Stormy Skies for Canada's Middle Class

[WIP]

Well, here's something that doesn't surprise me at all! I've been reading one story after another about the hollowing out of the middle class in the U.S.; wage stagnation - except for the top 1%, while there has been virtually nothing written on the subject of income demographics here in Canada. The last story I came across noted that the number of billionaires in Canada more than doubled during the last nine years, but finally someone has done a little fact-finding to give a more complete picture of the problem:

Yahoo News

Recent reports show Canada’s wealthiest one per cent accounted for 32 per cent of all income growth between 1997 and 2007 – the most in recorded history. Thanks to skyrocketing executive compensation levels and an aggressive attack on well-paid, family-supporting jobs, the gap between the rich and the rest of us grows ever wider.

The example of Air Canada provides a snapshot that the same forces at work in the U.S. economy are happening here....employees forced to take pay cuts, while company profits go up and the CEO walks out with a shitload of money:

Nothing epitomizes this situation more than the recent history of Air Canada. In the last decade, Canada's national carrier has suffered unprecedented financial turbulence, including run-ins with bankruptcy protection. According to the Canadian Auto Workers’ internal research, over the same period Air Canada's CEO at the time, Robert Milton, pocketed $86 million – while thousands of front-line employees were forced to take cuts, to the tune of about $10,000 per year, including an erosion of real wages, lost vacation, paid lunch breaks and other benefits.

Air Canada workers made major sacrifices. The company plowed ahead with plans to do more with less. Work intensified and productivity skyrocketed. Measured in seat miles delivered per employee, labour productivity at Air Canada jumped 75 per cent. Yet many who had earned a good (albeit modest) salary saw their quality of life and working conditions decline.

Really, do we have to copy every stupid mistake that the U.S. has made in the last 30 years of globalist dogma and supply side economics?

[dre]

Apparently you missed the memo...

We decided that having a middle class made it too hard to compete.

[WIP]

Apparently you missed the memo...

We decided that having a middle class made it too hard to compete.

Yes, that free trade scam that dangled the promise of cheap consumer products in front of everyone's eyes has led to the race to the bottom for wage earners. Funny how the only international cooperation that exists works for the benefit of multinational corporations!

[Guest American Woman]

The rich are getting richer...just like in the U.S.

Did you really think it was any different in Canada? If so, why?

[WIP]

Did you really think it was any different in Canada? If so, why?

No, my point is that we have fewer sources for information on the Canadian economy, just as we have less sources for information on social issues.

[Guest American Woman]

No, my point is that we have fewer sources for information on the Canadian economy, just as we have less sources for information on social issues.

Ok. I would agree with that. The U.S. does seem to put more of that kind of information out there.

[dre]

Yes, that free trade scam that dangled the promise of cheap consumer products in front of everyone's eyes has led to the race to the bottom for wage earners. Funny how the only international cooperation that exists works for the benefit of multinational corporations!

Dont worry about man! Its ok if we cant afford food or home heating or gas! DVD Players are like $20 and still dropping! Pretty soon non-durable consumer goods will be so cheap we can fassion shelters out of them... even burn them for heat maybe And ya know! They might taste alright if you cook em just right

[Shwa]

Yes, that free trade scam that dangled the promise of cheap consumer products in front of everyone's eyes has led to the race to the bottom for wage earners. Funny how the only international cooperation that exists works for the benefit of multinational corporations!

Have we no Walmarts? Have we no Targets?

[TimG]

For the last 60 years the rich world has lived in a fantasy land where the benefits of modern life were largely confined to a small number of rich countries while the rest of the world lived in squalor. International trade has brought the developing countries into the rich world's club and lifted billions of people out of poverty. Those people that claim to care about social justice should be celebrating this.

Unfortunately, the rise of the developing world has dramatically increased the pool of labour competing for jobs which means that wages for many sectors in the rich world must go down in response. This is inevitable. Nothing can be done to stop this at this point. The days where 90% of population could be kept in squalor while the few rich countries enjoyed all the benefits are gone. The massive deficits that burden the rich world economies are nothing but misguided attempts to forestall the inevitable.

Unions like Air Canada and Canada Post are dinosaurs that don't understand how the world has changed. The Air Canada union rep made me laugh when he said that workers are entitled to raises because they have gone 10 years without any. Complete crap. They are entitled to raises when productivity goes up. Not as some reward for long service.

[Michael Hardner]

The Air Canada union rep made me laugh when he said that workers are entitled to raises because they have gone 10 years without any. Complete crap. They are entitled to raises when productivity goes up. Not as some reward for long service.

I suppose that they are entitled to raises that they get ... by whatever means. We've already established that there's no fairness in this equation, so you can't blame them for trying every trick in the book.

[TimG]

I suppose that they are entitled to raises that they get ... by whatever means. We've already established that there's no fairness in this equation, so you can't blame them for trying every trick in the book.

I am less worried about Air Canada because it is a private company and if the union forces them under they lose their jobs and their pensions. I would like to assume the union has done the math and the have reason to believe they are making affordable demands. Still does not change the fact that the rational for the demands is silly. Edited June 13, 2011 by TimG

[Michael Hardner]

Still does not change the fact that the rational for the demands is silly.

I'm wondering if people still accept that as a point of view. It does evoke an idea of fairness, you must admit. "I made this much in the past, so why should I have to make less when the airline is making more ?". Even on this board people speak of salaries in terms of "fairness" so that does sound fair, as a baseline.

[dre]

For the last 60 years the rich world has lived in a fantasy land where the benefits of modern life were largely confined to a small number of rich countries while the rest of the world lived in squalor. International trade has brought the developing countries into the rich world's club and lifted billions of people out of poverty. Those people that claim to care about social justice should be celebrating this.

Unfortunately, the rise of the developing world has dramatically increased the pool of labour competing for jobs which means that wages for many sectors in the rich world must go down in response. This is inevitable. Nothing can be done to stop this at this point. The days where 90% of population could be kept in squalor while the few rich countries enjoyed all the benefits are gone. The massive deficits that burden the rich world economies are nothing but misguided attempts to forestall the inevitable.

Unions like Air Canada and Canada Post are dinosaurs that don't understand how the world has changed. The Air Canada union rep made me laugh when he said that workers are entitled to raises because they have gone 10 years without any. Complete crap. They are entitled to raises when productivity goes up. Not as some reward for long service.

Unfortunately, the rise of the developing world has dramatically increased the pool of labour competing for jobs which means that wages for many sectors in the rich world must go down in response.

Well its our policies that increased the pool of labour competing for these jobs. The west still accounts for a huge percentage of global consumption, so we could make our own stuff if we wanted to. It would just cost a little more, but it would drive up our wages.

They are entitled to raises when productivity goes up. Not as some reward for long service.

Thats not happening though. Worker productivity has skyrocketed in the last 30 years but inflation adjusted wages have been relatively stagnant.

[Michael Hardner]

Thats not happening though. Worker productivity has skyrocketed in the last 30 years but inflation adjusted wages have been relatively stagnant.

Maybe 'entitled' is a bad word. How about 'grab what you can get' ?

[TimG]

Well its our policies that increased the pool of labour competing for these jobs. The west still accounts for a huge percentage of global consumption, so we could make our own stuff if we wanted to. It would just cost a little more, but it would drive up our wages.

And increase poverty in the developing world? Are you really arguing that the developing world should be made poorer so the rich world can be richer? Doesn't that kind of undermine the whole income equality thing?

Thats not happening though. Worker productivity has skyrocketed in the last 30 years but inflation adjusted wages have been relatively stagnant.

Well, perhaps wage increases may be a bit much to expect. Productivity increases are necessary to keep the job in first place. Edited June 13, 2011 by TimG

[TimG]

"I made this much in the past, so why should I have to make less when the airline is making more ?".

In abstract I agree. The trouble with airlines is the price of fuel. This means that there is no guarantee that the current profits will continue. A suitable compromise would be a bonus system that is connected to profitability.

[dre]

I'm wondering if people still accept that as a point of view. It does evoke an idea of fairness, you must admit. "I made this much in the past, so why should I have to make less when the airline is making more ?". Even on this board people speak of salaries in terms of "fairness" so that does sound fair, as a baseline.

Its fair in that wage-earners/consumers brought this on themselves. We bought into the service-based economy scam pretty enthusiastically and believed the idea that we can have a high standard of life doing nothing but selling imported goods to each other. What the hell did we THINK was gonna happen?

And theres other questions of fairness... why SHOULDNT some dude in the developing world that lives in abject squalor purely based on the luck of where he was born compete with us for jobs? Especially when we actually rob them of jobs through various measures like agricultural subsidies.

Im a worker in the west, so Im pretty much bias, but If I was an alien observer orbiting in my spaceship for the last hundred years it would be pretty hard to muster much sympathy for the plight of workers in the west. Id be like "sweet! those poor fuckers over THERE are finally getting some money and some opportunities"!.

[guyser]

The trouble with airlines is the price of fuel. This means that there is no guarantee that the current profits will continue.

Except they all buy Futures contracts and know the costs up front. Seems to me its atad too convenient for them to tell us thats the reason.

[TimG]

Except they all buy Futures contracts and know the costs up front. Seems to me its atad too convenient for them to tell us thats the reason.

I don't think they can buy futures contracts for fuel 10 years from now yet they will still be committed to paying for pension promises they make today. They are trying to reduce their commitments today. If employees want a defined benefit pension they should fund it 100% themselves and take responsibility for any short falls. Edited June 13, 2011 by TimG

[RNG]

I would imagine in a capital intensive business like an airline, the senior execs are very concerned about debt service costs skyrocketing when the interest rates start to spike, as soon as the economy starts growing again. The stimulus spending and the QE occurring around the world will catch up. So this is a good time to get the debt load under control.

[Evening Star]

I hear what you're saying, Tim, but what do you think of the fact that the rich in the First World are getting more and more extremely wealthy while the brunt of redistribution from First World to Third World is being borne by workers and the middle class?

For the last 60 years the rich world has lived in a fantasy land where the benefits of modern life were largely confined to a small number of rich countries while the rest of the world lived in squalor. International trade has brought the developing countries into the rich world's club and lifted billions of people out of poverty. Those people that claim to care about social justice should be celebrating this.

Unfortunately, the rise of the developing world has dramatically increased the pool of labour competing for jobs which means that wages for many sectors in the rich world must go down in response. This is inevitable. Nothing can be done to stop this at this point. The days where 90% of population could be kept in squalor while the few rich countries enjoyed all the benefits are gone. The massive deficits that burden the rich world economies are nothing but misguided attempts to forestall the inevitable.

Unions like Air Canada and Canada Post are dinosaurs that don't understand how the world has changed. The Air Canada union rep made me laugh when he said that workers are entitled to raises because they have gone 10 years without any. Complete crap. They are entitled to raises when productivity goes up. Not as some reward for long service.

[Topaz]

I don't think they can buy futures contracts for fuel 10 years from now yet they will still be committed to paying for pension promises they make today. They are trying to reduce their commitments today. If employees want a defined benefit pension they should fund it 100% themselves and take responsibility for any short falls.

Do you believe that all workers in Canada should fund a 100% of their pensions? IF so, then MP's that WE, the taxpayers contribute 5.50 to their dollar, do you think that's fair??

[MiddleClassCentrist]

The Air Canada union rep made me laugh when he said that workers are entitled to raises because they have gone 10 years without any. Complete crap. They are entitled to raises when productivity goes up. Not as some reward for long service.

As long as the CEO's are getting a raise, the workers should be too...

[TimG]

Do you believe that all workers in Canada should fund a 100% of their pensions? IF so, then MP's that WE, the taxpayers contribute 5.50 to their dollar, do you think that's fair??

No I don't. MPs should fund 100% of their pensions too. However, 2 wrongs don't make a right.

[TimG]

As long as the CEO's are getting a raise, the workers should be too...

CEO pay is linked to performance. You want the same for workers?