Premier Kathleen Wynne’s awful job creation plan won’t create a single job: Mike Moffatt

This is essentially a wage subsidy to high-income workers, paid for by the general population

Mike Moffatt 6

 

(Brent Lewin/Bloomberg/Getty)

(Brent Lewin/Bloomberg/Getty)

Earlier today, the Ontario government announced that it is “partnering with Cisco Canada to launch the largest job-creating investment in the history of the province’s tech sector.” We should naturally be skeptical of any deal that sees taxpayer dollars go to a firm that made over $2 billion in profit just last quarter. However, reading through the details of this plan, skepticism turns to outrage. This is a plan that is explicitly designed to increase income inequality and transfer money from poorer regions of the province to one of Canada’s wealthiest cities and will likely not create a single new job.

The deal promises that “up to 1,700 jobs” will be added in the next six years, with the province providing “up to $190 million” in return, for a cost of $112,000 per job. Cisco estimates that 80% of the new jobs will be in Ottawa, a city with one of the lowest unemployment rates in the province at 5.7%. And if a 5.7% unemployment rate seems relatively low, it towers over the sub-3% rate in the Information and Communications Technology (ICT) industry. Because of the low unemployment levels of both the city and the sector, the number of net new jobs created here is likely to be zero. Cisco will be simply luring away workers that would have worked for other ICT companies (or who would have been hired anyway by Cisco even without the handout). This will help raise the wages of workers in that sector, but does nothing for jobs. Those jobs are already very well compensated, so this is acting as a wage subsidy to high-income workers, paid for by the general population.

We should understand what this deal is not. This is not a plan to “create jobs” for low and medium-skilled workers in Leamington and London, who have few options now that their plants are closed. A plan focused on laid-off manufacturing workers would have been a worthwhile goal, though it may not necessarily be sound public policy (the devil is in the details). But that is the exact opposite of what this plan does; I cannot begin to even understand what the province is attempting to accomplish here. The net effect of the Ontario government’s new policy is to subsidize jobs in an already strong labour market, increase the wages of already high-income workers and give hundreds of millions of dollars in corporate welfare to one of the largest and most profitable companies in the world. This easily ranks as the worst Canadian public policy of 2013.

6 comments on “Premier Kathleen Wynne’s awful job creation plan won’t create a single job: Mike Moffatt

  1. This doesn’t surprise. The wasteful spending of this government has gone beyond obscene, especially as she has not been duly elected as Premier. A painful slap in the face to communities losing jobs by the thousands. Cisco must have generously greased many Liberal palms to get this kind of handout of my tax dollars. What amazes me are the politicians that have the balls to call a press conference to announce these boondoggles.

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  3. Liberals should be voted out of existance!!! They blow our money like it’s just for fun. No regard, no intelligence, just stupid. You want to create jobs, cut the cost of electricty in this province in half for business. That will make jobs, not force them away like they are doing now with their stupid green energy boondogle. (Another bright liberal idea) Demons be gone!

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  4. Actually, this article makes no sense at all. You could use the same argument about the silicon valley 20 years ago. These jobs are net new jobs in Canada. Demand for workers will impact other tech firms, but given the lay offs at Blackberry, there will be out of work it workers. No this will not create jobs for unskilled workers. In my opinion, there will be a lack of jobs for unskilled workers world wide going forward. I would like to see us (the people) consider a 50% increase in the minimum wage. This would impact not just minimum wage employee’s but all lower income jobs as the minimum wage is the reference for all lower wage positions. Business may argue that this will put them out of business, but I would argue that business will find a way if the public want the product or services they provide. The spending power generated buy this could improve the economy in my opinion. Yes it would be inflationary, but the push up of the lowest income earners would be worth that cost

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  6. why not have a lottery for the 112,000$ per job . All persons of age 18 and older names entered in a drum, the deputy premier could pull out 1,700 names and award the winners personally. And the funds should come from each and every Ontario Liberal party member . WTF buying jobs from a profiting company , you liberals are corrupt and have no respect for taxpayers!!!!!!

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