The False Doctrine of the ‘Labour Shortage’

Busy people often lament, “I wish there were more hours in the day!” They struggle to get all their tasks completed. An extra hour or two each day would surely ease the pressure.

While this frustration is understandable, no-one seriously believes our days are too short – nor that time pressures would be solved by stretching the day to 25 hours. Almost certainly, our to-do lists would just get longer, and we’d quickly face the same time crunch again.

This same flawed logic infects the chorus of complaints these days about a so-called ‘labour shortage.’ Employers moan they can’t find enough workers. They preferred it when unemployed workers abounded, and simple job ads could elicit dozens of applications.

Tiff Macklem, Governor of the Bank of Canada, also cites employers’ complaints as justification for painful interest rate hikes. He aims to ‘solve’ the labour shortage by deliberately raising unemployment. 

The federal government, too, is catering to employers by increasing immigration targets to all-time highs. Properly planned and supported immigration is good for the economy and for society. But importing masses of workers just to make life easier for employers is the wrong way to do it (especially using exploitive temporary migrant programs).

At any rate, just increasing the number of people in the country doesn’t magically fix the labour market. Yes, there are more people to work, but now there is more work to do (since the population requiring housing and subsistence also grows). It’s like lengthening the day to 25 hours, while adding more tasks to your list.

Labour shortage narratives are also heard loudly in the social policy arena. For example, employers want Employment Insurance benefits cut, to compel unemployed workers to accept lower-paying jobs.

Others want to postpone the retirement age, to pressure Canadians to work longer. This, too, is a false solution. Yes, Canada’s population is ageing. But it’s wrong to assume this will translate into a crisis in labour supply. Strong labour force participation (including many over 65 who voluntarily keep working) is offsetting demographic trends, and keeping the labour force growing.

All these policies would make it harder for Canadians to find and keep good work – which should be our central economic goal. Pushing more workers into the labour market, while reducing job opportunities, will certainly make like easier for HR managers. But it will undermine life chances for most Canadians.

Statistics prove that Canada is not anywhere near ‘running out’ of workers. There are over one million officially unemployed. Another million or more are underemployed, working short hours or in menial jobs that don’t fully utilize their abilities. And at least a million more potential workers (including hundreds of thousands of female parents, and hundreds of thousands of non-employed who aren’t counted as officially ‘unemployed’) sit on the sidelines of the labour force.

Fully employing these Canadians would expand national output by 15 percent. It would reduce poverty and exclusion. And it would allow us to undertake vital priorities: like strengthening health care, expanding green energy, and building affordable housing. Instead, the economy is being deliberately held back to maintain an ample buffer of idle workers, ready anytime employers need them.

To be sure, employing every available worker (and achieving genuine full employment) would require careful planning and supports. We’d need stronger vocational training pipelines: to train and retrain workers, and connect them with relevant jobs. We’d need stronger child care, flexible hours, and public transit to support healthier work-life balance. And we’d need different ways of setting wages: through industry-wide negotiations that lift real wages steadily and sustainably (alongside productivity), rather than using unemployment as a weapon to keep wages in line.

Ultimately, the terminology of ‘labour shortage’ propagates an employer-centric vision. It portrays the economy as a machine – and human beings as just another input to that machine (like energy, raw materials, or widgets).

In fact, the economy is there to serve us, not the other way around. The economy is the place where we use our energy and skills to produce the goods and services we need for a good life. If workers are fully occupied, that means we’re doing a good job supporting ourselves.

We shouldn’t complain about that, or try to prevent it. We should celebrate it.