In the early 1960s, while I was working for the Canadian Labour Congress in Corner Brook, Newfoundland, the paper mill unions won a five per cent pay raise for the mill’s workers — much to the dismay of the town’s business owners. When I next shopped at our neighbourhood grocery store, the manager complained to me about “overpaid” workers.
“Now I’m being pressured to raise the pay of my own staff,” he grumbled. “There should be some limit put on the pay increases the unions can obtain.”
I looked around the store. There were a dozen other shoppers in the aisles, most of them members of mill workers’ families.
“Take a closer look at your customers,” I advised him. “The money they’re spending in your store comes from the wages they earn at the mill. This was the first raise they’ve had in three years. Did it never occur to you that, the lower their pay, the less they’d have to spend in your store?”
His jaw dropped. Obviously he had never made the obvious connection between the mill workers’ wages and the extent to which he could profit from their purchases at his store.
That was more than 60 years ago, but the same purblindness still afflicts business owners and managers across Canada. They are especially enraged that the wages and salaries of public employees are substantially higher than the amount they pay their own employees.
Organizations such as the Canadian Taxpayers’ Association (CTA), the Canadian Federation of Independent Business (CFIB), and the National Citizens’ Coalition (NCC) incessantly rant against this disparity, charging that public employees don’t deserve higher compensation and should have it cut back to match the private sector’s lower rates.
A report by the CFIB calculated that the millions of public employees in Canada, on average, were being paid 13 per cent more than their private sector counterparts. With the higher public sector benefits and pensions factored in, the gap more than doubled for federal workers to 33 per cent.
Of course, the main reason for these pay and benefit differentials is because public employees are unionized, while most private employees are not. The higher salaries and benefits in the public sector are negotiated by the public sector unions. Workers in private industrial and retail service jobs, lacking unions to represent them, have to take the inferior wages their employers decide unilaterally to pay them.
So the reality is not that public employees are overpaid, but that private sector employees are underpaid. A much better case can be made for raising inadequate private sector pay rates than for lowering those in the public sector.
One of the main benefits of being unionized has been the achievement of pay parity for female public employees, who now receive the same compensation as their male co-workers. In the private sector, however, unfair lower pay rates for women are still widely prevalent.
It’s not just business organizations that are campaigning against what they misperceive to be “too large, too wasteful, and too tax-imposing” government. Governments run by neoliberal conservative parties have also been committed to smaller government, lower taxes, anti-unionism, fewer public employees, deregulation, privatization and leaner public services.
A CCPA study released during the Harper reign, “Scapegoating Canada’s public sector,” found that “public services and the legislation that governs them have been seriously weakened by the Harper government, compromising our ability to help the unemployed, provide services to indigenous communities and veterans, curb climate change, and protect the environment … The ranks of the public service have been decimated, while revenue has been slashed by tax cuts that primarily benefit the wealthy.”
The study also pointed out that the public services for which Harper cut funding were worth about $41,000 a year for the average Canadian household, or 63 per cent of the median family income. As the study’s author, Hugh Mackenzie, noted, “Public services reduce inequality, provide stability, and promote social and environmental security. They are demonstrably more efficient, less expensive, of higher quality, and more accountable than privatized services. They constitute the best deal we’re ever going to get.
“If privatized and unregulated market forces were really superior to public services, as neoliberals contend,” argued Mackenzie, “why was it the public sector that was called upon to deal with and manage every major economic crisis of the last 100 years, from the Great Depression to Second World War mobilization to post-war reconstruction to the ‘stimulus’ measures implemented to cushion the effects of the 2008 financial meltdown?”
The “small government” madness
It’s not just the public sector’s more generous pay and benefit packages that infuriate big business leaders, investors and lobbyists. They are also determined to reduce the size and spending of the federal and provincial governments. “The smaller the government, the better,” they claim. And over the last few decades they have succeeded in slashing governments’ abilities to improve or even maintain the proper levels of essential public services.
Privatization and deregulation have been rampant. Health care, education, the environment, public housing, gender equality, child care, tax fairness, trade and even democracy have all been dealt punishing blows by the oligarchs of corporate and political neoliberalism. Their jihad against “big government” has been relentless. They seem oblivious to the fact that the more they shrink and cripple the public sector, the more they damage the private sector. They don’t seem to realize that the two sectors are intertwined and interdependent.
The private sector, for example, would collapse if not for the billions of dollars it derives from the public sector. The federal government alone spends about $35 billion a year on the purchase of private goods and services — everything from paper clips to aircraft, from computers to scientific research. Add the amounts spent in the private sector by provincial and municipal governments, and such vast expenditures are probably more than doubled.
And then there are the purchases of private sector goods and services by the five million public employees in Canada. I haven’t been able to get an estimate of this huge sum, but it must run well into the billions annually. And for every public sector worker who is laid off because of anti-government business pressure, down incrementally go private business sales and profits. But the corporate moguls remain just as unaware and unconcerned about this crucial correlation today as was that grocery store manager in Corner Brook 60 years ago.
Unbreakable public-private link
Private sector attacks on the public sector harm both sectors. Public expenditures often create private construction projects. Many industries could not get started or keep going without government services and infrastructure. Public funds spent on making workers healthier and better educated provide the private sector with a more efficient work force. Public funds spent on roads, airports and other utilities are essential to the operation of private industry.
That’s the absurdity of the big business assault on the public sector. Somehow more private industrial development is supposed to flow from less public education and research. More private X-ray machines, MRIs and other medical hardware is supposed to be made for fewer public hospitals. More private cars and trucks are supposed to be driven on fewer public highways.
You would think that, by this time, our political leaders would realize just how illogical, inequitable and impracticable this self-defeating business dogma really is. Instead, they submissively continue to aid, abet and subsidize the corporate kingpins in their deranged attacks on the public sector and public employees.
As long as this ignorance of public and private sector interdependence prevails, so will the cancers of inequality, poverty, deregulation, privatization, crumbling infrastructure and environmental degradation.
Editor’s note, March 5, 2020: A previous version of this story referred to an anecdote which took place in the 1960s as being “70 years ago.” In fact, 1960 was 60 years ago. The story has been corrected.
Ed Finn grew up in Corner Brook, Newfoundland, where he worked as a printer’s apprentice, reporter, columnist and editor of that city’s daily newspaper, the Western Star. His career as a journalist included 14 years as a labour relations columnist for the Toronto Star. He was part of the world of politics between 1959 and 1962, serving as the first provincial leader of the NDP in Newfoundland. He worked closely with Tommy Douglas for some years and helped defend and promote medicare legislation in Saskatchewan. This article originally appeared on Ed’s personal blog.
Image: Heather Quinn/Twitter