April 20th, 2021

Laying It Out: Cutting jobs, cutting wages – How to assault the economy for nothing

By Medicine Hat News Opinion on March 27, 2021.

The first thing we need to understand about Alberta’s public sector is it’s not bigger than other Canadian jurisdictions, and has not changed in relative size since the 1970s.

In comparison to population size, Alberta’s public sector has been a shade over 10% for nearly five decades (10.29% in 1976, 10.23% in 2018), and right on the national average (10.23% in 2018), according to a report by Robert Mueller, a professor of economics at the University of Lethbridge.

Population can’t climb without the need for increased public services, and Alberta’s haven’t grown at a rate faster than anywhere else, nor have they exceeded the pace of population.

That’s an important note to make this week, as the always entertaining but not always sensible Canadian Taxpayers Federation, namely its Alberta director Franco Terrazzano, released an op-ed denouncing public sector growth in a pandemic-filled time when private jobs are on retreat.

Titled “So much for being in this together,” Terrazzano’s piece takes issue with Statistics Canada figures showing Alberta’s public sector growing by a net 5,600 jobs in the past year, while its private sector shed 76,600 – or as he puts it, “vanished.” He says the public sector needs to “share in the pain” by, at the very least, accepting wage cuts (if not layoffs), such as the 20% reduction Cypress-Medicine Hat MLA Drew Barnes has publicly suggested in the past.

Terrazzano even makes sure we know who to picture when thinking “public sector” by writing, “Do you think families struggling to put food on the table or the restaurant trying to keep the lights on needs tax relief or more government bureaucrats to support?”

Forget the fact more than 87% of Alberta’s public sector employees are educational services, health care, social assistance or public administrators (most of whom are women, by the way), and that Terrazzano insists you picture a bureaucratic suit sopping up a fat-cat salary. What on earth does he think taxation has to do with wages in the public sector?

It’s difficult to pinpoint an exact figure but we have more than 400,000 public sector employees in Alberta, and it does take money to compensate them. But does paying them less, or not at all, change the rate at which the rest of us are taxed? No.

If every employee got a raise, or took a cut, we all still pay the same taxes. The only benefit a private employee gets when a public employee falls back, or off, is knowing they aren’t the only ones with a raw deal.

While I’m all for Schadenfreude when watching someone too excited to be on a game show, there is no real-world benefit to the literal misfortune of others, and in more ways than one it will have a noticeably negative effect.

At best you’ll hear people like Terrazzano or Barnes ramble on about debt servicing in 2063 being too much to afford schools or roads – a crisis that will apparently consume our grandchildren – all the while hoping you don’t notice what they’re really suggesting here is present-day job losses and a contraction of the economy that will devastate the very businesses they claim to support.

Think about it. Imagine for a second that, instead of growing out of necessity as population grows (and a pandemic arrives), the public sector actually “shared in the pain” of private. Health and safety concerns aside, how would it affect the economy?

Instead of a net gain of 5,600 jobs, let’s say we’d lost the same number – you can bet the UCP has sights on that very thing for its post-pandemic extravaganza of austerity. Now we have 11,200 more Albertans out of work, 11,200 more Albertans no longer contributing back in taxes and 11,200 Albertans who can no longer afford whatever it is you’re selling.

And what happens if the remaining employees all took that 20% cut Barnes has been pushing for? Now we’ve got 11,200 more Albertans out of work AND 400,000 others making a fifth of their salary less. How does that help business owners?

Aside from the portion they give straight back in their own taxes, public employees spend their money in the private sector, just like we do. The only effect a public employee’s salary has on our pocket book depends on how much they have in theirs.

Instead of playing this game of knock others down to our peg, we need to ask ourselves why people like Barnes or Terrazzano seek a shared pain instead of a shared prosperity. They advocate for a world with more private enterprise and “freer” markets while showing us just how cruel and awful that world would be.

Believe me, I worry about the private sector and I truly care about the businesses and workers within it. But if we don’t start propping it up instead of seeking ways to tear other sectors down, we’re conceding the race to the bottom.

You don’t fix 76,600 fewer jobs by getting rid of more jobs. And you don’t fix an ailing economy by taking more money out of it.

Contrary to Terrazzano’s headline, we really are in this together. You need me and my money, and I need you and yours.

Sharing in the pain won’t bring tax relief to the struggling restaurant owner – all it does is further relieve them of customers.

Scott Schmidt is the layout editor at the Medicine Hat News. He can be contacted at sschmidt@medicinehatnews.com

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