The unemployed will always be with us

That is how the real world works

Roslyn KuninVANCOUVER, BC, May 5, 2014/ Troy Media/ – Besides flowers, Vancouver is blossoming with help wanted signs in the windows of restaurants and stores this spring.

While it’s not surprising that the retail and food services sectors are looking for help, it is surprising that they seem to be having trouble filling their positions at this time of year. College and university terms, after all, have just ended and one would expect that there would be many students looking for summer work.

So why the help wanted signs?

One reason might be demographic, with not enough young people or others to fill these jobs. That’s called a labour shortage. But talking about a shortage of labour has now become very contentious.

But according to Statistics Canada B.C. has an unemployment rate of 5.8 per cent with 142,000 people looking for work. These numbers are not historically high and unemployment has been falling. Nevertheless, 142,000 is a lot of people looking for work. In Canada, the unemployment rate is 6.9 per cent, with 1.3 million people looking for work.

Another reason might be that the unemployed might not have the skills to do the jobs. But the vacancies we’re talking about here are entry level retail and food service positions where any skills needed can be learned on the job.

A further, often mentioned, reason is that the pay in those jobs is too low to make it worthwhile for Canadians to put in the hours. All it would take to fill those jobs, the reasoning goes, is an increase in wages. There is undoubtedly some truth to this reasoning.

But just as workers have a reservation wage below which they are not willing to work, employers have a wage above which they cannot continue to offer the job. An employer cannot pay someone more money than her work is generating for the business and still stay in business. Revenue for the business must cover all costs including wages, and revenue is limited by how much people are willing or able to pay for the good or service offered. This places an upper limit on how much wages can be raised.

The suggested solutions to the labour shortage are as contentious as the question of whether or not we actually have one.

Employers see one solution in the use of foreign workers. But others see this as taking jobs away from Canadian, even though employers are monitored to insure that they are meeting the basic labour standards of wages and working conditions and that they have unsuccessfully sought Canadians to fill their positions.

Employers have also decried the use of employment insurance and other income support programs when there are unfilled jobs available. They feel this makes it too easy for people to remain idle and is a bad use of tax dollars. If such transfers were reduced, they believe, it would be easier to fill jobs. Not surprisingly, many workers argue against this solution.

There is no magic bullet that will insure that everyone has a job and that all vacancies are filled. Some people may have to take less than their ideal job if they want to be employed, while employers may have to improve wages and working conditions to get and keep staff. All of us may face higher prices and less choice for what we consume if a lack of labour limits business.

But drastic solutions, such as banning all foreign workers or eliminating employment insurance, should be avoided by governments. Extreme voices from either side need to be ignored.

In the end, while every effort must be made to match jobs with available people and people with available jobs, there will always be some vacant jobs and some unemployed people.

This is how the real world works.

Troy Media BC’s Business columnist Roslyn Kunin is a consulting economist and speaker and can be reached at www.rkunin.com.

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