Monday, January 11, 2010

Hide your money if you have any!

I was almost sick when I read in today's SP that almost every major union is at the bargaining table this year. How does this happen? The government is broke and the province will, no doubt, be under siege as all the unions have strike mandates. After services are withdrawn the public will complain, the government will pay and everyone will point to the poor financial management by government. I feel like I am being forced to watch the same bad B grade movie over and over again and I not sure what crime I committed that warrants this penalty.

And yes, I know about the big, bad government's essential services legislation. I am just not confident that it will matter much.

If I had any money left, I'd fluff up my mattress.


  1. The only reasonable way to tackle this is going to be to take the first union out to the woodshed, hammer home that Sask is going through tough times and that EVERYONE will have to feel the pinch. Stand firm and don't buckle. If you cave one one the rest will expect equal or better deals. If the demands are anywhere close to what is being reported from the Nurses this is going to be a long and painful process.

    Time to cue up the 'union greed' as they do everything in their power to make Wall look bad and get their beloved NDP back in power to sweetheart their deals.

    Here's to hoping for -40 weather for the first month they go on strike, I'll take the trade off to know those self serving strikers are freezing.

  2. Civic Mistress: Grand Marshall of the the Parade to the Bottom...

  3. ........and here come the lefites to hurl their insults and offer no positive commentary

  4. The comments of Wendy Sol just show how uncooperative the unions will be in the upcoming negotiations. Getting the Essential Services Legislation was important, and really was a one time project. They ensure the citizens of the province will not be put in 'harm' or 'danger' due to a labour dispute. Good to see that the safety and protection of citizens who are not members is of no concern (or leaves a bad tast in the mouth of the unions according to Sol). In the end, what is the death of a few citizens during a snowstorm if it helps leverage the union into a better deal.

  5. Arguments of “union greed” are simply based in neoliberal rhetoric and devoid of any empirical evidence to indicate otherwise. Since the 1980s, teachers, for example, have only seen their wages rise at the rate of inflation, yet had to fight to simply see their wages remain stagnant.

    Historically, since 1980, the average wage in Canada absolutely stagnated, barely keeping pace with inflation. Meanwhile, corporate CEO wages have risen 30-fold. In fact, in the period between 1992 and 2004, the top 5% of income earners increased their income by 43%. This means that 19 out of 20 people are missing out on the productivity gains in the economy.

    Ironically, our drive to “flatten” the tax system and create capital gains exemptions has allowed these wealth increases for the top income earners to avoid the additional revenues that would be expected from the hoarding of wealth. Tax revenue simply does not follow this income shift in the manner it should.

    Then factor in that the average price of a house has risen from three times to five times an annual income in this period, and you quickly realize that almost everybody except the exceptionally wealthy are worse off than they were 30 years ago.

    To bring this back to union bargaining, a class in introductory labour economics will reveal that union’s efforts to bring up wages works to bring up wages across all sectors of the economy, as employers across all sectors compete for workers. It’s a simple economic fact.

    By attacking union gains for worker’s wages, you are vicariously attacking your own paycheque.

    The problem is that we need to drop the rhetoric and have an adult conversation.

  6. Well stated Anon 10:53, but your rant is littered with 'facts' (I don't have the time to check them, but will take you word for it) that are irrelevant to the current debate and only serve to rile of the anger of the people. What relevance is the skyrocketing CEO wages? I think we can all agree that top earners in private corporations earn ridiculous sums of money. I won't get into the argument of their qualifications, or their demand, but leave it at I agree they earn a disproportionate amount.

    But when we are talking about public sector employees why even bring that into the argument. While the MLAs and such received raises recently, I think most can agree that they are still underpaid themselves. You are attempting to plant the seed of corporate greed in the minds of people to sway their opinion, which is misleading. There is no CEO of Nursing Industry who is pulling down millions while screwing the nurses. This is public money, tax payer money, my money, your money, etc...

    Then to sum it up you insinuate that not supporting the unions is akin to not supporting a raise for myself? What sort of twisted logic is that. First off, you fail to mention that the increase wages being paid to workers also hampers small business owners who cannot afford to pay escalating wages (since we are making broad based assumptions). Secondly, I will feel free to defend hard line negotiations with the unions (and I guess myself) if it is required in order to navigate tough times. We are seeing spending frozen across the board, cuts to many departments, school boards are worried about funding, and you know what...... to me as a someone who is responsible for paying these contracts, I want to see some restraint shown as well. There is no reason why every area of the budget should be frozen or receive cuts, except labour which should given a raise (just shaking my head thinking about SUNs demands last go around). Each dollar they get is another dollar that comes out of our pocket as tax payers. So using your circular logic, technically we must pay from our wages (tax dollars) to get the unions raises increase, so that we can hopefully see our wages rise? Nice, but why not just take the wages I am paying them and pretend that is my raise thus eliminating the middle man.

    I appreciate the well thought out post, but please keep it on topic (especially when you are preaching on dropping the rhetoric). This is not a case of private comapny and it's officers pulling in millions of profit while the workers suffer, this is a case of a province going through a tough time and facing several union negotiators with gnarling teeth and a mandate to do whatever it takes to secure the best deal possible at any expense.

  7. perhaps the quote of the teachers salary should include a footnote about the unreported income that can be earned through their 'double dipping'. weird how you can hide income/wage increases like that

  8. Anon 11:44:

    While I understand your logic, your examination of the issue is too narrow and doesn't address the structural problem facing labour and capital.

    The “twisted logic” equating union gains to wage gains across the spectrum is anything but twisted. If you subscribe to any sort of market theory, this argument MUST hold true. Even the most introductory (right up to the most advanced) course in Labour Economics will reinforce the fact that when wages rise in one area, it drives up wages across sectors with similar barriers to entry and similar levels of education. This is economic fact, not twisted logic.

    The illustration of the wages of corporate CEOs is meant to come full circle to the fact that union wage bargaining is one of the few tools left for workers to hold this shift of wealth distribution in line across the middle class. Admittedly, the first to feel the effect are the unionized employees, but the private sector does follow. You are, indeed, vicariously attacking your own paycheque in the medium and long term.

    Your argument that it's you, Joe Q. Public, footing the bill for public services is indicative of the problem this shifting wealth creates for funding public services.

    Most of these outrageous earnings come as stock options and dividends. As capital gains are taxed at half the rate of labour, the income shift to the top end of the spectrum does not create a concurrent strangulation of tax dollars. Without proper flow of taxes from high income, public services cannot be properly financed.

    So, indeed, the middle class bears the burden, but only because we act as sheep and blindly accept the arguments of these CEO types that corporate tax cuts are necessary to drive corporate profits.

    These are the same folks working to drive down corporate taxes to fund these outrageous earnings and dividends, yet their lobbying is masqueraded as a tool to increase investment and jobs.

    However, as we both agree workers are clearly not gaining monetarily, let's look specifically at investment and ongoing corporate tax cuts. Between 1999 and 2004, corporate profits in Canada moved from 11.3% to 13.8% of GDP, yet capital investment fell from 12.8% to 10.9% of GDP. There simply is no macro-correlation between higher corporate profits and higher investment.

    In regard to the plight of small business, this tax system then also works to destroy them. Labour costs are not the problem. Putting aside the argument of how higher middle-class earning power creates more wealth across the spectrum, as we reduce corporate taxes, big companies are better able to take advantage of shifting earnings through methods such as transfer pricing and “foreign direct investment” to lower tax jurisdictions than any small business. These savings give them the ability to pay even less taxes for public services, while muscling out small business through cost reductions.

    You’re being sold a false bill of goods by blaming labour for putting the squeeze on small business: it’s the problem of trying to compete against multinationals when the playing field is anything but level.

    Ironically, as we cut corporate tax rates in Canada, one group, American corporations doing business in Canada, do not pay less tax: They are still responsible for paying the difference between the lower Canadian and higher US tax rate to the US treasury. One report estimates this tax cut at $4 to $6 billion per year in tax dollars that the Canadian government has effectively siphoned into US treasuries.

    These tax concessions to corporations are literally starving our ability to pay for public services. Yet we continue to support cutting taxes without any understanding of the consequences. Then when governments become strapped for cash, we blame workers.

    Major structural changes are required to correct this situation, but “sticking it” to unions - public or private sector - in a race to the bottom is clearly a step in the wrong direction.

  9. I gauge from your write up that your believe the problem to lay the problems at the feet of the tax structure, corporate CEOs, multinationals. Basically we could throw big tobacco in there and have all the 'white collar hooligans' represented. (On a side note, can we get a cartoon that gives us caricatures of these villains?) If that is what you truly believe then so be it, I agree with some of the things you have said and disagree with others. However, much like your first rant you have chosen to tip toe around the heart of the topic.

    Why have you continued to dodge the overrunning issue? My assumption (we all know how assumptions work out) is that the spreading of (mis-)information is more important. Why should anyone question the tactics, demands, actions of labour when the real problem is with the faceless corporations, rich CEOs, foreign companies, and federal tax scheme? Give the labour the image of the underdog who is out for the best of the people (by doing their darndest to raise the average salary of all us common folk).

    Rather than quoting me verbatim from your Labour Economics textbook the plights of the worker please address the issue at the heart of blog: What is Saskatchewan going to do with the upcoming contracts?

    The bottom line is that the province does not have an abundance of money, most departments would be lucky to receive the same budget next year. People are tightening their belts everywhere. It is a tough time for all.

    To make matters worse there are numerous public sector contracts that needed to be negotiated and leaders of the labour side are already talking of a 'bad tone' left from the essential services negotiations. Considering the strike on campus a couple years back (as I am sure you endured being the scholarly quote that you are), the fact that it is the a new government in power and wanting to set an exampkle, along with the recent demands being floated about this is not going to be the time that unions are prepared to accept a deal for the betterment of the province.

    What exactly is your viewpoint on the negotiations. Please keep this on topic and not start into some idealistic suggestions of restructuring the corporate tax and personal tax structures. Cause as flawed as they are, they ain't getting fixed in time to deal with this problem.

    So Anon, how exactly would you propose the G'ovt tackle this issue? To accept what the unions begin demanding and worry about paying for it later? To reason with them (ha good luck)? To hardball them?

    This is going to be an important year for getting the budget straightened out and these negotiations are going to impact that one way or another. As I said, let them strike. This was a tough year at my job too, the raises and bonuses were not what was expected (and my boss is not pulling in 7, let alone 6, digits). We the workers, accepted a smaller than expected raise because a) many of us have been there long term, and b) it is required in order to help the business pull through the tough times.

    Please put the textbook away and join the discussion, we get it.....the faults of the world are because of the corporate giants.

  10. I think the average citizen is prepared to pay a reasonable increase to unionized labour. It is when non-union employees receive inflationary increases and are asked to pony up for double digit increases is when the line gets drawn. And remember many union contracts include benefits such as dental, optical, prescriptions, etc. that are huge to a family's well-being. Would that be considered tiered medicare?

  11. You acknowledged that “The bottom line is that the province does not have an abundance of money.” I would hardly call illustrating the root of this problem dodging the issue.

    Governments have to deal with finding long-term solutions to maintain public services. To write off these dynamics as platitudes does nothing to bring the debate to where it needs to be. Every time a government contract comes up, the long-term structural problems are obfuscated by short-term rhetoric that, quite frankly, comes from all sides.

    It’s time to look at the issue as a whole, rather than simply salivate at the thought of no raises for public sector workers.

  12. I don't think it is so much the salivating at no raises for public sector workers, it is more along the lines of responsibly managing their contracts in a tough time. Rewind this a couple years, when the province was experiencing record earnings and all the hype I don't mind shooting a little of the extra funds to repair some roads, reward some of the employees, give a tax break to the tax base, etc... However, when the times aren't so good I can't sit here and advocate that that employees should still be receiving double digit raises, or money continue to be poured into projects that need not be done now.

    I understand that belief system is against the big corporations, CEOs and high earning people. You have repeatedly expressed your belief in the flaw of the system, which you suggest should be corrected by raising union wages (for a variety of reasons). You have yet to provide a reasonable source for paying these increases that are necessary, does it come from the education system (not teacher's wages obviously), from the roads (not the worker's wages though), from the farmers? Or perhaps Brad Wall can just go to PCS or Cameco and explain we will need a few more million dollars to help out with the public sector contracts. This is a practical problem in the real world, not a theory problem in a Marx class.

    As for your thoughts on tackling this long term, I agree governments do need to find the funding. But you seem to be confusing giving away the farm (for the good of all workers as you claim) with finding funding. It is easier to fund 1 million than 2 million.

    I'm not sitting here and saying we need to offer nothing, rather that there needs to be a definite strategy before commencing negotiations and that the government needs to remain committed to what it can afford to pay these workers. If you buckle on one negotiation you can forget getting a decent deal with any of the unions. This is going to be an ugly year for the provincial government.

    (PS- your simplistic approach to increasing wages is really quite flawed. Using false stimulants (high union wages for example) to increase a sector of the economy (overall wages) throws out the natural balance. As wages increases as do costs. The end result is higher than necessary inflation and devaluation of local currency. Having a high wage does little alleviate financial stress when you are forced to pay higher costs for all your purchases. They might introduce this to you in second year).

    (PPS- I worked for the provincial government for several years and, speaking for the department I worked in, they do quite well comparatively to private sector workers. In actuality with all the EDOs, per diems, insurance, pension and additional bonuses worked into the job it was quite lucrative. Don't portray the public sector workers of Saskatchewan as 'hard done by', I can assure you there are a multitude of workers who wish they had the benefits of provincial employees.)

  13. I can't believe this debate is still going... anyhow, we're clearly not going to agree on a few things, but for the sake of it...
    1. We both agree (and virtually every economic statistic published verify) this is a structural problem. That's what needs to be addressed.
    2. To discount the influence of union wages as bringing overall wages up in an economy means you are discounting the entire market framework upon which you build your arguments.
    3. High wages and income redistribution are two different things. An income redistribution will not have the inflationary pressures that high wages do.
    4. Nowhere was I advocating for double-digit increases in the public sector.

  14. I have to say I have enjoyed the banter back and forth on this issue. Job well done and look no name calling what a relief.

  15. That was a decent debate. Full marks to us!


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