Responding to the economic myths of Alberta’s trade minister

Over the weekend, I published a news story that reported on Alberta’s job numbers.

Tanya Fir, the minister over economic development, trade, and tourism, released a statement the day before regarding the update from Statistics Canada. Given that she left out some information in her statement, I thought I’d take the liberty to respond to it here.

It’s welcome to see job increases for the third straight month, with 187,000 Albertans returning to work over this period.

Let’s remember that even with jobs increasing by 187,000, there are still 174,100 jobs that were lost from the pandemic that have yet recovered. And that’s not even including the 52,600 full-time jobs lost between July 2019 and February 2020, before the pandemic.

Yes, more jobs filled is good news, but we’re nowhere close to being where we were.

“But we know that far too many Alberta families are still out of work and worried about their futures. The global pandemic and the opportunistic Russia-Saudi oil price war has sent shock waves throughout the world economy, and Alberta is not immune from the effects. What’s more, many Albertans have never fully recovered from the downturn in 2014–15.

Here’s the thing. It’s true that the oil-price war and the pandemic increased unemployment. Record unemployment, for that matter. However, those weren’t the only contributing factors.

The Alberta government introduced significant budget cuts in both last autumn and this past spring. These cuts resulted in tens of thousands of publicly-funded workers becoming unemployed. These were, of course, public servants, but they were also teachers, nurses, firefighters, support staff, and so on.

Last July, there were 3,856,400 public sector workers in Alberta. Last month, there were 3,782,100, a loss of over 74,000 public sector jobs.

Those were all jobs that the provincial government had direct control over. The number of unemployed people in Alberta right now could’ve been under 100,000. The UCP government chose to add an extra 74,000 workers onto the unemployment rolls.

That’s 74,000 people not spending their paycheques at Alberta businesses.

I wonder why she left that part out.

• Most of the $10 billion was already announced prior to the Recovery Plan.
• The corporate income tax cut from 12% to 8% won’t create jobs
• How many of the jobs created by the $28 million agriculture investment will be full-time permanent jobs?

While some demand that Alberta hike taxes on job creators by a whopping 50 per cent, we’ve seen before the disastrous effects of such policies in economically uncertain times.

I’m not sure what she’s referring to here. I know that if we went from the new 8% corporate income tax rate to the 12% rate it was just over a year ago, that would technically be a 50% increase. Is that what she’s talking about? Because if so, that’s just a silly way to frame it. It’s only a 50% increase because they cut it by 4 points. Had they left it alone, it wouldn’t be a 50% increase.

Also, the term job creators is disingenuous. Business owners don’t create jobs: consumers do.

Taxes are paid out of profits. Any decrease to the amount paid in taxes means an increase to the amount retained as profits. Profits are basically revenue minus expenses. Expenses include employee wages.

If a company hires new workers, those workers’ wages are already paid before the company even pays taxes. Companies don’t hire workers because their profits are higher; they hire workers because they have increased demand for their products and services. And that demand comes from one place: customers.

The more consumers have to spend, the higher the demand for products and services is. The higher consumer demand, the more jobs created. And the money consumers have to spend comes from their paycheques. Had the provincial government retained those 74,000 workers, that would be 74,000 paycheques being spent in the economy, driving up demand, production, and jobs.

Consumers are the real job creators.

Alberta’s government will not pursue the destructive policies of the past.

The UCP’s entire economic plan is built on destructive policies. That’s why in nearly a year and a half, we still haven’t seen a net increase in full-time jobs.

Originally published at https://kimsiever.ca on August 10, 2020.