Restaurants and stores say government aid is to blame for a labour shortage — but the hard data tells a different story

Of note, given current discussions on whether our immigration system needs to be rebalanced towards the lower skilled and paid:

Relaxed health rules are allowing thousands of restaurants and stores to reopen. But employers are already complaining they can’t find enough workers, especially in hospitality and retail. Some are offering signing bonuses, redistributing tips and making other special efforts to attract staff.

Employers like to point the finger at government income supports that helped people through the pandemic, like emergency recovery benefits (now extended to October) and expanded eligibility for EI payments. Employers complain these programs reduce the incentive to accept low-wage, irregular work in restaurants and shops. Many also want Ottawa to expand the Temporary Foreign Worker program, so they can access low-cost labour from other countries.

To be sure, it is an operational headache for restaurants and stores to reconnect with former employees after months of closure, and they’re all trying to do this at the same time. But the hard data does not support the claim of a generalized labour shortage.

After all, unemployment remains elevated: the latest Statistics Canada reportpegged the official rate at 7.5 per cent. And other pools of hidden unemployment (including people working very short hours, and people who left the labour force during the pandemic) push the true unemployment rate towards 15 per cent.

Wages in stores and restaurants remain very low, and are not rising, which should happen if labour was genuinely scarce. In hospitality, for example, the median wage is $15 per hour (barely matching the legal minimum in many provinces), and average weekly earnings are just $500 per week (reflecting inadequate hours of work as well as low wages).

There is no sign wages are improving, despite anecdotes in the media. To the contrary, wages have grown more slowly in retail and hospitality than the overall economy since the pandemic. Thus the wage penalty for workers in these sectors is getting worse, not better.

When your industry offers less than half the going wage, you shouldn’t be surprised you have trouble attracting workers. That’s like me offering $100,000 for a Lamborghini (less than half the list price), and then crying shortage when no-one will sell me one.

It’s no mystery how to recruit and retain a more stable workforce: offer better pay, stable shifts, decent benefits, and improved training and safety. Inadequate and irregular hours are actually a bigger disincentive than low hourly wages (almost half of hospitality staff work part time). Reorganizing schedules to allow predictable shifts and more full-time roles would support genuine career opportunities in these industries, rather than a culture of lousy precarious work.

Other countries have shown that service sector work can offer stable middle-class career paths. Canada could do the same, but only if we prevent employers from taking the easy out — namely, providing them with still more desperate workers willing to work for any wage. If governments respond to complaints about a labour shortage by cutting income supports or importing migrant labour, that will only short-circuit the improvements in job quality these sectors ultimately need.

Only once did Canada’s economy truly run out of workers. That was during the Second World War, when a massive, government-funded war effort ended the Depression and put every able worker into a productive job. We aren’t anywhere near that situation today, but we could be, if we wanted to. We could launch an ambitious post-COVID national reconstruction plan, featuring massive and ongoing investments in green energy, affordable housing, and human and caring services. That would create hundreds of thousands of jobs, end mass unemployment and improve living standards in the process.

But creating hundreds of thousands of good jobs is actually the last thing low-wage employers want. That would only make it all the harder for them to recruit cheap, desperate labour.

In sum, there’s no “labour shortage” in Canada today, nor is one on the horizon. Governments should ignore these phoney complaints, and instead encourage employers to respond to staffing problems like any other hard-to-find commodity. When something is truly scarce, smart businesses find ways to use less of it (in this case through automation and efficiency measures). They emphasize quality over quantity. And, at the end of the day, they pay more.

In the long run, this will drive productivity growth, innovation and better jobs. And that’s a good thing, not a bad thing.

Jim Stanford, director of the Centre for Future Work in Vancouver, is a freelance contributing columnist for the Star. Follow him on Twitter: @jimbostanford

Source: Restaurants and stores say government aid is to blame for a labour shortage — but the hard data tells a different story

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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