Shake things up a bit

My column in the TJ this a.m. comes at it from a different angle. My intent with the column is to systematically make the points that I try to convey on this blog: the underfunding of economic development; the misallocation of scarce resources to prop up bad business models for political reasions; new economic sectors with high growth potential; making the most of the resources you have; effective immigration; etc.

But this morning, it’s more about setting the table – as I do here on occasion. Providing the masses with a little taste of the kind of data they rarely see in print or hear in the media – but that are critical to understanding the structural challenges in the economy. An understanding that is the basis on which actual change can be predicated. For example, why do we still have 100,000 collecting EI each year? Sure, between 3k and 5k are maternity leaves and probably a few thousand more are actual EI between jobs – the the rest are seasonal workers. Why do we need to foster seasonal work when we have low unemployment? Total EI income in New Brunswick is up 29% from 2000 to 2005 while total employment income in New Brunswick is up 19%. I thought things were booming? Samuel LeBreton told us last month that things were so hot in the labour market that he was expecting things to cool off. What a crock.

The new government funding program for small biz still provides dough for seasonal tourism jobs. After all we have learned.

I told you before but it is worth reiterating that there is value in work. That statement should be axiomatic but it is not anymore. Even the father of the US welfare state – FDR – was worried that just giving unemployment men money would be a disincentive to work so he made all the unemployed workers (that were able to work) work for their unemployment cheques. Some of the most impressive public works in U.S. history were built by people that were unemployed during the Depression.

In the 50s and 60s in New Brunswick, people working in seasonal industries would just rotate around. Guide in the summer, work in the woods in the fall and plow snow in the winter. Then, with EI, we started making each of those a discrete job and we formalized through government funding a permanent seasonal workforce subsidized in their off months with their neighbours EI premiums.

I think we now have an opportunity to rethink this. To look at someone having a summer job and a winter job.

This is more than just about EI. It’s about income and productivity. To have 100,000 workers idled for periods ranging from a couple of months a year to six months a year is deeping draining on productivity and income and breeds a large underground workforce.

It’s time to get on with it.

11 thoughts on “Shake things up a bit

  1. Get on with what exactly? Picking on ‘the other guy’ is always a popular pastime, but the reality is that there is little understanding of the unemployed in the province. As you state, perhaps you guys need to find the facts FIRST. Face it, we are all the masses who know little of this. Get the facts first.

    I had this same discussion with a guy about welfare. He had all these memories of these ‘damn lazy welfare’ people who sat around and did nothing. He thought it was a huge social problem (it is, but not for the reasons he talked of), and didn’t realize that the number of welfare had dropped by over 50% since the mid nineties.

    And with the lowest welfare rates in Canada, people on welfare live in poverty-hardly a happy scenario. Single people live in ABJECT poverty at half the low income threshold.

    However, similar to your vague assertion, the number on welfare are by far people who are on it only sporadically (in other words, for one reason or another they can’t even get EI), or who were hurt on the job (and haven’t the luxury of suing bad employers).

    Meanwhile, of course the biggest sector here is construction, not resources. The province is experiencing a boom in urban areas in construction, which leads to more people getting into construction, which leads to more people collecting EI. In fact, construction is one of the industries that Moncton area high schools have co-op programs with so students can ‘learn a trade’.

    So the question is, what do you do with all those construction workers, roofers and landscapers? That is the ‘get on with it’ question. I’ve worked in all those industries and they pick up those who the educational system failed and who can’t afford university.

    Go to virtually any one of those people and tell them ‘look, you need to get an education’ and they would LOVE you, the problem is well known-they can’t AFFORD it. EI, like welfare, like many industries, operates as a trap. The government WANTS those people in those trades because it gives developers cheap labour-and YOU pick up the slack and like coal miners of yesteryear, they bear the brunt of unsafe working conditions and frequent layoffs and job insecurity.

    So there you have it. What exactly does ‘get on with it’ mean? Absolutely, do like Cuba and get a first class educational system that educates EVERYBODY. However, thats easy from the sidelines, companies like the deal because they have cheap labour, government likes it becaues the people have work, and other workers (taxpayers) pick up the slack. However, EI is FAR less generous than people suspect, and at least EI is paid federally, whereas booting them off and making them more dependant on welfare costs the province-or else the people just leave leading back to the original problem.

    Just like to add one other thing, Canadians work longer hours now than even the japanese-the ‘value of hard work’ speech is being overdone to the extreme. Other countries with resources like Norway and Qatar like to ‘work smart not hard’-thats a motto that really needs to be ingrained in Canada now.

  2. I don’t get your point. The truth is that seasonal EI is driving away a lot of young people who don’t want that kind of career. As for your point about construction workers, yes, what would be wrong with construction workers driving snow plows or working in the woods or doing something else in the winter? Why should they be paid to stay home? I know you will continue to equate the robust, well paid construction worker with the poverty stricken single mother living in abject poverty but I think that most people will see through this very weak comparison.

    The bottom line is that I think if the construction worker was working year round, we would have more funds to help those in abject poverty.

  3. Um, my point is that in Canada you CANT do construction year round. There’s a thing called ‘snow’. And ice. And freezing rain. And cold. Those two analysis are NOT that different and if people are ‘seeing through them’ then its because they aren’t actually looking at them.

    BOTH situations are the same. You have an individual whose skills are not being utilized. Now, I understand if you think people have dollar signs stuck on their head and their only worth is what they are paid for, but thats hardly all thats important.

    Again, we can go back to an earlier discussion and that many of these people are the ones who keep our society going through volunteer work.

    And people don’t leave because there is seasonal work, that makes no sense, they may leave because there is ONLY seasonal work.

    My point was to ask what YOUR point is… the ‘lets get on with it’ point, or the ‘shake things up’ point. What is it that is getting shaken up and what is getting on with? From your blog I have no idea, although from the way you talk about it you seem to be in the ‘lets cut em off’ camp. That may be wrong, I don’t know, I can’t tell.

  4. I don’t disagree that we should find a way to give persons incentives to seek work (when suitable work is available) rather than use EI. However, I am not sure that this really changes very much in terms of NB’s predicament. This topic will generate heat but not much that will contribute to increasing NBs growth. Not to be cynical, but are you just looking for an easy target, rather than telling people what they do not want to hear?

  5. I think we have to start the conversation. I am not necessarily in the “let’s cut em off” camp. I am just saying that the built out of a very large seasonal workforce subsidized by the EI system is a relatively new thing (last 30 years it really took off) and it is much more predominant in New Brunswick. You focus on ‘construction’ but don’t they have construction workers in Alberta? In NB, for one person receiving EI income there are 2.8 that do not. In Alberta, for every person with EI income, there are 10.8 without EI income. Now, for sure, there are many seasonal workers Alberta that make more than the maximum allowable to collect EI, but my point still remains.

    As for “getting on with it”, I do think we need to have a conversation about the role of the seasonal EI system and its effect on local economies.

    You can be naive about it and watch the feds commission a study from an Ottawa think tank that recommended they provide people incentives to leave areas that are reliant on EI for communities that are not reliant on EI or you can get out front of the issue and try and think it through. My preference would be to – over 20 years or so – migrate the industry in many of these communities to more permanent, year round jobs – or off season jobs where workers keep their benefits. We need to look at these issues in 20-30 year increments. I know politicians have a 3-4 year time horizon but I have been around now for pushing 20 years and I have seen things mostly get worse.

  6. Maybe I am not communicating clearly enough my position. I don’t want to ‘cut off’ people, pick on the downtrodden, etc. I am saying that the EI system, IMO, is a part of the problem – not the solution. We need quid pro quo development – not just arbitrary cutting but my parents live in the Miramichi and I can tell you that a lot of kids leave because they don’t want the EI, seasonal lifestyle. Most of the people in seasonal jobs don’t have company benefits. Most, don’t earn a whole lot of money (in total) and most don’t have a lot of incentive to get ahead.

    We can sit back and talk about urban development and ignore rural NB if we want. Or we can come to grips with the facts. The seasonal EI system in rural NB is an impediment to growth. Cutting it outright is not the solution – of course. But it is a lot easier for government to throw money at this program than to look at real economic development.

  7. I just finished reading your Telegraph column. Well said!

    I worked on EI reform in the mid-90s, and I still can’t understand why government won’t touch this sacred cow. I’m all for supporting the unemployed, but why should someone who is unemployed in one part of this province be treated any differently than their neighbour a few counties down?
    Why is an EI recipient in Saint John or Moncton treated a recipient of different benefits from a EI recipient in Miramichi?

  8. The point is that we KNOW what the problem is, your blog is about that-the lack of economic investment, the lack of jobs. There is seasonal work in Alberta as well, but there is also fewer people relative to the population doing it. Alberta is always the standout because its economy provides employment for seasonal workers during the off season.

    Keep in mind that New Brunswick saw the largest decrease in unemployment in Canada during 2001, these things are often cyclical.

    But statistically, you always see larger variances in places with small populations, and combine that with under investment from ALL areas and its not rocket science.

    So let’s use a favourite example, say some auto factory set up in the province, say in Miramichi. Many of the jobs would be full time, some would have changeovers, so that some local fishermen could sometimes work part of the off season at one of the plants. New companies would set up to service the town, and that means more jobs, many of them interchangeable.

    That, of course, is exactly what happens when you build an economy, and its why Ontario and Toronto in particular was griping loudly because only a small percentage of the people who paid into EI could even collect it. There were lots of jobs, so the EI wasn’t needed.

    However, in areas where it IS needed its a different story. In effect ALL the people would have to leave those areas and go west. So again, those people in the miramichi are leaving because there are no permanent jobs.

    The problem is when you place the problem on the backs of the workers, NOT the employers and politicians making the decisions. That there are no permanent jobs is not the fault of a guy living in Pokemouche (especially now with the Yarn factory closing).

    So the different treatment is simply because not everything is created equally. Treating people equally would have emptied the province long ago.

    The ‘conversation’ is the exact same conversation you’ve been talking about for years. I know you may be inclined to try to approach it from a different angle, but as Richard says above, sometimes thats just playing to the choir and picks on those most vulnerable. It is because of policies that New Brunswickers do not have decent educational levels, and policies why economics works the way it does.

  9. Excellent column. Getting the facts out is never a bad thing. There is too darn little of that as it is. Discount the naysayers. There are too darn many of those.

  10. Wow, sounds like there are big supporters of socialist government on this blog looking to drive those evil profit-seeking businesses away and let everyone work for the government.

    Guys, David is attempting to blog about economic development and prosperity and we are spending time promoting and defending welfare and EI. Sure, social safety nets are nice to have but the point is, we should be striving to have a strong economy with ample opportunities where something less than a third of the workforce does not have to be on EI during the year.

    Don’t be so defensive about EI and welfare. Sure there is a percentage of underground workers, hunters and snowmobilers who prefer lengthy EI periods but I am sure that is something less than one third of the workforce and given appropriate opportunities they would choose to work.

    Let’s stop being defensive about where we are and start focusing on where we want to be.

  11. Huh, you really haven’t thought this through too hard, eh? Just because someone’s on EI DOESN’T mean they’re not working/being productive. Many take advantage of the time to try to better their educations through the HRSDC TSD program so that they have more stability in the workforce. And more still work under the table in winter.

    You referenced plowing snow in the winter in the 50’s 60’s. Snow removal that once took multiple days can now be accomplished in a day or less. The inconsistent work is simpley not enough to survive on, nor is an EI cheque. So, we do what we have to to feed ourselves and our families. Also, many people return from out west for the winter months from working and draw EI here.

    But hey, I’m just a guy from a town who works (seasonally) as much as he can, when he can. Like possibly putting in 60-80 hour weeks, sometimes with NO ovrtime. I’m obviously not as well-versed on the subject as a Blogger.

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