When the Emergency is Chronic

On February 11, the government of Nova Scotia announced it was “pleased to see” that “Nova Scotia’s economic outlook continues to be positive.”

The joy, expressed in a press release from Finance and Treasury Board Minister Karen Casey, was sparked by Statistics Canada’s January Labour Force Survey which showed the number of employed Nova Scotians was up by 6,100 to 465,100 — the “highest level of employment on record for the province.”

Casey continued:

The monthly gain included 3,600 full-time jobs and 2,400 part-time jobs. Compared with January 2018, Nova Scotia employment is up by 11,600, which included full-time employment increases of 10,100 and part-time gains of 1,400.

Unemployment was also the lowest on record. The unemployment rate fell from 7.1 per cent in December to 6.9 per cent in January. Since January of last year, the unemployment rate has fallen from 8.2 per cent to 6.9 per cent.

I had a celebration planned — I was going to sing the Internationale and eat a cake shaped like a lunchbox — but I made the mistake of first listening to Doug Lionais on CBC’s Information Morning Cape Breton.

Lionais, an assistant professor at CBU’s Shannon School of Business, agreed the employment numbers were good for Nova Scotia but not so much for Cape Breton.

We bucked the trend in January.

So I canceled my celebrations and instead called Lionais to talk about the numbers in greater detail.

 

Good news

He began by linking the Nova Scotia employment narrative to the larger, national narrative: Canada’s unemployment rate hit a 43-year low of 5.6% in November 2018. (It crept back up a little in January, to 5.8%, but that was because more people were looking for work.)

And while Lionais agrees there is much to celebrate in this — and in the Nova Scotia numbers — he adds a couple of caveats. First, the national growth has been driven by consumer confidence (people buying things, eating in restaurants, etc) and both the Conference Board of Canada and the Bank of Canada are warning this will likely decline in 2019 (in fact, the Conference Board says that despite gains in January and February, “the index remains well below levels seen over much of the last 18 months.”)

Second, says Lionais:

[O]n the national level, while the number of jobs is going up, average wages are still declining or stagnating.

Or as the Canadian Press put it:

Year-over-year average hourly wage growth in January for permanent employees was 1.8 per cent, which was up from December’s reading of 1.5 per cent, but still well below its May peak of 3.9 per cent.

Even with the improvement, the January number remained just under the inflation level, which suggests Canadians’ salaries could have a tough time keeping up with rising prices for consumer goods.

Still, even with those caveats, says Lionais:

These are really good numbers for Canada and for Nova Scotia and that should be celebrated, we’re in a fairly good economic time at the moment, jobs are going up more people working is a generally positive story…

[O]n the Cape Breton side of things, this is where it’s a sad story.

 

Bad news

Maybe the best way to begin is to show you the numbers.

Here is the chart issued by the Nova Scotia Department of Finance on February 11:

Source: NS Department of Finance

Source: NS Department of Finance

 

Here’s the best version of that chart I could create for Cape Breton — I got the figures from the provincial Finance Ministry (which gets them from Stats Canada) but they’re not seasonally adjusted. Which means seasonal fluctuations (like, declines in employment in industries like construction and tourism over the winter) have been eliminated from the NS figures, but not from the Cape Breton figures.

 Jan '18Jan '19ChgPct Chg
Population (x 1,000)104.9104.3-0.6%
Labor force (x 1,000)55.154.4 -1.3%
Employment (x 1,000)47.245.3 -4.0%
Full-time employment (x 1,000)37.437.70.8%
Part-time employment (x 1,000)9.87.6-22%
Unemployment (x 1,000)7.99.115%
Unemployment rate14.3 16.72.4
Participation rate52.552.2 -0.3
Employment rate45.043.4-1.6

All the readings that are so positive for the country and the province — employment rate, unemployment rate, participation rate — are negative for Cape Breton. Lionais says this “wouldn’t be such a big deal on these month-to-month [statistics] if the overall trend was different,” but he’s got data going all the way back to the mid-80s and:

[T]hroughout that whole time, Cape Breton’s unemployment rate has been at least double and sometimes close to triple the national level. And I’m sure if I got data going from the mid-’70s or so, we’d still see that.

So, the story about Cape Breton is we are in this chronic place of crisis and it’s not getting better…[T]he only time we’ve ever come below double [the national unemployment rate] — and just below double — is when the national economy collapses. So in the dot.com bubble, the 2008 crisis, when the national economy takes a hit and lays off a bunch of people, that’s when our numbers, in relation [improve]. But we’ve essentially been in chronic crisis for decades.

Here are Lionais’ numbers from 1987 to 2018. (He notes that they are based on two separate Statistics Canada databases, one from 1987 to 2000, the other from 2001 to 2018 which means there “may be some continuity issues” from 2000 to 2001, but “the gap that is apparent in the comparison remains throughout.”)

 

Cape Breton Unemployment Rate 1987-2018

Region19871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018 
Cape Breton 1916.717.616.418.821.425.323.320.623.119.81817.617.617.215.115.815.614.413.113.512.815.5161614.414.3151514.714.115.1
Canada8.87.87.58.110.311.211.410.49.59.69.18.37.66.87.27.77.67.26.86.366.18.38.17.57.37.16.96.976.35.8
CB:CAN Ratio2.15909090909092.14102564102562.34666666666672.02469135802471.82524271844661.91071428571432.2192982456142.24038461538462.16842105263162.406252.17582417582422.16867469879522.31578947368422.58823529411762.38888888888891.9610389610392.07894736842112.16666666666672.11764705882352.07936507936512.252.09836065573771.86746987951811.97530864197532.13333333333331.9726027397262.01408450704232.17391304347832.17391304347832.12.23809523809522.6034482758621
NS1210.29.910.712.113.114.313.512.212.412.210.59.69.19.79.69.18.88.47.987.69.29.699.19.198.68.38.47.5

 

Said Lionais:

If the country had the same unemployment rate as Cape Breton does, even for a quarter, we would have a national emergency. Everything else would stop and all the focus would go onto how do we deal [with this]. It would take the complete attention of all politicians and we’ve just been living with it for decades.

 

Post-industrial

The question then, is why? Why, even in a generally “have-not” province like Nova Scotia, is Cape Breton still such an outlier?

Lionais says there a number of issues at play, some of which are beyond our control as a region, as a province and even to some degree as a nation:

What has gone on in Cape Breton is not unlike what went on and is continuing to go on in the Rust Belt of the US, the de-industrialized regions of Germany and England and so forth, so we’re not completely unique in the world in that sense…

That being said, the industrial policy of Canada has really favored Central Canada and increasingly Western Canada at the cost of Eastern Canada and that’s been going on — Donald Savoie will say that’s been going on since Confederation…Provincially, we have a very concentrated provincial government, so most of those provincial government jobs are in the Halifax region and not out to the regions…[T]he CBRM, as the second-largest urban area, has very few of those jobs, especially when you look at other provinces. So, some of those things would make a difference — those are good-paying jobs that could anchor a bit more economic activity in these places.

Lionais noted that, since the demise of the steel and coal industries in Cape Breton, we’ve become to a rather incredible (to my mind) sense a remittance society, dependent on money earned by Cape Bretoners working elsewhere:

I do a lot of work on mobile labor, people who live here but work primarily in the Oil Sands…To a large degree, people who are doing that have sort of held the place together, economically speaking, you know. It’s changed now, there’s fewer now, but at one point, 2014, 2013, there were as many people working out West, traveling back and forth, as there were working in Devco in the early ’80s. So we’ve essentially replaced those lost industries with these mobile workers who are going back and forth, which is economically beneficial but it brings all kinds of other social aspects that are not always as positive.

I suggested that the current state of affairs is also an indictment of decades of regional economic development activity in Cape Breton and Lionais agreed, although again, with a caveat:

I think it’s fair to be quite critical of the economic development activity that’s gone on in the region and in Cape Breton in particular…We’ve tried a lot of things and if you look at the results, in terms of the big picture results,…we haven’t turned this place around in any sense.

At the same time, I’m also somewhat compassionate to the people in those positions, it’s a very, very difficult job that they have. There’s no easy answer to this. [Laughs] If you threw me in that position I’m not sure what I would do.

But the “big story” here, he said:

…is that the national and the international economy doesn’t work for Cape Breton anymore and so, our economic development efforts really have to start thinking in very alternative ways of what economic development means, what prosperity means, for us. Because we’ve essentially been left out of that national/international economy for decades.

In fact, we’ve been left so far out that it’s had a perverse silver lining. Lionais explains:

When the 2008 crisis hit, to some extent, I mean, people in Cape Breton were hurt by that in different ways, you know their pension plans and things like this, if they had stock, but to a large degree we didn’t feel it because we were already there and more.

 

Neoliberalism

Before I touch on some of the possible “alternative” ways to think about economic development and prosperity, I’d like to consider some of the more traditional ways. In particular, I’d like to look at an article by Constance (Connie) deRoche, an assistant professor of Anthropology at what was then UCCB, called: Workfare’s Cousin: Exploring a Labour-force Enhancement Experiment in Cape Breton.

The article was an eye-opener for me when I stumbled across it recently because, although it was written almost 20 years ago (it appeared in The Canadian Review of Sociology and Anthropology in 2001) it offers a definition of a word that is seemingly everywhere these days: “neo-liberalism.”

DeRoche invokes the term to explain the theory underpinning the Cape Breton job-training program (the “cousin” to “workfare”) she was writing about. But I think it also helps to understand the current economic situation in Cape Breton, so bear with me, I’m going to quote deRoche’s article at some length:

It is currently widely recognized that, since the 1970s, Western nations have taken a turn to the political right. The New Rightist economic ideology has sometimes been called neo-conservative…but is more widely recognized by the term neo-liberal…since, as Broad and Anthony point out, the New Right rests more on the “pro-capitalist laissez-faire ideology of classical liberalism than on principles of classical conservatism which, while accepting social inequality, still incorporated a notion of society and social obligation”…

…In essence, New Right ideology argues that market forces must be freed to exert their discipline in order to realize economic efficiencies and thus correct problems that were produced by misguided, politically motivated economic strategies. Neo-liberalism, in other words, rejects the Keynesian orthodoxy of the post-War…era, which vested, in a strong state, responsibilities for social welfare and economic regulation…

In the neo-liberal view, government is inimical to the panacea of the free market. Public services are judged wasteful and inefficient. The welfare state is criticized as irresponsible overspending that creates massive debt. Privatization and radical social-spending cuts are said to be needed to reform a profligate, out-of-control system. That is, neo-liberalism suggests that we were for decades living beyond our means, and must pay the price for it by eliminating deficits and paying down the debt; our expectations must be adjusted to realistic standards, and that means that we cannot continue to underwrite customary public services.

In deRoche’s telling, the neo-liberals (and I’m putting them in the past tense, although they’re still very much in control) had you coming and going. Even when it could be demonstrated that cutting social programs often cost more money than it saved, proponents would argue the cuts were necessary to end the culture of “dependency” the social programs had created. (Sound familiar?)

The project deRoche was writing about in the article, the Cape Breton Community Employment and Innovation Project (CBCEIP), was a federal pilot targeting social assistance and employment-insurance (EI) recipients, who would give up those benefits to work on projects organized by community groups (but funded by the government).

The benefit for the workers, besides the money, was supposed to be “informal” skills training. But as deRoche points out, the jobs to be created by the program were expected to be low-skill and the organizers actually admitted to her that participants would be unlikely to find work locally once the program ended.

Moreover, participation made no sense for people like single mothers because any additional income they generated would be eaten up by transportation, child-care and other out-of-pocket expenses associated with going out to work.

The actual advantage to the program, deRoche argued, was ideological:

Participation represents a moral rather than a material benefit: it offers a means to enact the work ethic and avoid allegations of irresponsibility through dependency.

DeRoche also argued the program fit into the federal government’s privatization agenda, since the money, instead of being given directly to the people, was funneled through private (albeit non-profit) enterprises.

But when she put these questions to an unnamed federal government spokesperson, he told her she had it all wrong — people weren’t being trained to work in Cape Breton. No, he told her:

…Cape Breton will not be able to sustain its present population of about 116,000 but will rather stabilize at some 90,000 and…Project participants will be better equipped to find work elsewhere.

Out-migration, deRoche writes, while not part of the program’s explicit agenda, was something government personnel “accept[ed]…as a solution to Cape Breton’s woes.”

 

Alternatives

I put Lionais on the spot and asked him to comment on one “alternative way” of promoting economic development: basic guaranteed income (an issue the Spectator‘s Dolores Campbell has written about at length), in which context I raised something I’ve been reading a lot about lately — the effect increasing automation is expected to have on the workforce. The fact that we simply may not need as many workers.

Lionais said he’s “a big fan of basic income schemes, depending on how they’re built.”

There are, I want to say, very much more progressive versions of this, there’s other more sort of market-oriented versions of it as well, or neoliberal versions of it. I think that is a type of solution that, not just regionally, is going to be more and more needed, nationally and internationally as well…

The basic income approach is unusual in that it is a very non-mainstream way of thinking about the economy but there’s branches of both the political left and the political right who are very supportive of it.

Even in the US some of the conservatives would favor it because it is a sign of small government. And so it’s, “Here’s a bit of money and then don’t ask us for anything else,” and…the government gets out of your life kind of thing. Which to me is not a very compassionate way of thinking through this kind of thing.

What I should have asked him about was social enterprises, place-based businesses and cooperatives, because these are areas he’s researched. (I will just have to call back for a future article).

I did read an editorial he wrote on the subject of cooperatives (with Marcelo Vieta), in which they argue that, “guided by motivations beyond just returns and profits” cooperatives:

…may choose to maintain production in a location that is not sufficiently viable for investor-owned firms, may choose to hire “less productive” workers from marginalized populations (as with Italy’s social cooperatives), and may choose to purchase locally produced inputs despite cheaper imports…Cooperatives are effective tools for community development because they can, and often do, make community interest a priority over short-term financial gain. Operating as place-based businesses …they do so by choosing to locate their business functions in particular places for social rather than (purely) financial reasons…

The potential to unlock cooperatives’ transformational impacts on communities necessitates that they be grounded in broader issues of socio-economic justice and alternative visions of socio-economic organization.

I’ve also been reading Rutger Bregman’s Utopia for Realists and would add that how we measure economic development also needs to change. Bregman takes on the concept of Gross Domestic Product (GDP) like Leapin’ Lanny going after No Class Bobby Bass:

Besides being blind to lots of good things [like cooking and housework and volunteer labor], the GDP also benefits from all manner of human suffering. Gridlock, drug abuse, adultery? Goldmines for gas stations, rehab centers, and divorce attorneys. If you were the GDP, your ideal citizen would be a compulsive gambler with cancer who’s going through a drawn-out divorce that he copes with by popping fistfuls of Prozac and going berserk on Black Friday. Environmental pollution even does double duty: One company makes a mint by cutting corners while another is paid to clean up the mess. By contrast, a centuries-old tree doesn’t count until you chop it down and sell it as lumber.

It strikes me as I’m writing this that the existence of a book called Utopia for Realists — and the notoriety its author gained for challenging billionaires at Davos — suggests the world is starting to think about economic development in alternative ways. Wouldn’t it be nice, as Cape Bretoners, to be at the head of a positive trend for once?

 

Ray of hope?

As you can probably tell from that last paragraph, I would really like to end this piece on a high note. So I asked Lionais if he could think of one and he said:

The data is, it should be, alarming and I don’t think you should try to gloss over it too much.

The continuing remarkable thing for Cape Breton is the commitment a number of people have to living here and making it here no matter what. And that one’s pretty remarkable to me.

I met an old friend in the grocery store last night and he works…from home but on a remote team, and he acknowledged that in a lot of ways, his life could have been better if he’d moved away somewhere. But he wanted to be here — just, to be here. And I think that has always been the strength and the seed of something hopeful here.

 

 

 

 

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