Category: Market Action

A nice win for Toronto in the tech job sweepstakes:

Toronto has added the most technology jobs in the past five years and has the fourth-best tech talent market in Canada and the U.S., according to a new report released Tuesday.

The report by CBRE Group said Toronto added 82,100 technology-related jobs between 2012 and 2017 to beat out the San Francisco Bay Area for the spot by about 4,270 jobs.
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In terms of tech jobs added over the five year period to 2017, Montreal added 22,300, while Vancouver added 16,100 and Ottawa added 9,700.
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Ottawa had the highest concentration of tech talent of any of the 50 markets at 11.2% of all jobs, compared to 9.8% for San Francisco and 8.9% for Toronto.
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Ottawa also ranked highest in momentum of talent pools because of a 15.2% tech employment growth for a two-year stretch to the end of 2017, compared with a 10% drop for the two prior years.
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San Francisco ranked highest on average wages at more than US$125,000 a year, while Ottawa ranked as the highest Canadian city for wages at US$67,871.

PerpetualDiscounts now yield 5.50%, equivalent to 7.15% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 3.95%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 320bp, a sharp narrowing from the 335bp reported July 18.

I last mentioned this on 2016-11-30, so here’s an update on increased efficiency at McDonalds:

As minimum wage levels approach or surpass $15 nationwide, restaurant customers expecting to be greeted by a smiling face will instead be welcomed by a glowing LED screen.

As of 2020, self-service ordering kiosks will be implemented at all U.S. McDonald’s locations. Other chains, including fast-casual brands like Panera and casual-dining brands like Chili’s, have already embraced this trend. Some restaurant concepts have even automated the food-preparation process; earlier this year, NBC News profiled “Flippy,” a robot hamburger flipper. Other upcoming concepts include virtual restaurants which eliminate the need for full-service restaurants (and staff) by only offering home delivery.

Assiduous Readers will remember that I am following the Fortress receivership with great interest and today there was a new development:

Companies affiliated with Fortress Real Developments Inc. misled syndicated mortgage lenders about the value of land earmarked for real estate development projects, putting investors at risk of losing their money if the loans could not be repaid, the RCMP alleged in a search-warrant application filed in court in April.

In the Collier Centre condominium development in Barrie, Ont., the RCMP allege investors were told in 2012 that the “as is” value of the land was $21.9-million, but the RCMP believe the land was worth only about $7-million, according to the application.

Syndicated mortgage lenders provided $16.9-million in financing for the project, believing the amount was fully secured by the value of the land.

The plot thickens!

DBRS has confirmed Enbridge at Pfd-3(high):

DBRS Limited (DBRS) confirmed the Issuer Rating of Enbridge Inc. (ENB or the Company) at BBB (high) and the ratings on the Company’s Medium-Term Notes & Unsecured Debentures at BBB (high), Fixed-to-Floating Subordinated Notes at BBB (low), Cumulative Redeemable Preferred Shares at Pfd-3 (high) and Commercial Paper (CP) at R-2 (high), all with Stable trends.

The confirmations incorporate DBRS’s assessment of ENB’s strong business risk profile, which should benefit over the medium term from its strategic plan to reposition its asset mix to a pure regulated pipeline and utility business model (demonstrated by $7.5 billion of announced non-core asset sales to date) and completion of its current large portfolio of low-risk capital projects, combined with an improving financial risk profile that should benefit from ENB’s more conservative recent funding plan (including the expected $4.0 billion consolidated debt reduction), corporate simplification and the potential for reduced structural subordination at the ENB level over time. The Stable trends incorporate DBRS’s expectation that any incremental investments in new projects would be consistent with maintaining a strong overall business risk profile and medium-term improvement in key credit metrics with the completion of the current large capital expenditure (capex) program.
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A positive rating action is unlikely without substantial reduction in structural subordination. DBRS expects ENB to meet its key target metrics of 15% funds from operations-to-debt and five times debt-to-EBITDA, likely in late 2018 or early 2019. A negative rating action is not expected over the medium term.

PerpetualDiscounts now yield 5.51%, equivalent to 7.16% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 3.82%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 335bp, a significant widening from the 325bp reported July 11.

There was a good article in the New York Times regarding lagging paycheques in the US:

Yet many are far from making up all the lost ground. Hourly earnings have moved forward at a crawl, with higher prices giving workers less buying power than they had last summer. Last-minute scheduling, no-poaching and noncompete clauses, and the use of independent contractors are popular tactics that put workers at a disadvantage. Threats to move operations overseas, where labor is cheaper, continue to loom.
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Economists have offered various explanations for why workers are not doing better: the steady weakening of labor unions, the ability of American companies to find cheaper labor abroad or automate further, piddling productivity growth and the rise of superstar companies that are extremely efficient with a relatively small labor force.

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It’s difficult to look through this list of trend-drivers and find a suitable place for the imposition of public policy constraints – most potential measure will do more harm than good, to everybody.

However, I will suggest that it is appropriate for labour legislation to make ‘last minute scheduling’ less attractive – it’s an extremely exploitive management strategy that needs to be reined in. For instance, my contact in the nursing business works as ‘permanent casual’ (I think that’s the label!) with a major hospital complex. She has no set hours; every week she has to tell them her availability and they call her when they need her … and by ‘call’, I mean at 5am to start a 7am shift.

She has to give them so many potential shifts every week, including some on weekends, some graveyard shifts and some afternoons. If they call her for an ‘available’ shift and she turns it down, that’s a black mark. Three black marks in a year and she’s fired.

The problem with this – besides illustrating the complete mismanagement of the Ontario health care system – is that she gets nothing for making herself available other than the chance she might get called. It’s ridiculous. She could make herself available for 168 hours a week, not get a single call and they wouldn’t have to pay her a dime. That’s what I call exploitive. And, mind you, she works for a hospital – a civil servant in all but name. One would think that employment standards there would be pretty good.

If the ‘last-minute scheduling’ system is to be allowed to endure – and there are good reasons why it should be around to some degree – then workers should be either guaranteed that some proportion (two thirds?) of their availability will be taken up, or paid some hourly rate ($5/hour minimum) for availability that isn’t taken up.

Scheduling has attracted some notice from the Ontario Ministry of Labour and revised legislation is scheduled to come into force:

On-call pay — Three-hour minimum pay: Employees who are “on-call” and not called into work, or who are called into work but work less than three hours, must be paid three hours pay. Only one three-hour minimum applies to all on-call scenarios which may occur during a 24-hour period. On-call pay is not required if the on-call is for purposes of ensuring the continued delivery of essential public services and the employee was not required to work.

I think that addresses my concern – at least partially – but notice that ‘essential public services’, such as nursing in hospitals, has been specifically exempted! We will have to see whether the legislation survives the new Ontario Mindless Kneejerk Party government, and just how everything works out in practice.

Another possibility to be explored is a Guaranteed Annual Income. There was a long opinion piece in the weekend Globe about the idea, but the experiment that’s currently running is very poorly conceived:

In its new pilot, Ontario is providing single recipients up to $16,989 a year and families up to $24,027, minus 50 percent for any earnings

Fifty percent. And then there’s traditional taxes on top of that. So what’s the effective marginal tax rate on that? Maybe sixty, seventy percent for a low income earner? Boy, that leaves a lot of incentive to pick up an extra shift and go for that minor promotion, doesn’t it?

No, the way to implement a Guaranteed Annual Income is to make it universal and include it in taxable income. We don’t need to implement the whole thing all at once. Start off with a $1,000 refundable tax credit, included in income, and increase it whenever possible. Bear in mind that effective marginal tax rates are important … especially the particularly moronic ones, with a sharp cut-off of benefits.