Supply, demand and citizens – rather than temporary guest workers

Posted on April 25, 2014 in Inclusion Debates – Globe Debate/Editorials
Apr. 25 2014.

You can learn a lot about how the economy really works by going to a McDonald’s. Or a Tim Horton’s. Or the Brothers Classic Grill and Pizza restaurant at the Travelodge Hotel in Weyburn, Sask.

Canada has always been a land of immigrants and immigration. But by 2012, it was also home to about half a million temporary foreign workers, people brought here to work but not to stay. The system was created in the 1970s, and was supposed to be about filling short-term labour shortages until Canadians could be found or trained. Along with seasonal agricultural work and live-in domestics, the focus was on skilled and specialized fields where Canadians simply weren’t available. For a long time, the program stayed small.

But over the past few years it has ballooned, right through a recession and despite continued high unemployment in many parts of the country. It has quietly become an open tap that employers can turn to, to fill all sorts of low-skill, low-wage jobs. For example, the number of foreign workers in accommodation and food services admitted under a “labour market opinion” rose from a little more than 4,000 in 2006 to nearly 45,000 in 2012. A survey last year of members by the Alberta Hotel and Lodging Association found that one in five full-time employees is a temporary foreign worker.

On Thursday, Employment Minister Jason Kenney announced an immediate moratorium on new temporary foreign workers in one industry – restaurants. It’s about time. A series of allegations over the past few weeks suggest that the program has been turned into something it was never supposed to be: a way for businesses to keep wages down by importing cheap labour. Employees at a number of restaurants in Western Canada came forward with stories of having been shoved aside by temporary foreign workers, who appear to have been brought in not to fill unfillable vacancies, but to take already occupied jobs.

A study released this week by the C.D. Howe Institute, titled “Temporary Foreign Workers: Are They Really Filling Labour Shortages?,” concludes that they aren’t, and the program actually raised unemployment levels in the two provinces examined, Alberta and British Columbia. The author, Simon Fraser University public policy professor Dominique M. Gross, also found that the steady ramping up of the program over the past decade occurred “even though there was little empirical evidence of shortages in many occupations.”

In a free labour market, employers and employees bargain over wages and working conditions. In tight labour markets with low unemployment, like much of Western Canada, that’s to the advantage of employees – not necessarily a bad thing. It pushes wages up. But demand also spurs supply, as relatively high and rising wages in the West draw in those who are out of the labour force, along with the unemployed and undercompensated from other parts of the country. Growing demand leads to scarcity of labour; scarcity leads to rising wages; that leads to more supply moving to where the high demand and the high wages are.

It means, for example, people moving from higher-unemployment Atlantic Canada to find jobs in a booming West. It also means that people on the fringes of the labour force, the young and the less experienced, have a better shot at landing decent-paying work. In a tight labour market, wages for even low-skill, entry-level jobs may be pushed higher. All things being equal, it’s a good thing if people at the bottom end of the income scale see their options improve, and their incomes move up.

But allowing businesses to call in temporary foreign workers to take over burger-flipping position short-circuits all that. It makes perfect sense for companies to be able to bring in specialized engineers or skilled tradespeople from overseas, to fill vacancies in critical, highly paid positions. There’s a clear benefit to the Canadian economy. It’s harder to see the benefit to Canada of creating a class of permanent guest workers filling entry-level jobs.

Last week, a New York Times analysis of international income data came to a not entirely surprising conclusion: that middle-class Canadians are better off than middle-class Americans. The same goes for lower-middle-class Canadians and the poor too. America’s upper middle class and rich, however, are better off than our rich.

The figures can be debated, and some of the results, drawn from 2010 data, are coloured by the fact that the United States went through a deep recession, a financial crisis and a housing collapse, and has yet to fully recover. But what is clear is that Canada is one of the world’s most economically successful countries, partly thanks to the good luck of sitting on a bounty of natural resources, but mostly due to wise policy, free markets, stable institutions and a population that is now more educated than that of our southern neighbour. And Canadian social policies, from medicare to a slightly more progressive income-tax system, are part of the reason that a little more of the wealth accrues to the middle class and the poor on this side of the border, and a little more to the rich down south.

One other thing that Canada gets right is immigration. We have long been among the world’s highest immigration countries. The U.S., in contrast, takes in relatively few legal immigrants but far more under its unofficial version of the temporary foreign worker program – otherwise known as illegal immigration.

There are economic reasons to rethink and scale back Canada’s temporary foreign worker program. But there’s also the question of the kind of society we want. Do we want a class of working strangers who come here, do our dirty work and then are forced to leave? Canada has always wanted something else: immigrants. People who cross the seas to become our neighbours and our fellow citizens. We don’t just want them to work for us. We want them to join us, as Canadians.

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