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May
26
Immigration, Birth Rates, the Price of Labour and Canada
May 26, 2007 |
I am always amused by the call for more immigration else we lose Canada. It tends to be made by people who see Canada as a set of transfer payments between regions, generations and classes. An accountants’ Canada. And to prop it up we need to import tax serfs who are prepared to support the system in the hope that it will benefit them eventually. (I’ll leave aside the inconsistency of the idea of importing workers with a) any concept of justice in the countries whose doctors, teachers, nurses and scientist we are swiping (to convert into cab drivers), b) the existence of “family class” immigration which has precisely the opposite economic effect.
At this point many parts of Western Canada are experiencing a “labour shortage”. More precisely, businesses in those regions are having difficulty attracting workers at low wages when those workers can go down the street and make more money. Is the solution to import more workers to keep wage rates down or is it to accept the end of various low wage driven businesses.
Wages are a reflection of the value we place on people with particular skills. For many years Canada has had an average income which, after tax, is not really enough for a family of, say, four to get by on. Rather than a) looking for ways to raise that income, b) looking for ways to cut the tax, we have accepted the idea that both parents need to work. And with that idea comes the creation of a vast set of remarkably low paying jobs in the so called service sector.
Here’s why: if mum is out working her eight hours at $10.00 to $15.00 an hour she is not at home. Which means her kids have to be taken care of which creates a “job” which, realistically, cannot pay much more than mum is making. It creates the need for “fast food” and pre-cooked food because mum can’t really hold down a job and cook real food. It creates the need for Wal-Mart clothes which are essentially disposable because mum does not have the time to mend socks or put patches on the kids’ jeans.
Encouraging (or, indeed, forcing) mum out into the labour force creates a cash value for mum; is that cash value a greater economic benefit than the value of the unpaid services mum used to perform before she went to work as a teller or a Wal-Mart clerk? And then, if you want to have some real fun, ask that question net of the costs of having mum out there struggling for the legal tender.
While there are certainly women with skills whose market value is significant, there are a lot more women for whose skills the market is willing to pay very little. So, in rather real terms, the entry of relatively low skill women into the labour force may well have the economic effect of taking in each other’s laundry and pretending value has been created.
But wait, surely if we were to encourage women to stay home there would be a decrease in economic activity and therefore an even greater need for immigration? Immigration proponents would like us to believe that these are linked questions and, to date, they have been. I am not at all certain that there would be a decrease in economic activity. Rather there would be an increase in the wages of the people left in the economy as the demand for those people would grow.
Would this be a bad thing? Well it would be if you are trying to finance endless government services, boondoggles and extravaganzas. (Although, with our current tax system, rising wages would lead to rising tax receipts to off set the minor loss of the receipts from the many badly paid women who would be exiting the work force.) But for the average family an increase in dad’s income - especially if it were not entirely taxed away - would be very welcome.
What would shrink in such a re-alignment are the business which depend on low skill, low cost labour. I am not convinced that flyer delivery, daycares, fast food spots, box stores and dollar stores would be missed. Or rather, the ones which went under because they were not productive enough to compete for a shrinking labour pool would be missed.
There is, of course, a moral and civic dimension to this sort of issue. Are we as a nation prepared to accept continued immigration from an increasingly hostile and anti-Western pool of potential immigrants as a reasonable price for a low wage economy? Or do we want to start looking at reducing immigration and discouraging mothers with children under 21 from working so as to raise the wages of the people left in the employment pool?
This is about what kind of Canada we want. About how many of our core values we wish to maintain. One alternative is to continue as we have been for the last thirty years and become just one more nation competing in the low wage race. A race we are unlikely to win given that the competition is in China, India, Thailand, Malaysia and assorted other developing nations. Or do we want to drive towards a high wage society in which, in order to afford to hire labour, a firm has to be highly productive and competitive.
If we had anything like political leadership we would not be debating which fraud to perpetrate in pursuit of Kyoto, rather we would be considering how best to take advantage of the huge competitive advantages Canada enjoys. And here’s a hint…we don’t have or need that many people. Rather we need enough, very high quality, very well educated, very skillful, people. The rest we can offshore.
Update: Macleans - which is really getting rather good online - has an interesting article on birthrates and various incentives. It disagrees with much of what I am saying here but it is well worth reading.
Comments
2 Comments so far
I say we get rid of the looming publicly funded health care crisis by putting suicide booths on every street corner for the boomers. All we have to do is label them “free liposuction” and “free botox shots” then let nature take its course. So to speak.
Immigrants? We don’t need no steeeenkin’ immigrants!
Insightful piece. Skillful rendering of complicated situation.