The Temporary Foreign Workers program was working just fine

Time being outraged over the program would be better spent thinking about what kind of labour market we want

OTTAWA, ON, Jun 27, 2014/ Troy Media/ – “Why don’t we just scrap the Temporary Foreign Workers program? There is plenty of unemployment in this country. If businesses stopped making ridiculous profits and paid a fair wage, all would be well.”

If only it was that easy. But arbitrarily raising wages in low wage sectors makes as little sense as devising complicated schemes to save Timbit jobs for Canadians.

The TFW program was created in 1992 as a way to plug in labour where shortages existed. To be accurate, of course, we should say ‘shortages which existed at the offered wage’ – something that should be said without apology.

In the fast food industry (to take a not-exactly random example), the wage offered is about $10, which leads to a shortage of Canadians looking to fill those positions. Increasing the wage to, say, $50 an hour would of course lead to a surplus of Canadian clamouring for the jobs.

But $50 an hour for a fast-food worker is unrealistic because:

1)    it would blow away the fast-food business model. A fast food company paying a wage that high for a behind-the-counter employee might have to charge $15 per burger just to break even. Are Canadians willing to pay that much to ensure that people get paid more? Not likely.

2)    employers could pick from a wider pool of workers and might well choose to hire those with different skills ahead of the fast food workers who currently have – and need – the jobs.

The reality is that many low wage industries exist because it suits Canadians to have them exist, and arbitrarily raising wages would not be in the best interest of the economy.

Canadians already inherently understand this: that’s why there is not nearly the same clamour to change the live-in caregivers program – which supplies foreign nannies to Canadians at wages that Canadian-born nannies would frankly never accept. The program is effectively a subsidy to middle-class parents who need childcare and whose household business model does not run to paying $50,000 for a live-in nanny.

The time spent in outrage over the Temporary Foreign Workers program would be better spent thinking about what kind of labour market we would actually like to have in this country.

What would that ideal labour market look like? First, there would be plenty of well-paying jobs for college or university graduates. In fact, jobs in general would pay well, at least keeping up with the rate of inflation. Second, the unemployment rate would be consistent with ‘full employment’ – the point at which everyone who wants one basically has a job. Third, the ideal labour market would be one without labour shortages, where businesses could find skilled, competent, happy and engaged workers turning Canadian companies into world class organizations and causing prosperity to reign.

While fast food restaurants might still exist, employment in them would be short term, a mere stepping stone to better prospects.

But how do we achieve our idyllic future? For a start, by letting businesses be profitable, by taxing them on their earnings, and by encouraging them to train workers to move up in their organizations. Better still, we could do more to boost Canadian productivity so that profits and wages would rise and people could afford to pay more for everything, even fast food. That in turn would raise wages in all jobs.

But getting from here to that future will require a long term commitment to supporting businesses and workers and focusing on what we want in the much longer term.

If allowing businesses a short-term subsidy gets us there faster then perhaps it is in all our best interests to see the TFW program for what it is: a path to the future and one that was not in need of reform.

Economist and consultant Linda Nazareth is a Senior Fellow at the Macdonald Laurier Institute. She is also the author of Economorphics: The Trends Turning Today into Tomorrow (Relentless Press).

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