On declining shares

While Paul Moist discusses the more general imbalances and injustices facing workers as they celebrate Labour Day, a couple of CanWest stories from this weekend suggest that the impending economic downturn will come about just in time to keep workers from sharing in most of the benefits.

Mind you, the first article suggests that the question is simply one of a trade-off, claiming that workers have avoided increased wages by valuing job security instead:

Canadian workers this Labour Day are basking in the greatest job security most have ever known, thanks to record levels of employment and an unemployment rate that is hovering near a more than 30-year low of just 6.4 per cent.

Yet, their share of the income pie has been shrinking...

Figures released this past week show that Canadian workers got 62.9 per cent of the income generated by the economy in the second quarter of this year, down marginally from 63 per cent a year earlier, and down significantly from their 64.9 per cent share in 2002 when the latest leg of the current economic boom took off.

Their share is also well below the all-time high of nearly 70 per cent reached in the early 1990s, although the increase in their share then was more a reflection of the weakness in profits during what was a long recession.

In contrast, the share of income going to corporate profits has climbed almost steadily since the beginning of the latest economic boom four years ago to 17.1 per cent in the second quarter of this year.

That's up from 14.8 per cent four years ago, and also just shy of the all-time high reached at the end of last year...

"We're starting to see some indication of upward pressure on wages, especially in Alberta," Porter said.

"But I'm not expecting anything dramatic, as it still seems to me that unions are more concerned about securing job certainty than pushing for big wage gains."

From that conclusion it might sound like wages are likely to move upward as workers finally start to share in the long-ballyhooed economic improvement. But then, the other article published the same day suggests that the job market is set to cool off just as it was in danger of actually pushing wages upward:

Workers in manufacturing and construction will bear the brunt of the coming economic slowdown, the TD Bank forecast yesterday.

However, overall job growth will continue but at a more normal pace than in recent years, it added in a report.

That slowdown in job growth is underway, it suggested, noting that the past two labour market surveys by Statistics Canada showed small job losses.

Analysts expect the slowdown in the U.S. economy, which is being driven by the end of the housing boom in that country, will act as a drag on Canada's economy as well since more than 80% of Canadian exports go to the U.S...

(T)he impact of the U.S. slowdown will likely be felt most by Canadian industries that are the most heavily dependent on the U.S. for sales, especially manufacturing, which has been struggling with a strong dollar and has already suffered massive job losses, it said. Industries that support exports to the U.S., such as transportation, as well as tourism, are also likely to feel some impact from the U.S. slowdown.

Meanwhile, the Canadian construction industry will be hit by the impact of the increase in interest rates over the past two years and the ensuing slowdown in the Canadian housing market, especially in Central and Eastern Canada, it said.

Employment growth will also be dampened by increased labour productivity, it said, noting that Canadian companies have been taking advantage of the strong dollar to upgrade their operations by importing more productivity-enhancing machinery and equipment.

So, having seen their share of economic production decline during a growth phase due to a shift away from sectors which have historically offered greater wages and job security, Canadian workers can now look forward to...an acceleration of the same shift as the economy cools. Which makes yet more stagnation in inflation-adjusted wages look all the more likely, particularly since job security will start to look even more important as job growth dwindles.

It remains to be seen whether workers will notice the gap and recognize the potential for greater influence through better organization. But it looks for now like the deck is once again stacked against workers. And on Labour Day, it's worth asking what can and should be done to turn that trend around.