacturing have largely been replaced with retail jobs, professional service jobs largely replaced by sales and support services. All of these new jobs can be broadly characterised as more precarious, providing lower pay with little to no benefits, few opportunities for advancement and no job security, relative to the jobs they’ve replaced.

Labour market survey redesign

Labour market surveys were slow to adapt to the changing labour market structure and dynamic. Both the Bureau of Labour Statistics (BLS) and Statistics Canada updated their alternative / supplementary measures of unemployment, aka labour underutilisation, in the mid-90s.

     

The preceding docs detail the revisions to the U.S. Current Population Survey and the Canadian Labour Force Survey. The broadest measure of unemployment from the BLS is U-6; from the LFS, R8. To summarise, the key differences between the two measures are:

U-6 counts respondents who indicated they were either involuntarily working part-time or those who were marginally attached to the labour force for a variety of reasons. However, R8 only counts involuntary part-timers’ hours expressed as ‘full-time equivalents’, or those who were “marginally attached to the labour force because of economic reasons”.

Different approaches, different trends

Using the publicly available data from the CANSIM 282 series for the LFS, it is possible to recreate a Canadian equivalent of U-6. The results are surprising, to say the least:

     

A quick comparison of the BLS U-6 and the LFS U-6 equivalent shows that while labour underutilisation in the U.S. increased dramatically with the onset of The Great Recession, it’s been consistently high in Canada since the survey redesign – and likely had been for some time before that. In fact, in 1997, the first year data was available for both the CPS and LFS following their respective redesigns, Canada’s U-6 equivalent was nearly double that of the U.S. U-6, 17.0% to 8.9%.

A few other brief notes:

– The LFS R8 dramatically underestimates underemployment and marginal attachment relative to LFS U-6 equivalent. The gap between the official unemployment rate R4 and R8 is about half the size of that between R4 and Canada’s U-6 equivalent.

– Contrary to Miles Corak’s observation, measuring Canadian unemployment using the BLS equivalent (U-3) yields the same official LFS (R4) annualised unemployment rate. Unfortunately, Mr. Corak was looking at the seasonally adjusted data; had he used the unadjusted data for August 2012, he would have noticed a much smaller difference (8.2% vs 7.8%, respectively).

That said, the surveys, in addition to using slightly different populations (age 16+ for BLS, age 15+ for LFS), also ask questions slightly differently. For details, readers can consult the CPS and LFS questionnaires. That said, the differences are not that significant, as evidenced from the identical annualised unemployment rates obtained from the LFS using R4 and the U-3 equivalent.

Labour force surveys offer incomplete picture

While the BLS effort to broaden its definition of labour underutilisation (relative to Statistics Canada) is commendable, it would be impossible for a labour survey to fully capture the impact The Great Recession had on households.

Between October 2008 and December 2011, the LFS recorded an increase in Ontario unemployment of 68K (up 16.1%). However, it also recorded an additional 367K as no longer in the Ontario labour force, (up 10.8%). Only 50K of those were reclassified as ‘Not in the labour force but wanted work’. Over the same period, the number of Ontario residents receiving regular social assistance increased by 105K (up 28.4%), while the number receiving disability support increased 65K (up 19.3%) – both increases well above the population growth rate.

There are still a few figures needed to complete the picture. It’s clear, however, that many Ontarians were left far worse off than either the official or broader unemployment figures would suggest. It’s not too far a stretch to assume the same malaise in many parts of the country (if any readers are interested in helping fill in the national picture, please hit the CONTACT page).

Public policy, moving forward

In such an environment, public policies cutting social assistance, further limiting employment insurance benefits, raising the qualifying age for OAS/GIS and curtailing other social transfers would be ill-advised, to say the least.

But that’s what governments can get away with when the public is provided an incomplete picture. The loss of the long-form Census will only further obscure the extent of the problem.

Unfortunately, it’s easier to kick the can down the road than to deal openly and honestly with a growing structural problem. Since the industrial revolution, income distribution for the majority has come through the exchange of labour for a wage or salary. That system is increasingly eroding. The first post on this site showed the increasing gap between salaries/wages and corporate profits as shares of GDP between 1990 and 2008. The drop in corporate profits during the Great Recession likely caused a break in the series, but the long-term trend is obvious. Not surprisingly, consumer spending as a share of GDP dropped over the same period, as household debt soared (posts two and three on here). It doesn’t take much to figure out why, at least in Canada, there’s yet to be a sustained economic recovery: The Great Recession capped nearly two decades of unsustainable growth.

Categories
Employment Financial security Governance Poverty

Canada’s Economic Action Plan: Creating high-paying jobs

Canada's economic action plan - creating high-paying jobs

McDonald’s Set To Serve Up More Than 6,000 Jobs in Canada on National Hiring Day
McDonald’s Restaurants of Canada Limited, Canada Newswire April 8, 2013

Home Depot Canada plans 6,700 new hires
The Canadian Press February 6, 2013

Target’s hiring spree in Canada poised to roil retail market – will hire as many as 27,000
The Toronto Star, July 3, 2012

Walmart Canada Launches Hiring Spree – 4,000 new associate jobs to be created this year
Walmart Canada, Canada Newswire June 25, 2012

while…

Canadian Pacific cutting 4,500 jobs
CBC News, December 4, 2012

RIM to cut 5,000 more jobs
CBC News, June 28, 2012

CBC to cut 650 jobs, programs over next 3 years
CBC News, April 4, 2012

Budget cuts 19,000 public service jobs
CBC News, March 29, 2012

(the CBC shared our sense of humour/irony, posting the following with the its story on the public service cuts last spring)

Canada's economic action plan - Flaherty budget announcement