This type of economic development is coming to an end

I had a long talk last week with one of New Brunswick’s foremost CEOs and his message to me was that for 40 years governments had made job creation – at all costs- their #1 priority and that now the focus has to fundamentally shift towards better quality economic development.   Buying low end jobs with taxpayer money, in his view, should be over.

I was reminded of that reading this story from PEI:

Golden Grain Bakery [moved] to Borden-Carleton’s industrial park in 2005 and has been struggling to find employees ever since. 

Snair says he does not want to leave, but fears there is no alternative. He believes businesses that pay high starting wages, and the Island’s unemployment insurance program, are part of the problem.

“I believe people can make more sitting at home on minimum wage,” he said. “So why would they work?”

Snair says he pays all of his employees higher than minimum wage, most a couple dollars higher, but says in order to compete with nearby businesses that pay $15 to start he would need financial help.

“I’ve lost a lot of workers to higher paying jobs,” he said. “We’re a small business, we simply can’t afford to do that.” He says he began turning to government for help more than two years ago and has yet to receive it.

Borden-Kinkora MLA George Webster says he is aware of the issue, but that his government is not responsible for putting people in those jobs.  “I don’t think the P.E.I. government can make people go work there. They make their own choice to work in that field or not,” said Webster.

There are multi-layered issues here such as the minimum wage,  the trade off between working and accessing funding from government programs and the role of government in trying to create jobs.

Without going into all of it, I do think the PEI government is right not to prop up companies that are paying wages too low to attract workers.  Wage appreciation is a consequence of successful economic development.  Propping up companies who cannot pay market wages with taxpayer money is a consequence of bad economic development.