I’ve just figured out what Finance Minister Jim Flaherty could do in his next career, after he retires (or is retired) from politics. He’d make a most excellent union negotiator.

Why, just yesterday he was quoted on the front page of this publication arguing that a 55 per cent increase in the entire economy’s relative production costs (resulting from the take-off of our currency since 2003) is ultimately good for business. It will facilitate our country’s evolution away from relying on cheap labour, boost our innovation and help us to move “up the scale” of economic value.

I, of course, actually am a union negotiator. I share Mr. Flaherty’s concern with trying to reduce Canada’s reliance on cheap labour (although my strategy is to make low-wage jobs better-paying, not simply destroy them willy-nilly). And I’ve tried out Mr. Flaherty’s arguments myself over the years. I’ve presented economic evidence justifying why a wage increase of 2, 3, even 4 per cent might actually be good for a company’s business—contrary to fears that we’d put the whole company into the ditch.

Reasonable wage increases can help employers retain and reward good workers, and facilitate improvements in productivity and quality. So long as the enterprise continues to develop and grow, wage increases on this scale are fully digestible.

But in my wildest dreams, I wouldn’t have the gumption to claim that a 55 per cent cost increase could actually be economically beneficial. Had I tried, my efforts would surely have foundered on the rocks of economic reality. There aren’t many companies that can endure a 55 per cent jump in their costs and stay in business.

And indeed, Mr. Flaherty’s argumentation needs a hard, cold reality check. His conviction that our labour is cheap is refreshing, but went out the window back in 2004 as our loonie soared past 75 cents (U.S.). Now our labour is definitely on the expensive side; at 97 cents (U.S.), we’re positively gold-plated. At any rate, it’s not low-wage jobs that are disappearing, it’s high-wage ones—in sectors such as the auto industry, which has lost at least 20,000 net jobs (many of them in Mr. Flaherty’s own riding) to cheaper pastures.

Mr. Flaherty’s parallel claim that Canadian manufacturers should get with the program and start using modern technology makes me wonder how many factories he’s visited lately. They’re not exactly using steam engines in there any more.

In fact, the dollar’s rise is having a perverse impact on the quality and sophistication of manufacturing. Investment spending and productivity growth in non-energy manufacturing have deteriorated since the loonie took off. Yes, imported capital goods are cheaper—but there’s little reason any more to put them in Canada.

However, like any good bargainer in the heat of midnight contract talks, Mr. Flaherty is grasping at any argument to underpin his 55 per cent solution. And so, gentle reader, if you’re feeling underpaid and underappreciated, take a page from Mr. Flaherty’s book of negotiating tips. Go ahead, demand a 55 per cent raise today, brandishing bunker-busting economic zingers like these:

Your low pay has artificially sheltered your boss from global competition.

To support much higher wages, the company will have to move “up the scale”—very quickly.

A honking big raise would force your boss to purchase high-tech equipment so you can do your job 55 per cent more efficiently.

Market forces and free trade will keep you employed, doing whatever you do best—even if you’re 55 per cent more expensive than you used to be.

If the boss challenges these arguments, tell him that if the Finance Minister says it’s good enough for Canada, then it’s good enough for you.

A word of caution: The job destroyed as your employer jumps 55 per cent upscale could be your own. But you’ll be in good company. Almost 400,000 Canadian manufacturing workers, tossed aside by the loonie’s flight of fancy (a flight ratified by the inaction of Mr. Flaherty and other policy-makers), will be right out there with you.

Jim Stanford

Jim Stanford is economist and director of the Centre for Future Work, and divides his time between Vancouver and Sydney. He has a PhD in economics from the New School for Social Research in New York,...