Latest Canadian Taxpayer Fed attack on EI flawed

The Canadian Taxpayers Federation (CTF) is once again harping on reforming Employment Insurance. And by reform they mean changes that will both reduce employer premiums and pressure workers to take any crappy job that is offered. This latest run at EI reform (it started last autumn) is (I assume) aimed at providing employers with cheap labour now that the feds have gotten cold feet on temporary foreign workers (TFWs).

Kevin Lacey the CTF’s Atlantic Director has been leading the latest charge and the gist of his op-ed from the Medicine Hat News is:

• EI pays people not to work. EI actually provides (lousy) compensation when someone can’t find employment. But it is easier to advocate for reform if you hint that EI recipient are lazy.
• There are lots of jobs because employers have to bring in TFWs. Perhaps, but what kind of jobs are employers offering? That EI recipients won’t take these jobs may well suggests the wages and working conditions on offer are the pits.

Lacey uses two examples (New Brunswick companies hiring TFWs and moving to the US respectively) to bolster his claim. There is, however, no analysis of the quality of the jobs on offer, the skill set required and locally available, or whether the employers are even telling the truth about their situation. As we’ve seen over the past six months, employers happily lie to the feds to jump the hoops necessary to get TFWs. The CTF’s prescription is:

1. Reduce EI access. This will pressurize workers to take whatever (if any!) jobs and terms are offered to put food on the table, driving down wages.
2. Increase immigration: “Be gone TFW scourge!” cries the CTF But bring on the permanent immigrants. But wait, won’t this just increase unemployment and further drive down wages by flooding the labour market…?
3. Pay higher wages. Oh yeah, the CTF says employers should pay more for service jobs. But given (1) and (2) above, this is unlikely to happen.

The ever-receptive Calgary Herald has jumped on the bandwagon, drinking the CTF kool-aid about differential EI benefits. Editorialist Richard Marsden parrots:

The Canadian Taxpayers Federation reports that we’re the only country in the world to set employment insurance payments based on where an applicant lives. The result has been perverse, leading to a system where those who live in high areas of unemployment — and thus are more likely to lose their job and less likely to find a new one — receive higher benefits for working fewer weeks than other Canadians.

This criticism makes zero sense. The purpose of EI is to provide a financial backstop if you lose your job. If you live in an area where job tenure is shorter, it makes sense to reduce the qualifying period. And, if you live in an area where it is harder to find a job, its makes sense that your EI benefits last longer. But never mind good sense and reason. Let’s return to Marsden’s prescription:

Expressed another way, 58.3 per cent of Newfoundlanders collected EI at least once a year between 2008 and 2010, compared to 12.7 per cent of Albertans, according to the taxpayers federation. … Cutting indefensible EI payments would help fill jobs that are going begging, reduce the drain on EI and produce higher incomes, which would stimulate the economy and increase the amount of money governments collect.

Hmmm. So you cut EI to Newfoundland and what happens? Well, folks some will stay in Newfoundland and raise their kids in poverty because they have these silly attachments to community and family. In the CTF’s and Marsden’s prescription, it’s cool to let these kids go hungry if their parents won’t pull up stakes and move to Alberta.

For those Newfoundlanders who will move to Alberta, they will then flood the labour market, depressing wages here. In effect, we’d be trading international migrants for interprovincial migrants. (For the record, I’ve no issue with inter-provincial migrants).

The only group that wins here is employers. Their EI premiums go down. And a looser labour market (i.e., more workers fighting for the same number of jobs) allows employers to reduce wages and make jobs crappier. I wonder if the majority of Canadian taxpayers (whom the CTF purports to represent but actually doesn’t) would really like lower wages and crappier working conditions?

-- Bob Barnetson