Minimum wage hike is boon to economy

Higher minimum wages are good for the economy but you would never know it from Ontario’s experience. Their hike to $14 dollars per hour has taken an ugly turn. Seattle’s experience was quite different.

image: Toronto Star

The upset in Ontario is centered on Tim Horton franchises. Cuts to benefits have triggered public outcry in support of employees. Demonstrations took place across Canada at Tim Horton shops last Friday organized by Leadnow.org.

The franchisees, themselves, have been abused by their owners: Brazil-based Restaurant Brands International Inc. RBI has been squeezing franchisees for more profits.

Franchisees in Canada have joined their American counterparts in suing the parent company. The Canadians formed the Great White North Franchisee Association and in their statement of claim, they complained:

“Since the time of the corporate takeover of Tim Hortons, the relationship between Tim Hortons and its franchisees has become more adversarial than amicable.”

It’s a toxic business plan that has left franchisees, employees, and customers with a bad taste in their mouth that a double-double won’t sweeten. The flap is damaging the iconic Tim Hortons brand.

Seattle’s experience was quite different. Employers took the wage increase to $15 dollars an hour as a challenge. Toronto-based Lending Loop surveyed of Seattle businesses. Their CEO Cato Pastoll explained: “It kind of forced people to make some just general good business decisions (Globe and Mail, October, 2017).”

Low wages discourage productivity because cheap labour can make inefficient businesses profitable. Higher productivity involves streamlining operations and introducing technology. It’s notable that these measures are changes that employers make -low productivity is not the result of “lazy” employees.

One Seattle furniture store eliminated low-wage entry level positions and empowered employees to become more productive. One employee was so motivated that he contacted condo owners and offered deals on furniture for new tenants. The store owner was pleased with the boost in morale: “Find out what makes your staff excited and empower them to be part of it with you,”

“It’s really easy to become angry and start acting in injudicious ways,” said an owner of a nail salon in Port Angeles, Washington. He and his wife could have cut back on staff, or turned them into commissioned workers, but they streamlined operations instead. The time taken for each procedure was standardized which meant that more clients could be booked. An automated time-keeping system eliminated the time to manually fill out time sheets. Under different circumstances, staff might have resented seeing more clients a day but with an increase in wages, they were more willing to focus on work.

Contrary to the calamity predicted by some doubtful business owners, higher minimum wages don’t result in more unemployment. Studies done by the Organization for Economic Co-operation and Development show those countries with higher wages shift employment from formerly low wage sectors such restaurants to higher wage areas such as technology.

The owners of Tim Hortons could improve profits though the introduction of technology.  I notice that McDonalds has automated kiosks where you can both order and pay for your meal.

Higher minimum wages are a boon to the economy because businesses save costs by keeping experienced workers and reducing training costs; productivity and profit margins are improved; and local economies are enhanced with worker’s new spending power.

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Indigenous labour is an untapped resource

Canadians opened their hearts and homes to Syrian refugees last year. It was a warm humanitarian gesture as well as an economic imperative: Canada relies on immigrants to sustain our work force.

    image: Government of Canada

Treatment of our Indigenous people is puzzling in both regards. Refugees from Indian Reserves do not receive a warm welcome. Communities don’t sponsor Indigenous families and put them up in homes. They are not being bombed but they are fleeing abominable conditions: mouldy housing, undrinkable water, poor education, appalling health care and little hope for employment. Instead of being helped, First Nations refugees often end up on city streets with few options for integration into society.

Not only are Indigenous Canadians uninvited in cities but the labour resource they represent is wasted.

The Centre for the Study of Living Standards released a report earlier this month entitled “The Contribution of Aboriginal People to Future Labour Force Growth in Canada.” The 36 page report outlines the wasted labour resource of Indigenous Canadians.

Indigenous citizens are the youngest, fastest growing demographic in Canada.

To start with, all Indigenous people are underemployed. More critically, participation of the 15-24 age group is 12 per cent lower than average. Only one-half of Indigenous youth are employed. That untapped resource could contribute to future labour force growth. It’s worse in the North where participation in the labour force is one-fifth the average.

If Canada’s Indigenous work force were developed, they would contribute to one-fifth of the future national labour growth. That contribution could be in the North, where they are most needed. As the global climate change warms and the climate of the North warms disproportionately, opportunities will open for jobs in resource extraction, infrastructure, housing and tourism. The expansion of the Indigenous work force In the North could comprise 83 per cent of total northern growth.

What would it take? The report states rather dryly:

“Indigenous people also face deficiencies in hours worked, employment, income by level of education and health among others. Progress must be based on Indigenous autonomy and this in turn will require strengthening administrative and managerial capacities, most likely under new institutional arrangements.”

In more vital words, it will take a reversal of our colonial past which was designed to dominate and assimilate Indigenous peoples. The Trudeau government made a good start when it divided the Indigenous portfolio in two with Jane Philpott becoming minister of Indigenous services and Carolyn Bennett becoming minister of Crown-Indigenous relations and Northern Affairs.

Some criticise the move as increased bureaucracy but the split was recommended in 1996 by the Royal Commission on Aboriginal Peoples. Both ministers are capable I can only hope they will succeed in ending the anachronistic Indian Act.

National Chief Perry Bellegarde of the Assembly of First Nations is optimistic:

“First Nations are working to move beyond the Indian Act and re-asserting our jurisdiction and sovereignty over our own lands, title and rights.”

Let’s bring our Indigenous brothers and sisters in from the cold. And if compassion doesn’t motivate Canadians, maybe a bleak economic future without them will.

Let’s talk about doctor’s pay

Doctors have been given benefits under incorporation in lieu of receiving wage hikes and that’s not right. Doctors are on both sides of the issue. The Canadian Medical Association has come out against any changes to these benefits while 450 doctors signed an open letter to Finance Minister Morneau in favour of tax reform.

  Dr. Rita McCracken supports tax reform. Photo: Huffington Post

The existing tax system allows for the questionable practice of “income sprinkling” where family members are paid even when they don’t contribute to the doctor’s business. In Ontario, children and spouses are allowed to be paid as members of doctor’s corporate boards.

Doctor practices are unlike other small business. They operate private businesses while being paid through the public healthcare system.

Some doctors are uncomfortable the existing breaks. Dr. Hasan Sheikh says:

“There is nothing unique about a physician’s work that makes income sprinkling okay for them and not for others (Globe and Mail Sept. 22, 2017.)”

As usual, proposed tax changes are political fodder. Some premiers have condemned them, even though the details have yet to be released. Manitoba Premier Brian Pallister calls them “class warfare.” Nova Scotia Premier Stephan McNeil worries about the ability to attract doctors and small business to the province. B.C. Finance Minister Carole James concerns are more nuanced:

“I certainly believe in closing tax loopholes, I believe that’s important, but I also don’t believe there was good consultation done.”

That’s Morneau’s failing. He announced the changes in the downtime of summer and faces a storm brewing in the fall. Only now is he consulting provinces.

One of the doctors in favour of tax reforms is Dr. Ritika Goel. The existing system doesn’t even benefit all doctors fairly:

“So, for example, if you have a single mother who is a physician she would be paying higher tax rate than a mother with a spouse that she’s able to income sprinkle and we don’t believe that’s fair (CBC’s The Current, Sept. 19, 2017).”

Another doctor is opposed to the changes. While acknowledging the issue of tax-fairness, she is bitter about existing compensation. Dr. Brenna Velker told The Current:

“I think that as physicians, you know, we all understand that those who make more money need to pay more tax, that’s how society works. The problem that I think a lot of us are running into is that we’re feeling really beat down. So, any of the forms that I fill out and of the phone calls that I make, or you know, e-mails, or anything like that, any other communication with my patients is unpaid. You know, it really leaves a bad taste in your mouth.”

Doctors deserve fair wages. They are dedicated and hard working. They incur more student debt and they start earning money later in their career.

“Let’s stop talking about propping up a broken tax system that benefits some Canadians and not others based on the title of their profession and not the nature of it,” adds Dr. Sheikh.

Instead of granting doctors dubious tax breaks, they should be given appropriate pay and benefits that dignify their profession.

Leisure time at work

The promise of technology was that leisure time would increase. That hasn’t happened, at least not in the manner expected.

  image: CNBC

The number of hours at work has decreased over the decades but not at the rate expected. Europe has seen a significant drop but the U.S. and Canada are relatively steady at about 34 hours per week.

Why is the promise of technology realized in Europe and not North America? In a word: unions. When the Great Recession of 2008 hit France, instead of laying people off, workers shared jobs as negotiated by their unions. In Canada and the U.S., the choice was stark: either you had a job or didn’t. Once the recession eased, French workers continued to share jobs.

The French work fewer hours with greater productivity. France has 29 per cent greater productivity than Canada and the French work 16 per cent fewer hours. The French are more productive when they are on the job.

Canadian and American workers have increased leisure time in an unexpected way –they relax on the job. In a survey, Salary.com found that that 89 per cent of workers admitted to wasting time at work. An increase in productivity due to technology is offset by goofing off on the job.

Of those who admitting to time theft, one-third wasted 30 minutes, one-third admitted to one hour, and one-third to up to 5 hours a day. The top time-wasters were talking and texting on the phone, gossiping, internet and social media, breaks, distraction of noisy co-workers, meetings, and email.

Examples of what employees were caught doing are: caring for a pet bird smuggled into work, laying under boxes to scare people, wrestling, sleeping while claiming to be praying, and shaving legs in the women’s washroom.

When these hours are subtracted from the time spent at work, the actual time spent working is only 29 hours per week. Because the work is being done in fewer productive hours, productivity is actually up by 2.3 per cent.

But you can’t say that workers who goof off at work are actually relaxing. If I’m hiding under a box waiting to scare passersby, I’m aware that I could be caught and disciplined, even fired.

Importing European solutions, like shortening the work day, is not easy. North American individualism creates a different work ethic and Corporate America has exploited that ethos. There is a sense that hard work and long hours are the key to success. And where the Puritan Work Ethic fails, corporations instil the fear of job-loss when workers try to organize.

As evidenced in Europe, productivity can improve when hours of work are reduced. Employees are more focused on the job at hand when the hours to do the job are reduced

North Americans resist job-sharing even though they would have more quality leisure-time if they did, not just hours stolen at work. The dilemma that many workers now face is having time or money, but not both. In my first column ever for the Kamloops Daily News in 2000, I wrote: “Now, productive leisure time is a luxury of the idle rich, or, a necessity of the destitute poor, but beyond the grasp of most.”

 

Guys, don’t despair when she earns more that you.

The male ego is attached to being the chief breadwinner. It’s a fictitious remnant of the cave man’s role as hunter and provider. The stereotype was perpetuated when men returned from World War II and replaced women in industrial jobs.

  image: Mother Nature Network

With the decline of industrial jobs in North America, and with more women getting a post-secondary education, women are positioned to move into professional jobs. Over the past four decades, full time jobs have increased for women while decreasing for men.

Not just men who have lost industrial jobs worry. Alan, 40, is a successful accountant and his wife, a doctor, earns more than him. At first, Alan was embarrassed by his wife’s breadwinner status. “It was a male ego thing,” he told Levo.com. “There was just something about it that made me feel inadequate. I knew it was illogical.” After simmering for years, the issue came to a head and the couple sat down and talked about the toll that wage imbalance was taking on Alan’s self-esteem. “She helped me gain perspective. There are so many more important things to worry about in life than who makes more money.”

Wage inequity weighs heavily on wives, too. Alyson Byrne and Julian Barling investigated the toll it takes on relationships in their study published in Organization Science. “You have to imagine that a lot of these women, particularly in senior executive or high-status roles, are very smart and very ambitious. We know from management studies that they’ve had to work that much harder and face that many more barriers,” says Dr. Byrne.

Byrne and Barling studied 200 high-achieving businesswomen in Canada in relationships where 44 per cent of husbands made less than they did. Many wives reported a personal loss of status when responding to statements such as “My spouse’s job impedes my future career success;” “I am embarrassed when my spouse accompanies me to work events;” “My spouse’s work makes me look bad.”

This “status leakage” manifested itself in marital dissatisfaction and instability. However, stress was reduced in relationships where the husband was willing to provide an increased roll in child care and household chores.

Frank discussions between partners are critical in reducing martial stress. Men need to lay their own insecurities bare. “The whole time,” said Alan, “I thought I was doing a pretty good job of hiding my feelings, but it turns out she knew and was internalizing my resentment into guilt. That about broke my heart.”

Left to fester, wage disparity can be toxic unless dealt with openly. Unemployed men become confused about their role. They become more violent and controlling. Drug and alcohol abuse increase; so do suicide rates.

Wives need to be frank, as well. Dr. Byrne found that wives are not angry or disgusted, but that they feel a sense of loss. “They are just feeling loss or wishing that they [husbands] were at a similar level to their own, but it creates these long-term impacts on their marriages.”

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I was going to write a column about Omar Khadr’s award of $10.5 million by the Canadian government but I don’t have much more to say than I did in my column, nine years ago, in the Kamloops Daily News.

 

Unmasking Uber and Facebook

Let’s stop pretending that Uber is just along for the ride in the gig economy and that Facebook is just a technology company.

gig

At first glance, the gig economy seems great: a way for individuals with an entrepreneurial spirit to improve themselves. The reality is that it’s a race to the bottom. For many workers, it’s all they have. They string together a number of insecure, low paying, temporary jobs to try to keep the wolf from the door.

Mortgage companies are reluctant to lend to those without secure work. Gig workers have trouble saving for retirement; they have no sick or maternity leave; no health care plans. Workers are easily abused because of the one-to-one relationship with employers.

It’s easy to become complacent if you have a reliable income. Someone like me, for example. On my visit Los Angeles last year I used Uber. I marveled at the technology that allowed me watch the car’s progress from blocks away on my tablet. I was impressed by the courteous driver and his new, clean car and the low fare.

But those of us with reliable incomes should worry as full-time positions are eroded by the gig economy.

Uber professes to be just an app that connects drivers with passengers; a dubious claim says Carl Mortished:

“That was Uber’s wizard scheme: to make money from millions of taxi journeys without actually employing a single driver or even being part of the transaction. It was about making money from the gig economy without doing a single gig (Globe and Mail, November 4, 2016).”

Judges in England found Uber’s claim that it was not an employer to be unbelievable. Drivers have no control over choice of customers, fares, and routes traveled. They are subject to a rating system that amounts to a disciplinary procedure. Judges ruled that drivers were entitled to minimum wages and paid holidays.

Facebook harbors its own pretensions. At an event in Rome last year, an audience member asked founder Mark Zuckerberg if Facebook was an “editor in the media?” He replied that Facebook does not produce content but merely “exists to give the tools to give you the tools to curate and have the experience to connect to the world that you want.” Mortished disagrees:

“What Mr. Zuckerberg says is untrue. Facebook is editing and making content. Facebook is paying millions of dollars to celebrities and other media organizations to make videos for Facebook Live.”

Facebook edits its website: banning, deleting and restricting content that doesn’t fit their rules. They ran into a storm of protest when editors deleted the famous Vietnam War photo of naked girl fleeing an American napalm attack.

Facebook should grow up. It’s no longer the college photo-sharing web site it once was. Facebook would prefer not to be classified as a publisher because it would find itself in the messy business of being responsible for content that might be offensive, defamatory, or potentially criminal.

I’m not against Uber. Properly implemented, it could improve taxi service and provide fair working conditions for drivers. I like Facebook. It keeps me in touch with friends and family. But let’s avoid the charade, Mr. Zuckerberg, of the exact nature of the business that you’re in.

Conservatives can increase chances by decreasing happiness

The antics of some Conservative leadership hopefuls are pathetic. Chris Alexander at a rally bobs his head in rhythm to the chants “lock her up” in reference to Premier Rachel Notley, tone deaf to the toxic implications; Kellie Leitch calls for immigrants to be tested for “Canadian Values” even though no such test exists and if it did, she would probably fail.

Huffington Post

Huffington Post

Trump-style populism into will not succeed because Canadians are not ripe for such politics –we need more inequality and the resultant unhappiness for this approach to work.

Inequality creates a sense of injustice and anger that manifests itself in a variety of ways. Jan-Emmanuel De Neve and Nattavudh Powdthavee researched the effects of inequality for the Harvard Business Review (January, 2016). They found that anger and stress increased in countries where the richest 1 per cent controlled the greatest share of wealth.

“In societies where the richest hold most of the country’s income, people were more likely to report feeling ‘stressed,’ ‘worried,’ or ‘angry’ on the day before the survey.”

Angry politicians appeal to angry voters. Trump’s anger is what propelled him into power; that’s why his racist and misogynistic views were largely overlooked. He was as mad as hell and wasn’t going to take it any more.

It’s not just anger that is affected. As anger went up, life satisfaction went down.

“We examined data from the Gallup World Poll and the World Top Incomes Database and found that the more income is concentrated in the hands of a few, the more likely individuals are to report lower levels of life satisfaction and more negative daily emotional experiences.”

Life satisfaction exacerbates unemployment. For every 1 per cent increase in the share of income of the top 1 per cent, unemployment rises by 1.4 per cent. There are a couple of factors involved –exporting jobs to areas of cheap labour increases profits; unhappy workers tend to be less productive, take longer sick leaves, and quit their jobs.

At the other end of the scale, greater wealth also creates unhappiness. Nobel laureates Daniel Kahneman and Angus Deaton calculated that day-to-day happiness peaks at an income of $75,000 a year, after which it plateaus. Inequality creates unhappiness at both ends of the wealth spectrum.

Canada is the sixth most happy country in the world according to the World Happiness Report behind the Scandinavian countries but ahead of the U.S. at thirteenth. Can you guess how these counties rank in equality? Right, the Scandinavian countries are the most equal followed by Canada and then the U.S.

Inequality is rising fastest in the U.S. where the top 1 per cent increased their wealth from 8 per cent of total wealth to 19 per cent in just thirty years (Scientific American, September, 2016).

Equality and satisfaction of life can be increased, and anger reduced, through fair taxes and benefits to the poor: like minimum wages, child care, job security, employment insurance, and an affordable education.

Conservative leadership hopefuls can increase their chances by increasing inequality and decreasing the happiness of Canadians by lowering taxes, increasing tuition, resisting wage hikes, and reducing job security.