Labour Media release

Media release: Labour Federation says Tory “Better Paycheck Guarantee” not the solution for Nova Scotia economy

This week, Progressive Conservative Leader Tim Houston announced his “Better Pay Cheque Guarantee”, a plan for workers, not for the rich, says the release.

Nova Scotia Federation of Labour President Danny Cavanagh says Mr. Houston claims he wants to work with labour yet after one meeting, we never heard from him.

“I would think that as an organization representing over 70,000 workers in this province, the Federation would have been able to offer a great deal to a plan for the NS economy that Houston says ‘won’t truly grow unless our workers and our middle class grow with it’, says Cavanagh.

This plan is all about tax breaks and no mention of how to make up lost revenue and that its also an admission that higher paycheques bring on more spending but is silent on a higher minimum wage.

Cavanagh wants to know why must taxpayers now permanently pay for the labour that generates private profit for businesses, and give up any expectation that companies will fully help pay for the cost of infrastructure and social services?

Employers already get various taxpayer subsidies, including the ability to deduct wages and benefits as a business expense. 

“Why exactly should taxpayers pay for this? Aren’t businesses expected to take on the private risk and expense of running an enterprise (including wages, benefits and taxes) with the potential for private profit? 

Houston’s press release claims that this is not ‘trickle down economics’. In fact this is precisely what it is. By directly rewarding employers, the ‘Better Paycheque Guarantee’ claims that workers and society will benefit through increased employment and higher wages. 

There’s little evidence that blanket wage subsidies meaningfully expand employment; rather, they tend to subsidize hiring that has already taken place, or would take place, subsidy or no subsidy. This produces a large amount of inefficiency in public spending (so called ‘deadweight losses’), and is why most labour economists recommend targeted wage subsidies aimed narrowly at the hard-to-employ (long term unemployed, workers with disabilities, etc).

“It’s also not clear why wages would necessarily rise as a result of a blanket wage subsidy. Rather than using the subsidy to raise wages, causing rising expectations across the employer’s workforce, an employer may decide to use the subsidy to pay for new hires that it already intended to take on as reopening progresses.

“If taxpayers are going to permanently subsidize jobs, shouldn’t they insist that these jobs are decent jobs with good benefits, training opportunities, and access to collective bargaining? These are all public goods, and if the public is paying for this, shouldn’t they get a say?” says Cavanagh.

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