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The problem with Hudak's million jobs promise

Photo: Ontario Chamber of Commerce/flickr

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Ontario Progressive Conservative Leader Tim Hudak has a new jobs plan to create a million new jobs over the next eight years.

ONE MILLION (cue Austin Powers reference).

There are a few known details of his so-called plan -- like cutting corporate taxes and ending green energy -- but little clarity on how this will actually create jobs.

Even without the full details, there are other reasons to doubt his promise.

For starters: there aren't a million unemployed people in Ontario.

In 2013 the unemployment rate in Ontario was 7.7 per cent (2013 Annual Unemployment, CANSIM 282-0002, 15-64 age group), which the CCPA agrees is too high. In terms of nominal unemployment, there are about 551,600 people without a job in Ontario and, based on declining participation rates, we calculate that there are an additional 83,200 discouraged workers in Ontario since the recession (Estimated based on: (2008 Labour Force Participation rate – 2013 LF PR) x 2013 LF Population = Discouraged workers).

Hudak is promising to create these jobs over eight years, so he might be accounting for population growth. Ontario's working age population (15 to 64) has grown by 0.9 per cent annually over the past five years, including migration, and it is slowing as baby boomers start retiring (calculated from CANSIM 282-0002). Nevertheless, if you project a 0.9 per cent annual population growth forward to 2021 and assume the labour force participation rate, employment rate and unemployment rate don't change, then the number of unemployed Ontarians will still be about 593,000 (all projections use data from CANSIM 282-0002).

If you assume that discouraged workers re-enter the labour market and we return to pre-recession labour force participation rates (to 78.5 from the current 77.6), then the number of unemployed in 2021 would be about 685,000 -- 315,000 people short of projected jobs growth under Hudak's plan.

If you take the initial, base projection (based on status quo population growth and labour force participation) and assume no change in nominal employment, there would actually be more than one million jobless Ontarians in 2021. In that scenario, the number of unemployed Ontarians would be 1,017,000. Adding in Tim Hudak's one million jobs would leave only 17,000 Ontarians unemployed and Ontario would have an unemployment rate of 0.2 per cent.

Since his jobs announcement, Hudak has acknowledged that the "one million jobs" figure is based on the change in nominal employment in Ontario during the Mike Harris government. But here's the reality check: Hudak is harkening back to a period with fast working-age population growth, when the baby boomers were in their prime working years, when their children were entering the labour force, and when there was significant labour force participation growth, particularly among women. At that time, the manufacturing-based labour market had yet to begin its disappearing act in Ontario. In 2004, Ontario's manufacturing sector employed 1.1 million workers. By 2012, that number had shrunk to 800,000.

And the other little secret from that era: Ontario under the Harris government was able to ride the long economic coat tails of a thriving American economy -- and that's a magical carpet ride that cannot necessarily be relied upon today.

Unfortunately, it's not realistic to expect these conditions to repeat themselves anytime soon. It's equally unrealistic to think a platform populated with promises of tax cuts, public service cuts, and anti-worker laws that would drive down wages is the answer to Ontario's labour market shift.

The Harris-era claim that tax cuts create jobs has done the province few favours as it tries to climb out of the dual challenges of a waning manufacturing sector and post-recession economic recovery. On this front, so far no party has advanced a jobs platform that would address this fundamental shift in the province's labour market.

Hudak's threat to slash 10,000 jobs in Ontario's education sector and to freeze public service workers' wages across the board would only make things worse. It not only creates a fiscal drag on economic growth, it would hasten the hollowing out of the province's middle class. And since women hold most of the jobs Hudak would eliminate or slap a wage freeze on, it means they would disproportionately be impacted by such a political agenda.

And that anti-worker, low-wage platform can only mean one thing: even if a Hudak government would manage to create half of the jobs on promise, they would likely be low paying, precarious jobs that offer little security, few or no benefits, and leave workers on their own to plan their retirement income.

More working poverty. Worsening income inequality. A million jobs, a gazillion jobs -- what's it worth if it simply lowers our standards? The pressing challenge is for a political agenda that addresses the fundamental labour shift underway in Ontario. That requires a jobs platform of substance, not style.

Kayle Hatt is the Andrew Jackson Progressive Economics Intern at the Canadian Centre for Policy Alternatives' National Office. Trish Hennessy is Director of the CCPA Ontario Office.

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Photo: Ontario Chamber of Commerce/flickr

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