Maybe I’m hopelessly optimistic about this — or maybe, at the same time, it’s hopelessly pessimistic. But things go in cycles and that means, eventually, things end up turning around.
Take mortgages: not that long ago, maybe a week ago, federal Finance Minister Jim Flaherty was warning Canada’s banks not to get into a race for the bottom when it comes to mortgages. His painfully simple message? That it’s not a good idea for everyone to be trying to fill their residential portfolios with plenty of low-interest mortgages, because competing for the bottom could leave the banks caught out when, eventually, interest rates start to climb.
The race for the basement has pretty much continued, though, because the banks, like many businesses in this country, are more focused on their year-over-year financial numbers than they are on where their business will be in 20 years, or even 10.
And that’s not all that surprising. This may be a simplistic way to think about things, but many larger companies in this country — banks included — reward their executives with bonuses based on single-year performance. If you’re in management, it may be financially better — for you, personally — to make a decision that helps this year’s bottom line, even if it could damage the company further down the road.
Perhaps that’s why benefits for employees in Canada are on the slide as well. The number of private sector companies in this country that actually offer pension plans, for example, is critically low. And for those who do, the last decade or so has seen many flee from defined benefit plans to defined contribution plans, a measure that improves the bottom line but, somewhere down the road, can leave retired employees trying to figure out how to live on peanuts.
Trimming away benefits may help the bottom line in the short term — and that may mean a few years of bonuses for those who make the decisions. What’s forgotten in that is why there are benefits in the first place — but I’ll get back to that.
There’s an interesting object lesson unfolding on the Northeast Avalon right now for those who employ people at minimum wage. For years, employees in that segment of the economy were hurt by the fact that jobs were limited. It was better to have a less-than-perfect job than find yourself out on the street. But the number of jobs has grown, and employers are now finding it difficult to fill positions — not only that, but employees are benefiting from a new and unusual mobility.
Unencumbered by benefits and pensions — and able to find new work quickly — employees are much more in the driver’s seat.
Anyone with minimum-wage workers in this part of the province can tell you they’ve had staff quit over something as simple as a change in schedule. Give those employees grief and they give you the finger. That’s new for employers here, and it’s a shift in the power dynamic that’s worth thinking about.
So, back to pensions and benefits — and why workers had them in the first place.
Companies offered pensions and benefits as part of salaries to entice good employees to stay, and to make it that much more unlikely that your good people would simply pull up stakes and head out. After investing years in a pension, it can be scary and risky to take a hike.
But without those enticements, you go back to the very simplest of equations — and that’s what’s happening with the minimum-wage equation here. The only things on the table become money and opportunity — and both of those can be somewhere else very quickly.
Eventually, I think people will recognize that benefits actually served a purpose — and smarter companies looking for smarter, better people will go back to offering them. And those who don’t? I think they’ll end up getting the finger.
Russell Wangersky is The Telegram’s
editorial page editor. He can be reached by email at email@example.com.