Monday, May 31, 2010

Firefighter WCB Coverage Expanded

Most workers who are injured on the job are eligible for workers’ compensation coverage if their injury is deemed to have arisen out of and occurred in the course of employment. The compensability of occupational diseases (e.g., cancer) is often more difficult to determine than that of acute injuries (e.g., a severed limb) because of the long latency period and murky causality associated with most diseases.

Alberta has identified a schedule of diseases that are deemed automatically compensable if a worker has had significant occupational exposure (Schedule B of the Workers’ Compensation Regulation). Occupational cancer is of specific concern to workers, with the Auditor General noting that the Alberta Cancer Board believes that as many as 760 of the 5,700 new cancer cases identified each year (13.3%) were work-related. Yet, in 2008, only 31 new cancer-related claims were recorded by the WCB.

To its credit, Alberta has specified a list of cancers among firefighters that are deemed automatically compensable. And, on May 14, Alberta announced it would increase the types of firefighter cancers deemed automatically compensable from 8 to 10. This is clearly a good news story for firefighters with cancer, but the announcement can stand some unpacking.

Minister of Employment and Immigration Thomas Lukaszuk noted “If (firefighters) have the science to show me that other cancers also fall into the category where the rate of incidence is identifiably higher than others, I'm always willing to look at them. But the science has to be there."

This statement sounds quite reasonable: prove the occupational link and we’ll deem it covered. But consider what this means practically: the government intends to delay acknowledging further forms of cancer are presumed work-related until so many firefighters have died from a form of cancer that the causation is irrefutable. Until then, firefighters with cancer must go through the difficult and stressful process of determining compensability.

The Minister’s statement also ignores that proving causation is very difficult. There are more than 70,000 chemical substances in use in North America. Another 800 substances are introduced each year. There is no toxicity data available for 80% of these substances and the data for many of them is highly questionable. Further, demonstrating (or even recognizing) causation is very difficult due to the long latency period and murky causality of many diseases and the (understandable) focus of doctors on treatment, rather than sussing out occupational contributions.

The Minister’s statement further ignores the state’s role in causing occupational diseases. There is no legal obligation on manufacturers or employers to determine the hazardous properties of products before introducing them into the workplace. Consequently, workers are often the first humans to experience prolonged and significant exposure to these substances. This is a policy choice by government that prioritizes the right of manufacturers to create and employers to use substances over the right of workers to know about their hazardous effects.

Finally, while firefighters with some forms of cancer have gained an even greater degree of automatic compensation, there has been little effort focused on addressing other groups who routinely find themselves exposed to hazardous chemicals in the workplace, such as cleaners and healthcare workers. Perhaps the clarity of the firefighter data or the nobility of firefighting accounts for their preferential treatment. But it should not be lost on us that the majority of firefighters are white men and the majority of cleaners and healthcare workers are women and, often, minorities.

-- Bob Barnetson

Tuesday, May 25, 2010

Minimum Wage Review

Alberta's Standing Committee on the Economy is requesting submissions regarding Alberta's minimum wage policy. This follows Alberta's decision not to increase the minimum wage by 12 cents an hour this spring. Here is my submission:

Naresh Bhardwaj, MLA
Chair, Standing Committee on the Economy
801 Legislature Annex, 9718 107th Street
Edmonton, AB T5K1E4

Dear Chairman Bhardwaj:

Thank you for the opportunity to comment upon Alberta’s minimum wage policy.

Why have a minimum wage?
Minimum wage laws stipulate the least compensation society deems to be acceptable for employment. These laws have been developed because employers seek to minimize wages as one way to maximize profitability. Workers must engage in employment in order to afford the necessities of life. This need for income gives employers a powerful lever (sometimes called the “whip of hunger”) that employers use to strike a wage-rate bargain that is maximally advantageous for the employer.

Practically, this plays out as follows. When there are more workers than jobs (the usual case) employers pit workers (who must have a job) against one another to drive down wages. For example, an employer may offer one worker $5.00 an hour. If that worker accepts (because she needs to feed her children), the employer is then able to say to another worker: “Jane will work for $5. If you want the job instead, you need to work for $4.50.”

The historical result of this dynamic has been exploitative wages (often most disadvantaging women, minorities and young persons), grinding poverty and social instability. A legislated minimum wage helps protect the most vulnerable workers from this scenario by setting a wage floor below which no employer may go.

Alberta’s minimum wage
Alberta’s minimum wage is $8.80 an hour. Assuming a 40-hour workweek for 50 weeks per year, Alberta’s minimum wage means an annual gross income of approximately $18,000 (when you factor in vacation pay). Alberta does not have a clear statement about the purpose of its minimum wage policy or the criteria upon which the minimum wage is set. But let’s assume that underlying purpose of stipulating a minimum wage is to ensure workers can earn enough money to get by with from month to month.

A minimum-wage worker has about $1500 per month (before taxes) with which to purchase shelter, food, clothing and other necessities. So let’s work out a basic budget:

• The average monthly rent for a two-bedroom apartment in Edmonton in 2009 was $1059, so let’s assume a single person, sharing an apartment, has a rent of $525 and ignore the possible cost of utilities.
• A worker needs some way to get around so let’s assume a bus pass, which costs about $75 a month.
• Add on a very minimal $200 for food (based on Alberta Agriculture and Rural Development estimates) and sparse $150 for clothing, toiletries and other essentials.
• Source deductions (tax, CCP, EI) will run about $150 a month.

This leaves about $400 a month for all other expenses, including medical and dental care, emergencies, better food, a cup of coffee once in awhile and entertainment. If the worker has dependents, additional groceries and childcare costs alone will easily eliminate this $400.

Who earns the minimum wage in Alberta?
Approximately 1.4% of the workforce (~20,000 Albertans) earns the minimum wage. Data is not available on the number of workers who earn just over the minimum wage. It is often thought that minimum wage earners are primarily teenagers earning pocket money and thus not responsible for many of the costs set out above. This is untrue.

The majority of minimum wage earners are women (~70%), over the age of 24 (~61%) and have permanent jobs (~80%). This suggests that minimum wage earners are mostly working adult women attempting to earn a living. About half of minimum wage workers have high school or less and thus comprise a very vulnerable sector of the labour market with relatively few options in the workforce.

Adjustment of minimum wage
If the minimum wage is meant to ensure workers can earn enough money to get by with from month to month, then it makes sense to periodically adjust the minimum wage to account for changing prices. Some governments make periodic adjustments at the discretion of the Legislature or cabinet. Alberta previously used this system.

Discretionary systems have some drawbacks. Increasing the minimum wage causes political backlash, thus governments tend to do so only infrequently. This means the minimum wage does not keep pace with cost of living increases for these vulnerable workers. These multi-year delays also means increases (when they do happen) tend to be large, causing significant backlash from employers.

In 2007, Alberta linked annual changes to the minimum wage to changes in average weekly earnings. This allows for small, regular changes indexed to average wages. But then, in March or 2010, Alberta pre-empted the scheduled increase in the minimum wage. Minister Lukaszuk indicated that “This decision reflects what government feels will both protect jobs during these uncertain economic times and support the economy.” The proposition that a 12-cent-an-hour increase (approximately $240 per year per worker) would have derailed the economic recovery is not credible, but it does raise the issue of the relationship between minimum wages and employment levels.

Are minimum wages and employment linked?
There are mixed opinions among academics about whether increases in the minimum wage will have any negative effect on employment levels. While I am not a labour economist, my reading of the research shows it to indicate “sometimes yes, sometimes no”. It is unclear what explains the unevenness of the effect.

While the technicalities of this research are interesting, looking for a definitive answer often distract from the fact that a minimum wage is not primarily an economic policy. Rather, it is primarily a social policy because the purposes are (1) to ensure workers earn wages they can survive on and (2) prevent workers’ exploitation. For this reason, we should not use economic criteria (e.g., impact on employment levels, impact on employers) as the main basis upon which to evaluate the minimum wage. Rather, we should ask ourselves if the minimum wage allows workers to survive.

That said, economic considerations can (and likely will) play a part in decisions to increase the minimum wage. But they need to be seen in context and realistically. The Minister’s intimation that a 12-cent-an-hour increase might jeopardize the economic recovery is simply not credible. While a $240 a year increase in wage costs will have some impact on the profitability of businesses, it seems doubtful that many employers will be significantly impacted. Indeed, some employers will be positively impacted because their workers will now be able to spend an additional $240 per year.

More importantly, a $240 annual increase means the working poor—mostly women—will be better able to feed, clothe and house themselves and their families. This is, of course, the ultimate goal of minimum wage laws. In the unlikely event that some employers are forced to close their doors, we need to ask is this a bad outcome? That is to say, is it the government’s job to prop up businesses that are so economically marginal that a $240 a year increase in wages will cause them to fold? And should that support come in the form of denying the working poor a 12-cent-an-hour increase? Clearly the answer to both questions is no.

The Committee is requesting advice on the minimum wage policy. To be brief, I think the government had the basic elements correct before the Minister intervened:

1. There was a minimum wage.
2. There was a mechanism for periodic adjustment.
3. The periodic adjustment was related (if indirectly) to changes in costs faced by low-income workers.

I think you might profitably explore other indicators to index the periodic change to, such as the consumer price index. Yet using the annual change in average weekly earnings has the appeal of parity: it is what changes in MLA compensation are based on.

Thank you for the opportunity to provide input into your committee’s deliberations.


Bob Barnetson

Tuesday, May 18, 2010

Temporary Foreign Workers

The Calgary Herald is reporting that 18 bus drivers brought from England a year and a half ago as temporary foreign workers (TFWs) will be forced to return as their work permits expire. These drivers are among the tens of thousands of TFWs—some 57,843 on December 1, 2008—hired during the recent economic boom.

Alberta is not alone in using migrant workers. There were 252,196 TFWs in Canada in 2008—20 times the per-capita rate in the United States. Ontario, for example, has relied on migrant agricultural workers for decades.

While TFW are often thought to meet a need for skilled workers. But approximately half of Alberta’s TFWs work in unskilled jobs. While the economic downturn has resulted in many skilled TFWs returning to their home country, those in low-skill job have remained. In effect, the government’s TFW program is creating a permanent class of migrant workers who do the worst jobs.

A recent development is the interesting suggestion that employers continue to seek TFWs in field where there are not worker shortages. This may reflect employer’s desire for a more easily manipulated workforce.

TFW are easily manipulated because they are particularly vulnerable workers. Their work permits are employer and job specific. That is to say, they have virtually no realistic options for employment if they are treated poorly and want to quit. And complaining to the government carries with it a very real risk of termination. While this sort of retribution is illegal, it is an endemic feature of Canada’s workplaces. The temptation for many employers to break the law is great.

This became evident almost immediately upon expansion of the TFW program, with more than 800 complaints received by Alberta between 2006 and 2008. These complaints centred on unfair wage deductions, fees charged by recruitment agencies and accommodation problems. These issues are typical ways that the powerful exploit the less powerful in the workplace.

In late 2007, Alberta dedicated eight employment standards inspectors to investigate TFW complaints and carry out inspections. Whether eight inspectors enforcing only provincial laws are having a meaningful impact on the situation is highly contestable. Educational campaigns aimed at workers were also carried out—although targeting the victims rather than the perpetrators seems misplaced.

A typical example of the problems that emerge can be seen at an Okotok’s A&W. TFWs there have filed numerous complaints about their treatment. One employee, seeking her employer’s help in converting her temporary visa to a permanent one, alleges she was told could have the requisite supervisor’s position, but only if she returned the associated raise to the employer under the table.

When she refused, she was terminated because “downsizing was necessary”--even though the A&W continued to advertise for workers. The worker also alleged the employer charged 130% more for accommodation than allowed. When the employee complained to Alberta’s temporary foreign workers office, it referred her to other government agencies. If the foreign worker does not follow up on the referrals, the complaint is forwarded to employment standards.

Things seem to be worsening for TFW with the economic downturn. In 2009, 74% of TFW employers inspected by the province violated employment standards. In 2008, only 56% of employers were found non-compliant. Half of the violations were for failing to pay workers properly for overtime, vacations and statutory holidays.

Bizarrely, Minister of Employment and Immigration Thomas Lukaszuk called this a "really good news story". His rationale was that a high percentage of valid complaints indicated worker education efforts were successful. This seems to ignore that a high percentage of employer’s violating the floor of rights—the minimally acceptable treatment in our society—suggests that these vulnerable workers are being exploited.

-- Bob Barnetson

Friday, May 14, 2010

Minimum Wage in Alberta

In March, Alberta announced it would freeze an expected 12-cent-per-hour increase in its (present) $8.80 per hour minimum wage. “This decision reflects what government feels will both protect jobs during these uncertain economic times and support the economy,” said Thomas Lukaszuk, Minister of Employment and Immigration.

In effect, the government asserted that increasing minimum wage costs by 1.4% for the 1.5% of the workforce earning the minimum wage would somehow result in job losses or impede the economic recovery.

There is quite a lot of debate regarding the impact of increasing the minimum wage on job number. On the one hand, the Fraser Institute argues the case is clear: increasing the minimum wage reduces employment. Of course, increasing the minimum wage also reduces the profitability of businesses (slightly), which runs contrary to the interests of the Fraser Institute’s funders.

On the other hand, the Canadian Centre for Policy Alternatives argues there is little evidence of rising minimum wages having any impact on employment numbers. Further, neither the Organization for Economic Co-operation and Development nor the International Labour Organization believe that increasing the minimum wage is a significant cause of job loss.

This technical discussion is interesting but it distracts us from the real policy issue: the purpose of the minimum wage (and, more broadly, the floor of rights) is to ensure workers are not employed at an unacceptable wage.

This suggests Lukaszuk needs to ask himself if subsidizing marginal businesses -- businesses that would presumably go under if wages went up some $240 per year -- on the backs of the lowest-wage earners is consistent with the public policy objective of a minimum wage.

It seems to me that holding the minimum wage steady simply ensures the 1.5 per cent of Albertans who earn the minimum wage will be less able to afford the necessities of life. These minimum wage earners -- the working poor -- are mostly women and have little education. Working full time, they can expect to earn a before-tax annual income of $17,600 for full-time work -- $3,500 less than the 2006 low-income cut-off (i. e., the poverty line) of $21,202.

-- Bob Barnetson

Monday, May 10, 2010

Health Effects of Shift Work

Approximately one-quarter of Canadian workers are shift workers. Excluding occupations requiring 24-hour staffing (e.g., emergency services), shift work is a way for employers to maximize the use of machinery and other physical capital.

The Institute for Work and Health recently released a summary of its symposium on the health effects of shift work. A high-level briefing is available here. Among the more alarming impacts of shift work on workers are:

1. Shift work appears to elevate the risk of breast cancer and possibly colorectal cancer. There are some studies suggesting that shift work may also elevate the risk of preterm delivery, gastrointestinal disorders and mental health problems.

2. The level of workplace injury is higher among shift workers than among those who work regular shifts. This is particularly the case for shift workers working at night. Among the issues contributing to this is that government regulation (e.g., inspections) of workplaces tends to occur during week days.

It appears possible to mitigate these effects through scheduling changes that constrain shift-work during non-regular hours.

This discussion suggests that the organization of work is not solely a technical undertaking focused on optimizing production schedules. Rather the organization of work can have a significant effect on the health and safety of workers.

-- Bob Barnetson

Friday, May 7, 2010

Injury statistics in Alberta

There has been a flurry of media coverage about workplace injury in Alberta following an April 2010 report by Alberta's auditor general. This report found serious weaknesses in Alberta's occupational health and safety (OHS) system.

The main weaknesses included the absence of a clear system by which to escalate enforcement activity when persuasion is ineffective and the existence of a group of persistent violators (who had higher injury rates), including some who continue to hold Certificates of Recognition for their injury prevention work!

While these issues are important, the report ignores the broader issue of whether overall enforcement activity is adequate to protect workers (the ultimate purpose of the OHS Act and Code). The Alberta Federation of Labour quickly released a report that highlights some of the failings of the OHS system.

Both the AFL and government reports use workers' compensation board (WCB) statistics as a measure of injury. For example, in 2007 the WCB reported it accepted about 175,297 new accepted injury claims and 154 fatalities. These numbers do not address injuries not report, claims not accepted and injuries in workplaces not covered by workers' compensation.

The real number of injuries in 2007 was more like 321,378. If these injuries were distributed evenly throughout the workforce, that would be about 1 in 5 workers. These numbers largely exclude most instances of occupational disease. If included, these would further drive up the number.

This high number of injuries suggests that (1) many workplaces are dangerous and (2) OHS enforcement is not effective. Ineffective enforcement is easily explain: there are simply not enough resources and no political will to enforce the law. Consider these statistics:

Inspectors: In 2008, Alberta had 84 health and safety inspectors, 144,000 employers and 2,013,300 employees. This means there was 1 inspector for every 1714 employers (many of whom have more than one worksite) and every 23,968 workers. These ratios explain why it takes the government an average of 18 days to respond to a report about an unsafe worksite. Even when unsafe conditions are found, it takes an average of 86 days to remedy them.

Inspections: The Auditor General’s report suggests there were 9600 site visits in 2008, although many of these inspections were repeat visits to the same employer. It may be more accurate to look at 2004 data on the number of worksites inspected (5237). If we (charitably) assume each of Alberta’s 140,000+ employers had only one worksite, it would take more than 26 years for every worksite to receive a single visit. In 2007/08, inspectors issued 3392 orders, approximately one per 100 workplace injuries.

Prosecutions: In 2008, Alberta reported 22 successful prosecutions under the Occupational Health and Safety Code for violations going as far back as 2004. During this time, Alberta recorded approximately 700 occupational fatalities. The largest fine was $419,250 for a 2004 violation. That sounds impressive. When compared to the company’s annual revenues of $47 million in 2007, such fine is akin a person with an annual income of $50,000 getting a $440 ticket—about same fine you’d get for doing 80kmh in a construction zone. Prosecution numbers actually dropped in 2009, with only 9 prosecutions and the highest fine being $300,000.

The upshot is that (1) Alberta employers are unlikely to be inspected even if there is an injury, (2) they face little chance of prosecution even if they kill or maim a worker, and (3) prosecution results in a relative small fine. Given this, it is hardly surprising that injury numbers are high.

The Minister of Employment and Immigration Thomas Lukaszuk recently patted his department on the back, noting a decline in injury numbers in 2009. “We’ve made good progress reducing workplace injuries but we can still do better.” Setting aside that this reduction likely has more to do with declining employment in dangerous occupations as a result of the recession than anything his department has done, Alberta certainly can do better. A place to start would be with OHS funding.

In 2008/09, Alberta spent about $23.3 million on OHS, of which $21.7 million came from the WCB (i.e., surplus employer premiums). That is to say, the government contributed about $1.6 million to OHS work. What this suggests is that ineffective OHS enforcement is a direct result of the government choosing to restrict funding. In this way, Alberta's injury rate is a political choice about funding levels and how much intervention in the workplace is acceptable rather than being the product of chance or carelessness.

-- Bob Barnetson