Front Burner - The myth behind 'nobody wants to work anymore'

Episode Date: August 24, 2022

Many employers continue to struggle to fill vacant positions, despite the end of most pandemic restrictions — and the underlying explanations for this vary depending on who you ask. A common notion is that people just don’t want to work anymore. But when Canada’s unemployment rate is at its lowest level in decades, does the data really bear that out? Today on Front Burner, economist and Atkinson Fellow Armine Yalnizyan debunks common myths and explains how the current labour crunch has roots stretching back well before the pandemic — and what to expect moving forward.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Jamie Poisson. I have the best advice for women in business. Get your f***ing ass up and work. It seems like nobody wants to work these days.

That's so true. Remember when billionaire reality star Kim Kardashian said this a little while back? The internet totally lost it, calling her entitled. But Kardashian seemed to be echoing an idea that was already all over the place. Around that same time, Canada hit an all-time record of job vacancies, one million of them. And really, for almost two years, some employers have been pretty fed up with their inability to fill positions. I don't understand the younger generation. They don't seem to want to work. And the ones that do show up, they last till noon or, you know, one day, three, four days, maybe a week.

And they're not leaving for other jobs. They just don't want to work. But hold on a second. There's something else going on here. It's not just that vacancies are high. More people are working now than before the pandemic. Unemployment is below 5%, the lowest since 1970. And the amount of unemployed people for every job open is also at an all-time low. It's just 1.2 at the start of this year. So why are there suddenly so many empty jobs with so few workers to fill them? Today, I'm talking to economist Armin Jelnezian, who argues this problem actually isn't sudden at all, that this labor market crunch has been coming for decades.

We just didn't stop it. Op-Ed. Hi, Armin. Thank you very much for coming on to FrontBurner today. Hi, Jamie. So I've been seeing some pretty hot takes on Twitter and in Op-Eds recently. They argue that the reason employers can't fill jobs right now is because too many Canadians don't want to work. Maybe pandemic benefits made them lazy, but does the data support that laziness, no one wants to work anymore argument? What a great question, because in fact, the data tells you exactly the opposite answer to that question. Everything in the data is showing us tighter labor markets, more people leaving, exiting the labor market because of aging out of it than entering it because they're coming

into their working age years. That you're seeing that in the number you mentioned, 1.2 unemployed people for every job opening that is out there. So an historically low unemployment rate, which we haven't seen in half a century. Rates that we were seeing in the summer months before the pandemic hit. In the summer of 2019, we were also there. And it's just the slowest moving train on the planet called population aging. And it's happening throughout the global north. And it's coming to a neighborhood near you. And I want to talk about why that is in one second. But first, maybe it's worth us noting that this argument, this no one wants to work argument, it's not new, hey? Like we were talking before this interview about this Twitter thread by Paul Ferry.

He's a researcher out of the University of Calgary. And he pulled articles saying people don't want to work going back to the 1890s. Here's one from 1894. With all the minds of the country shut down by strikers, what will the poor editor do for coal next winter? It is becoming apparent that nobody wants to work these hard times. I love that because it is literally the go-to phrase over and over again. While it's true that this phrase has been a go-to phrase for generations, it is also true that we are in an historic moment. Population aging of the baby boomer cohort has meant we're flipping over from a narrative or actually an experience of too many workers for every job to one of not enough workers for every job. A narrative flip from labor surpluses to labor shortages. And it's going to take a while for our culture to catch up with that, it appears. Essentially, what you're saying here is that the baby boomers, they're retiring. They're moving out of the workforce. Yeah. Since the pandemic began,

we have seen almost 600,000 people age over that mythical tripwire to retirement, going from under the age of 65 to over the age of 65. Almost 600,000 people have made that voyage over the course of the months since the pandemic began. And we are seeing a shrinkage of the population of people, not only that are right behind them, the 55 to 64-year-olds, but the people that are young and just entering the labor market, 15 to 24 year olds. So more people exiting than people entering is a huge problem for the labor shortage. And the sheer dynamics of the numbers mean that it's going to be extremely difficult to meet all the job openings that are out there unless demand shrinks, which is, I guess, what the central bank is trying to do.

Borrowing costs in Canada are going up by one percentage point. The expectation was for 75 basis points. And this brings the central bank's policy rate to two and a half percent, with the biggest increase since 1998. The Canadian economy is overheated. There are shortages of workers and of many goods and services. Demand needs to slow so supply can catch up and price pressures ease. Did the pandemic do anything else to really mess with the labor market? Oh, 100%. And the real photo finish story here is what's happened in the care economy, everything to do with home care, long-term care, hospital care, primary care, and also early learning and child care and school. All of those sectors are female-dominated in terms of who does the care work.

And we are seeing an extraordinary exodus of women in that 55 to 64 year category, both from the labor force and from employment. Men are also leaving in that age group, primarily because of population changes. But actually, fewer women are working and in large numbers, much larger than for men. We don't know what the reason is for them leaving or not working anymore, but there's a trinity of theories. The first is that many of them in that age group, 55 to 64, are workers as teachers and nurses. And after over two and a half years of pandemic economics and pandemic politics, they're burnt out. And so they're retiring early because they can. They have good public pensions. There's another category, which is there's still ageism

in our labor force. And women that are 55 to 64, particularly low-income and immigrant women or women of color, got pushed out of marginal jobs during the pandemic, the non-essential jobs that paid poorly and didn't have big margins to begin with. A lot of those businesses folded, and they're having a tough time getting back in. And a third theory is because our schools and child care services were such a shambles throughout the pandemic, and maybe again in the fall, a certain group of mothers stepped out of the workforce, basically in their prime earning years to support their children so their children didn't lose their jobs. We don't know which of those theories are the main reason or how it's weighted in why fewer women are working, but the proof is in the pudding. There's fewer women

working in the ages 55 to 64, when usually this is the age where they step up their work because their kids are grown and they need to save for their retirement. So something's fishy. That's so interesting. Some other stats that I thought were really interesting that I wanted to run by you is how it seems like people are moving to different kinds of jobs too, right? So the number of workers in transportation went down 2.3% between 2019 and 2022, in agriculture down 10%, in food services down 14%. And on the flip side, professional science and tech jobs went up nearly 20% during that same period. And so what does that tell you? Oh, that tells me that we had a pandemic. We actually can't keep up with

the demand for online shopping, which is why some of those jobs grew in professional science and technology. Anything to do with online anything has exploded. It was already exploding before the pandemic, but the pandemic just moved more of us online instead of in-person commerce. And the transportation story you're talking about, well, we've been talking about self-driving trucks for so many years now that a lot of young Canadians don't want to be a trucker, even though it can be a decent job with pretty low educational requirements and pretty good pay, though it's a pretty grueling job for long-distance haulers. And that means we have turned more and more to temporary foreign workers to fill that breach. And we couldn't do that during the pandemic. I mean, there are other places that are major shortages too, but you've kind of put your finger on what a pandemic can do to change the composition of jobs.

So, you know, if you were just looking at wage growth as the Bank of Canada has been doing, you know, worried about labor shortages and the inflation that we have been experiencing because of the pandemic and the invasion of Ukraine by Russia. Worried that that might turn into a wage price spiral where workers try and catch up to rising prices so they don't lose purchasing power. And that just sets off another round of price inflation. So obviously nobody wants that, particularly in a world where the cohort of people who are on fixed and low incomes is growing because more people are retiring. Of course, they're not the only ones on low and fixed incomes, but those are the people that are going to get the most hurt by inflation. So you want to avoid inflation, particularly now when fewer people can work and fewer people are

making good livings to support themselves and the cost of basics like rent and food and gas are all rising and that slows the entire economy down so going back to wage growth we saw during the pandemic a huge spike in average wages at the beginning of the pandemic that wasn't because everybody was earning more that was because we kicked out the low-paying jobs which tend to be related to non-essential services. And then when those jobs started coming back, you saw the rate of wage growth fall because the composition of jobs was changing. And that's what we're looking for now. On the other side of the pandemic, has the composition of jobs changed fundamentally so that we do have more jobs that are good paying? Or is it that we are

looking for better wages? Those are two different types of wage growth. One is inflationary. You're paying people more for the jobs they were already doing. Another is not as inflationary. It's actually higher productivity because you're getting better skills matches as people move to higher paying jobs that they can do. So very different types of wage growth that would tell us about how the labour market is fundamentally changing because of the pandemic and after the pandemic. I'm going to go. part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak

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A hundred percent. Great question. And the answer will be different in every sector. In a sector like hospitality, that's bars and restaurants, maybe even hotels, the margins are pretty thin. So raising wages is a real concern for the employers. They don't have a lot of wiggle room. And we also still don't know what's going to happen to the businesses this fall. We were in a seventh wave in the middle of the summer, and there's a lot of employers that just don't want to invest heavily. And don't forget, when you hire somebody, you also have to train them. So it's a sunk cost to hire a new body. And it's unclear that they can't find people

or that they can find people, but not at the wages that they can afford to pay. Thus far, we are not seeing higher wage growth, higher than average wage growth in those sectors that employers have been saying, but, but, but we can't find people. So there's a bit of a question mark there. But again, it depends on the sector that you're talking about. Of course, in professional scientific and technical sectors, if you're private sector funded, and if you happen to have a lot of venture capital behind you, the sky's the limit in what you can offer. And we are seeing really strong wage growth there. But will those jobs last for more than six months or a year

or two years until the IPO happens? We don't know the answer to that. For jobs that are absolutely stable, absolutely essential, and highly skilled, nursing in particular, in the healthcare sector, you've got governments that are trying to keep a lid on costs, like in Ontario, where wage growth is limited to 1% by law. So every sector has got a different story. But we are seeing, you can basically take the labor shortage story to every single sector and say, I can't find enough people to do the work in parentheses at the price I'm offering. I saw Tip Macklem, the head of the Bank of Canada, urge the business lobby last week not to raise wages to meet rising inflation. And I mean, I know you've already kind

of touched on this, but like, what did you make of those comments? Because I think for a lot of people, that was a pretty lousy thing to hear. Yeah, no kidding. Look, it's very easy to be an armchair central banker. He has one job. His job is price stability. For his job to be done, the less businesses raise wages, the easier it is for him to tame inflation without jacking up rates and causing a recession. So of course he's going to say that. But it is a very slap in the face thing to hear because workers' wages are not the cause of inflation. And in fact, the central bank cannot tame inflation in food. It cannot tame inflation in gas prices.

It is taming inflation in housing prices by jacking up the monthly carrying costs, which is lowering prices. But that only affects a handful of people that have got mortgages that are coming up for renewal. Actually, 37% of Canadian households rent, and renters are seeing enormous increases in rent prices. So he's not doing anything about rents with his new rates. All we are seeing is him acting in whatever way he can to meet his mandate, which is price stability, which is something we all want. I mean, we can actually slag him for saying don't jack up wages, but nobody wants to see prices jacked up. So how do you get there? It's a real Rubik's cube. So I wonder if you could talk to me a little bit about how you think we can get there, how we can try and fix this issue that we have right now, that we can't find people to work in important sectors.

Like, I just simply do not know what a, there isn't a single bullet answer to your question, but I know that we can do better by the people who are already here. Look, demographic change is actually our friend if we want it to be. We could make every job a good job. We could give people that have been historically marginalized in the labor market more opportunities to train and get better paying jobs. We could actually improve the size and the resilience of the middle class if that's what we wanted to do. And as the ninth largest economy in the world, which is maybe something you don't know is true of Canada, we can be and we can do anything we set our hearts and minds to do. So I don't know what we're going to do, but the historic response to labor shortages in this country has been import the solution. What's new about the importation solution now is we're turning

to temporary foreign workers. We had a similar labor shortage in the 1950s and a similar labor shortage in the early 20th century. And we imported the solution with people that came here and built their lives and families here. They didn't just come here to work. This is the first time we are facing this kind of labor shortage and telling people you're good enough to come and work here, but you're not good enough to stay here. This demographic challenge is happening throughout the global north. It's even happening in places like China because of the one-child policy from the 1980s. They're already starting to fret about population aging and not having enough workers in China. So we are going to be competing with the rest of the world to find newcomers. If we do not make every job a good job, if we do not make more of our communities great places to

live because the physical and social infrastructure is there to support them in their lives as human beings, not just as workers, we will lose the global foot race to having enough workers. Certainly, we are not going to be through this anytime soon. The last baby boomer turned 65 in 2029. So we've got a few more years. And even though it's true, more people over the age of 65 are working, then historically, it's still a very small minority of the olds who are working. It's the young olds who are working. We're not going to have a bunch of 85-year-olds working. So we really need to get our head around what do we do when we don't have enough people to do the work? How do we value the people that we do have around us so we don't burn them out because they are working so hard?

It's not that people don't want to work anymore. It's that people can't work anymore. They're working as hard as they can. Overtime is up. Employment to population ratios are up for every age group except those over 65. Well, actually, even that group is up. Something new is happening, and it's going to take a while, I guess, for our leaders, both in business and in government, to cotton on to the fact that you have to value your workers now. Bargaining power has utterly shifted. It will take us a while to catch up with that. The only way bargaining power won't shift is if we keep trying to flood the market with temporary foreign workers who have no labor rights.

So is it fair for me to say that in many ways this could be really good news for employees, right, for workers? It is absolutely fair that you could say this could be really good news. Population aging could be our friend if we had public policy row in the same direction as market forces, which we're not doing right now, both through errors of omission and errors of commission. But something that is often pitted as good for workers is also good for employers. If you are offering better wages and working conditions, you're going to attract more people and you're going to retain more people. That reduces your recruitment costs and your training costs. If those people have more spending power, they're going to buy more of your stuff. It's good for business. People love to say business creates jobs. No, I'm sorry, ladies and gentlemen, it is actually consumers that create

jobs. And if we are seeing our purchasing power get frittered away by causes that are largely out of our control. A pandemic, a war on the other side of the world. These things are not controllable by our public policy. But what we can control is how we make every job a good job, that we value our essential workers. We don't just pay them lip service. We pay them good wages and better working conditions so that they stay, so that the actual social infrastructure that is as important to us as roads and bridges, having the care that we need when we are too old, too young, and too sick to work,

that that care is there so that the rest of us can get on with the work that we do, that is completely overlooked at this moment. And I think if we don't start waking up to the significance of that, our economy will shrink. It's that simple. Armin, thank you. Thank you so much for this. Jamie, it's been a total pleasure. Thank you for having me. with me. All right, that's all for today. I'm Jamie Poisson. Thanks so much for listening. We'll talk to you tomorrow.