Government polices part of story of BC’s declining median income

May 27, 2008

The results of the 2006 Census on income were recently published and produced stark headlines about enormous wage declines in Canada over the past 25 years. The income gap between rich and poor is widening, immigrant incomes are plummeting and young people entering the labour market are earning less than their parents a generation ago.

In BC, the median real wage dropped a staggering 11.3% from 1980, and by 3.4% since 2000 – the steepest slide of any province. Statistics Canada officials were at a loss to explain why BC had such a huge drop in earnings, although various BC analysts said it was a result of a shift away from industrial employment towards service-sector jobs, an increase in new immigrants in the workforce, and rising inter-provincial migration.

All these trends may partly explain the drop in BC’s median earnings, but the commentary to date would have us believe that government policy choices have been of no consequence. Something else needs to be considered: deliberate government changes in labour policy.

Soon after the current BC government was elected in 2001 it proceeded with initiatives to increase ‘flexibility’ in the labour market. The most dramatic event was the mass firing of hospital support staff (8,000 laundry, cleaning and food service workers), who were disproportionately women of colour, older and immigrants.

This was the first time in Canada that a government had completely overturned a properly negotiated collective agreement. ‘Flexibility’ in this case meant reversing all of the equal pay gains that health support workers had won through the collective bargaining process over twenty years. These workers initially made about $17 per hour. Those who remained in the public sector had their wages reduced by 15%, and those whose work was privatized worked for as low as $10 per hour. Too many lost work altogether.

Changes in the Employment Standards Act since 2002 are also responsible for the deterioration. Employment Standards are important because they provide minimum standards for wages and working conditions. They are vital to ensuring that workers – particularly low-wage workers – get the all the hours and pay they are entitled to. Yet since 2002, we have witnessed a dramatic decrease in the enforcement of employment standards, the removal of whole groups of workers from the law’s protection, and specific regulatory changes affecting all workers.

Enforcement was affected by budget cuts to the Employment Standards Branch that resulted in a 1/3rd reduction in staff, office closures, and the elimination of routine workplace inspections. But most significant was the shift from having a complaint dealt with by the Branch to the introduction of a ‘self-help kit’ (workers who feel their rights have been violated are now required, as a first step, to try to resolve the dispute on their own with their employer). The result was stunning: complaints dropped 46% the first year and 61% over the following three years. This is not because employers suddenly began behaving better, but because it is so much harder for workers to exercise their rights.

Whole groups of workers have been excluded altogether from most of the protections of Employment Standards. This includes all workers in trade unions (or about 34% of all workers in the province), long haul truck drivers, oil and gas field workers, and farm workers.

Most seriously affected by the changes in Employment Standards are young workers and immigrants. BC introduced the ‘first job’ minimum wage of $6/hour for the first 500 hours of work, giving BC the lowest wage for new workers in Canada. But many in this category are immigrant women with considerable work experience who find themselves confined to $6/hour and too often do not leave this wage category when the ‘qualifying’ period is up. And some young people appear to loose their jobs when the 500 hours is up.

Other changes affecting all workers include:

  • Complicated “overtime averaging” rules that allow people to work 12 hour days for 7 straight days with no overtime pay.
  • Changes to the Labour Code making it harder to obtain union representation.
  • The introduction of “voluntary” agreements between workers and employers to forgo legal rights to overtime pay.
  • The ability to be called-out for work for as little as 2 hours a shift.
  • Removal of the requirement that workers’ legal rights to be posted in workplaces.

All these changes help to explain why BC’s median wage has fallen, even under conditions of high demand for workers, low unemployment, and steady economic growth. Government policy has deliberately lowered working standards, and made the promise of shared wealth elusive.

Marjorie Griffin Cohen is a professor of Political Science and Women’s Studies at Simon Fraser University, and a principal investigator of a major research project on Economic Security (funded by the Social Science and Humanities Research Council of Canada), led the Canadian Centre for Policy Alternatives and SFU.