Behind the Numbers

David Macdonald’s Blog Posts

David Macdonald is an economist with the Canadian Centre for Policy Alternatives (http://www.policyalternatives.ca).

The EI “Job Credit”: try “Job Killer”

September 11th, 2014 · David Macdonald · 2 Comments · Employment and Labour, Employment Insurance

This morning the federal government announced a “Small Business Job Credit”. The idea is that small businesses with a payroll of under about $550,000 a year will have a portion of what they paid in EI refunded to them. Only the employers get some of their money back, not any of the workers. Also, this is at a time when EI is so restricted that 6 out of 10 unemployed Canadians can’t even get it.

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Tim’s + BK = $ for Canada right? …. Wrong! (in one table)

August 25th, 2014 · David Macdonald · No Comments · corporations, Economy & Economic Indicators, Taxes and Tax Cuts

Big news today that Burger King, a US company, is planning to buy Tim Horton’s, a Canadian one. This is another in a string of “tax inversion” deals where US corporations move their corporate headquarters from the US to elsewhere to avoid US taxation. They don’t actually change anything or move anyone outside of their accounting fairyland. Instead, they just check some different boxes on their income tax forms and ‘poof’ save millions in taxes.

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The Truth Behind Corporate Tax Cuts (in one chart)

August 19th, 2014 · David Macdonald · 10 Comments · corporations, Economy & Economic Indicators, Taxes and Tax Cuts

Corporate Canada has reached a milestone in 2014. For the first time ever, it is now hoarding more cash than the national debt. What that means is that in one fell swoop, Canada’s corporations could pay off our entire national debt with just the cash sitting in their banks accounts, nevermind their other assets.

Corporate cash hoarding really ramped up as corporate tax rates were slashed in half from 31% in 1997 to 16% today. Corporate Canada argued in the late 1990s that they’d use that extra cash to build more factories, train more workers and make Canada more productive. Turns out … not so much.

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What’s wrong with the tar sands boom? (in one graph)

August 5th, 2014 · David Macdonald · 1 Comment · Economy & Economic Indicators, Environment, Income Inequality, Uncategorized

So let’s say that you don’t care about pipelines. Let’s say climate change doesn’t concern you or your children. Let’s say you aren’t concerned about the radical alternation in the landscape of northern Alberta.

What if when I say “tar sands” and you say “Show me the money!”

Well even if you didn’t care about the above, you should care about the money and where it has been going since the tar rush began. The value of crude oil since 1986 has risen 50% from $379/m3 to $570/m3 ($2010). That has created a resource rush like Canada has never seen. At its epicentre, the richest Calgarians have seen their average incomes rise over $600,000 (inflation adjusted) an increase of over 180% since 1986…make it rain!

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EI is Not Actually Helping the Poor

July 14th, 2014 · David Macdonald · 6 Comments · Employment and Labour, Employment Insurance, Income Inequality

Who does employment insurance help? It seems like an obvious question. One would assume that EI is for Canadians who’ve lost their jobs and are therefore going to be low income. EI is meant to support them through hard times as they hopefully get another job and get back on their feet.

But…. what if we look at what income quintile EI recipients formerly found themselves? Were they low-income, middle class, or rich before they got laid off? I did some digging and I was surprised by the result.

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Temporary Foreign Workers: A Progressive Solution

June 26th, 2014 · David Macdonald · 5 Comments · Employment and Labour

The Temporary Foreign Workers (TFW) program has become such a mess that its complete elimination for low-skilled occupations is now an active possibility. Business, for its part, is screaming bloody murder that the cancellation will force the shutdown of entire sectors. They claim even offering $100/hour or $180,000/year to serve coffee at Tim Hortons will be inadequate to attract applicants. To boot, there is clear evidence that hiring TFWs instead of, say, Canadian youth is bad for Canadians looking for work.

As a progressive, I’ve wrestled with what to do with this mess. Should the whole program just be cancelled? If so, what happens to the actual Temporary Foreign Workers and, as a progressive, should I even care?

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Wealth Inequality: Going from bad to (net) worth

February 26th, 2014 · David Macdonald · 3 Comments · Economy & Economic Indicators, Income Inequality, Poverty and Income Inequality

Yesterday, Statistics Canada released its 2012 wealth survey (Survey of Financial Security). Two previous wealth surveys were published in 2005 and 1999 with a similar methodology.

We often talk about income inequality, which examines what middle class and rich Canadians make in a year. However, wealth inequality examines middle class and rich Canadians’ net worth, including their house, RRSPs, savings, car, etc. If income inequality—where the top 20% of families get 43% of the income— is concerning, then wealth inequality should be downright shocking. The top 20% of families in Canada own 67% of all net wealth (although this is down slightly from the high of 69% of all wealth in 2005).

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Budget 2014: Let stagnation reign

February 11th, 2014 · David Macdonald · No Comments · Alternative Federal Budget, Federal Budget

As Canada slogs through its anaemic recovery, the federal government again appears to be happy to drive down growth.  In fact since the last budget, economic growth for 2014 was revised down by a full point.  The future two years out looks rosy until we get there and then—surprise!—stagnant growth continues to be the norm.

The labour market, despite a whole booklet on it in the budget documents, is in much worse shape than advertised. Of the decline in the unemployment rate since the worst of 2009, 20% was due to Canadians finding jobs, obviously a positive thing, but 80% was due to Canadians giving up their search.  In fact the situation is much worse for youth where 100% of the drop in their unemployment rate was due to young people giving up their search.

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Alternative Federal Budget 2014: Striking a better balance

February 5th, 2014 · David Macdonald · No Comments · Alternative Federal Budget, Economy & Economic Indicators, Federal Budget, Income Inequality

The following remarks are excerpted from the 2014 Alternative Federal Budget press conference, featuring Armine Yalnizyan, David Macdonald and Bruce Campbell (February 5th, Parliament Hill).

This year is our 19th Alternative Federal Budget (AFB).

From the beginning, we’ve developed a rigorous economic and fiscal framework for our Budget; and we have acquired an enviable reputation for more accurately forecasting fiscal balances than the  Department of Finance. Organizers of a recent international conference in Berlin recently called our alternative budget the leading example of its kind in the world. Former parliamentary budget officer Kevin Page has praised it, as have many academic economists.

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What’s a province to do on CPP expansion?

December 18th, 2013 · David Macdonald · No Comments · Economy & Economic Indicators, Ontario, Pensions, Poverty and Income Inequality

It appears that a Canada-wide deal on CPP expansion is a bust, as Ottawa was the only objector and Ontario is now vowing to go it alone. It doesn’t appear that the Ontario government has a concrete proposal as of yet, but they will develop one in the coming months. It is truly unfortunate that a countrywide deal was not possible at this point. What does this mean for Canadians? It means that if they move around the country throughout their career they will receive varying amounts of post-retirement support, given the different provincial pension schemes. This will certainly make it much more difficult to plan for retirement. However, given Ottawa’s recalcitrance, expansions by the provinces is better than nothing for middle class Canadians.

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