Fall is here and it’s back to school. Ontario spends about 25% of its budget on education. Yet the Ontario Chamber of Commerce claims the “‘skills mismatch’ is a [...] growing challenge.”
Jeffrey Boggs, a faculty member at Brock University, challenged this claim in the Globe and Mail. Boggs argued that pay should be getting higher for in-demand skills. However, pay for in-demand skills has not increased – therefore, no skills gap exists. Even if it does, Boggs argues employers should train their own workers, believing employers do not do this because of “a sense of entitlement.”
Employer attitudes are not the problem. Intervention in the labour market is the problem.
Ontario’s minimum wage is the highest in Canada. It is set to get even higher, sooner than anywhere else. A high minimum wage means employers tend to hire only skilled workers. Students and others with lower skills will have problems finding jobs. Employers will not take a chance on a low-skilled worker at a high minimum wage. A market will then develop where workers have no protections at all.
Governments also try to pay employers to hire, the Canada Summer Jobs program being an example. This program pays half the wage of summer student workers. Similarly, Ottawa announced a $73 million program to pay student wages at technology firms. But employers will not invest much training in workers who are only on the job for a short time. This is trying to fix a government intervention with another intervention. Employers spend time filling out government forms to get benefits rather than hiring.
A high minimum wage is bad policy. It is enacted only for votes. A lower minimum wage, with predictable raises, would be better. Employers can choose good workers who can be trained further. This was the system promised to Ontarians in 2014.
A basic income would be better than a minimum wage. It protects worker incomes, and allows employers to set their own worker pay. Improving basic education would also be a better use of money. The “Expert Panel on STEM Skills for the Future” agreed with this approach. Yet last year, half of Ontario’s Grade 6 students failed math standards.
Given the cost of education in Ontario, this is a poor result. Canadians should aim to excel globally. But students from Singapore and Finland outperform Canada and the U.S. Canada’s economy will not do well if our students fare poorly globally.
Employers can train the workforce of the future. But a good basic education is needed. Government should make fewer interventions in the labour market. We need to stop costly job programs. Instead, we should focus on the basics - a basic income and basic education.