Ontario wages trail peer U.S. wages by 23% in competitive industries: report
CNEWS
By Peter Worthington
TORONTO (CP)—Whether trading stocks at a Toronto brokerage firm or making beds in a Niagara Falls hotel, many Ontario workers are making significantly less than their U.S. counterparts.
Wages for Ontario workers are 23 per cent less than those in the U.S. in the industries that are most important to Ontario’s prosperity, says a preliminary report released Friday by an institute supported by the provincial government.
Ontario firms are not as productive as their American equals because they don’t face the same competitive pressures that develop in industry clusters across the border, said James Milner, executive director of the Institute for Competitiveness and Prosperity.
“Those two factors ... we think go together to cause our firms to be not as productive as they could be, and then, with that lower productivity, wages tend to go down,” he said in an interview.
The institute assessed the impact of market structures on Ontario’s competitiveness to help understand the causes of the province’s $4,118-per-capita prosperity gap compared to a peer group of U.S. states.
The gap refers to how much Ontario’s gross domestic product per person—a measure of economic productivity that drives standard of living—trails the median performance of a peer group comprising the largest U.S. states and Quebec.
Roger Martin, chairman of the institute and dean of the Rotman School of Management at the University of Toronto, said governments “under-invest” for future prosperity.
Joe Cordiano, Ontario’s economic development and trade minister, said the government is after a more “high-powered economy,” and that the institute’s findings point them in the right direction.
“One of the things we are focusing on is a cluster approach to the economy,” he said, citing a $63-million government program announced last month aimed at helping researchers commercialize their products. “We are looking at those areas where we have more value-added traded goods.”
But labour leaders say academics and the government should spend less time figuring out how to do things more cheaply, and focus on how to build better markets and create more jobs.
Many companies deemed to be both productive and profitable are still trying to claw back benefits from workers, claiming they can make the product cheaper elsewhere, said Wayne Samuelson, president of the Ontario Federation of Labour.
“My immediate reaction is that this is a bunch of academics talking to a bunch of business leaders and digging up numbers that, while they may be important in the academic and business world, they really don’t talk to what working people are concerned about now,” he said.
But Cordiano said the report is looking at a bigger picture.
“It’s not about carving up the pie into smaller and smaller amounts,” he said. “It’s about increasing that pie to ensure that there’s more value and that our workers then are paid at the highest rates in the world.”
The report showed that Ontario had a “good mix” of industry clusters—such as metal manufacturing—but discovered they were not as effective as the same clusters in peer states.
In lower-wage clusters, such as furniture and textiles, Ontario’s wages match or are close to results in peer states, the report said. In natural resource industries, Ontario’s wages outperformed peer states by 20 per cent, and in local industries, such as retailing and personal services, Ontario’s wages were only 11 per cent behind.
But in higher-wage clusters, such as financial services and information technology, Ontario’s wages lag considerably, trailing peer states by 37 per cent and 54 per cent, respectively.
Milway said the institute is still trying to understand why this is happening.
“These are ones that we’re scratching our heads about,” he said.
Toronto’s financial services sector, for example, is a strong cluster, but compared to those in Boston or New York, it comes up short.
U.S. companies deal with bigger markets and more sophisticated products and services, Milway said, adding that Ontario needs to find its niche markets.
“These are ones that we’re scratching our heads about,” he said.
Toronto’s financial services sector, for example, is a strong cluster, but compared to those in Boston or New York, it comes up short.
U.S. companies deal with bigger markets and more sophisticated products and services, Milway said, adding that Ontario needs to find its niche markets.
