Week in Review April 9, 2015

Week in Review April 9, 2015

  • First tragedy, then farce: balanced budget legislation
  • Selling out GM shares
  • Jobs find workers and not so much vice versa
  • Wage hikes for the lowest paid in U.S.
  • John Baird: Checking out and cashing in
  • The high cost of Conservative “child care”
  • Class action: edcuation workers ready to strike

  • First tragedy, then farce. After running deficits for seven consecutive years, increasing the federal debt by $147 billion and putting in place tax cuts for the wealthy that could starve future governments of revenues, the Harper government announced they will introduce “balanced budget” legislation. This could bind the hands of future governments from pursuing sensible economic policies to stimulate the economy and create jobs, but is more just political posturing used to squeeze public spending. Many governments enacted balanced budget legislation in the 1990s but either immediately jettisoned it when the recession hit and/or have been able to get around it. Once again, this is a case of history repeating itself, first as tragedy, then as farce.
  • Selling out. The federal government sold its stake of 73.4 million shares in General Motors to Goldman Sachs right at the beginning of April for about $3.26 billion. This will help it to register a balanced budget this fiscal year, which started April 1. However, not only does this mean the federal government loses its ability as a shareholder to persuade GM to keep investment and jobs in Canada, but it also looks like it was a bad financial move. Analysts expect GM shares to increase in value to an average of $44 US in the next 12 months, 23.5 per cent more than the federal government received. That means Ottawa could have netted $770 million more in the next year alone if they hadn’t been in a rush to sell off assets to balance their budget. A study by the Centre for Spatial Economics commissioned by Unifor calculated that closing GM’s assembly plants in Oshawa would wipe out 30,000 jobs, reduce federal and provincial revenues by $1 billion and reduce the GDP by $5 billion.
  • Jobs find workers and not so much vice versa. The majority of workers who get new jobs weren’t actively looking for one, analysis in the U.S. has found. This applied not only to those who switched jobs, but also to those who were jobless before becoming employed. This means instead of workers finding jobs, in most cases it’s the other way around: jobs find workers instead. But almost half of new hires happen at companies that didn’t even report a job vacancy.
  • Wage hikes for lowest paid in U.S. Strong job growth and public pressure in the U.S. may be finally paying off for the lowest paid. Job growth in the U.S. has been twice as fast as in Canada, bringing its unemployment rate down to 5.5 percent, while Canada’s languishes at 6.8 per cent. While U.S. job growth in February was lower than previous months, it may be because employers are now having a harder time finding workers: the number of job openings climbed to the highest level in 14 years. The tighter job market, together with a strong campaign to raise wages to $15 focused on fast food and retail workers, led to McDonald’s, Walmart and Starbucks agreeing to increase wages for their lowest paid. However, overall average increases remain low including for middle-wage workers.
  • Checking out and cashing in. Job growth remains low in Canada, but the Harper government has succeeded in creating a few well-paid jobs. Former foreign affairs minister, John Baird, who resigned suddenly last month wasted no time cashing in on his connections to score a number of high-paid part-time gigs. These include becoming a director of Canadian Pacific (annual pay: $200,000 minimum for a few meetings a year), on the international advisory board of Barrick Gold (following Brian Mulroney who was paid more than $1 million for his time there) and as international advisor to Hong-Kong multi-billionaire Richard Li.
  • The high cost of Conservative “child care”. The federal government’s spending on “child care” through the Universal Child Care Benefit and the Child Care Expense Deduction on taxes will increase to $7.7 billion this year, according to a report by the Parliamentary Budget Officer. It sounds impressive, except most of it will go to families with older children and no child care expenses. In fact the amount the federal government transfers for child care will almost certainly exceed the total amount families spend on childcare ($5.7 billion in 2013-14). While sending out checks to families for “child care” just before an election might buy some votes, it would be far better if the federal government funded a program to create real—and affordable—childcare spaces for families.
  • Class action. Education workers in primary and secondary schools in Ontario moved closer to a strike, as CUPE’s 50,000 education workers voted 93 per cent in favour of taking job action if necessary, as the Ontario government pushes for concessions. Secondary school teachers in Ontario will be in a legal strike position on 19 April. Tens of thousands of students and union members also continued protests against the Quebec government’s austerity policies.

2 responses to “Week in Review April 9, 2015

  1. Pingback: The Progressive Economics Forum » My “Top Five” Most Outrageous Things About This Budget

  2. Pingback: Week in Review April 30, 2015 |

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