PrefBlog

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.

… and now it’s time for PrefLetter!

A good day for FixedResets, presumably due to the Bank of Canada policy hike and anticipation of increasing five-year Canada yields.

PerpetualDiscounts now yield 5.47%, equivalent to 7.11% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 3.85%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 325bp, unchanged from July 4

Jobs, jobs, jobs!

Despite sharpening trade tensions, a hefty rise in payrolls has provided new evidence that the American economy is strong enough to keep pulling sidelined workers back into action.

Employers added a total of 213,000 jobs in June, the Labor Department said Friday in its monthly report. The jobless rate rose to 4 percent, up from 3.8 percent in May, but that was because so many people joined the labor force and started actively hunting for work.
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For workers, the modest 2.7 percent increase in the average hourly wage over the past year was disappointing; pay raises are a nose behind some measures of inflation. But the slow pace does undercut arguments that the economy is in danger of revving too fast.

There were jobs in Canada, too!

The Canadian dollar strengthened to a three-week high against its U.S. counterpart on Friday as oil prices rose and data showing a stronger-than-expected rise in domestic jobs raised expectations for a Bank of Canada interest rate hike next week.

The Canadian economy added 31,800 jobs in June, more than the 24,000 gain that analysts had predicted.

Chances of a Bank of Canada interest rate increase at the July 11 announcement climbed to more than 90 percent from 88 percent before the data, the overnight index swaps market indicated.