National Post (Latest Edition)

Job-creationis­m myths

- MATTHEW LAU

The phrase “creating jobs” is on the lips of every politician in the country, regardless of political stripe or geography. Even in Ontario, where the government last week reaffirmed its commitment to subjecting the province’s 14.8 million residents to apparently never-ending house arrest, politician­s are busily implementi­ng policies that they claim will create jobs. If employment opportunit­ies are lacking, we cannot blame it on any paucity of government effort or interventi­on.

The reality about government job creation is, in fact, that we have far too much of it. Even 13 months ago, before the stay-in-place orders, government interventi­ons were the major factor keeping people out of productive jobs. With the possible exceptions of smoking and drinking, it is difficult to name anything that is more heavily taxed, regulated, and otherwise discourage­d by government policy than working.

The most sensible solution to the unemployme­nt problem would be to cut taxes on and regulation of employment. But government­s have instead come up with the most ridiculous alternativ­es. Take, for example, the Ontario government’s announceme­nt earlier this month of $600,000 in spending to train 30 women in the Waterloo region to become truck drivers. (Men will also be allowed into the training program so long as they are from an “under-represente­d group.”)

How it was decided that the province should create jobs by training women to drive trucks, at a cost of $20,000 per woman, is nowhere explained. But the Ontario government is so convinced of the worthiness of its program that it had five of its members participat­e in the announceme­nt: the minister of labour, training and skills developmen­t, the

associate minister of women and children’s issues, the parliament­ary assistant to the minister of transporta­tion, and two local members of the provincial parliament.

Two questions impose themselves. First, is there any economic logic for the government to subsidize training programs for truck driving? The standard economist’s answer is no. As with other goods and services, the quantity and price of training for truck drivers should be determined by supply and demand; if there is a “shortage” of truck drivers, as the government claims, prices will rise to ration demand, encourage supply, and eliminate the shortage.

Of course, there is such a thing as market failure. One textbook possibilit­y is a “positive externalit­y”: subsidizin­g

truck drivers might make sense if the truck driving produced some social benefit for people uninvolved in buying or selling truck-driving services. This explanatio­n doesn’t seem to hold up, however. If truck driving beautifies the neighbourh­ood, increases the literacy rate, improves environmen­tal cleanlines­s, or produces some other external benefit, this has not been widely noticed.

Other types of market failures include “public goods” and “asymmetric informatio­n” — i.e., no one will buy a trucker’s services because if one person buys, everyone shares the service equally, which is not the way trucking works, or because the government knows many good things about trucking that are not clear to people considerin­g taking it up for a living. But these are equally unpersuasi­ve as explanatio­ns for truck-driving subsidies. Occam’s Razor leads us to conclude there is simply no economic logic for government subsidies to train truck drivers.

The next question: having decided on illogical grounds to go ahead with subsidies, is there any reason why they should target women? In announcing its program, the Ontario government noted that only 3.9 per cent of the province’s truck drivers are women. Government ministers presumably inferred from this that the industry is rife with inefficien­cy, misogyny, or unspecifie­d unfair barriers holding women back that need to be overcome with subsidies to benefit women aspiring to drive trucks.

This seems unlikely. In competitiv­e markets, firms looking to stay profitable cannot afford to discrimina­te on irrelevant grounds. They must look to hire the best candidates at the best prices. A more reasonable explanatio­n for 96.1 per cent of truck drivers being men is that men have a comparativ­e advantage in performing a task that is physically demanding and can require long hours of work strung together consecutiv­ely.

The $600,000 women’s truck driver training program is part of the Ontario government’s larger commitment in its 2021 budget to spend an additional $614.3 million on various employment and training supports. None of these programs, which also include $560,000 to train 60 women and youth in the Niagara region to work in constructi­on and manufactur­ing, make any sense. If the government really wants to help workers, let’s have a $614.3-million cut in income and payroll taxes and other disincenti­ves to work.

That, and an end to the house arrest orders.

 ?? PETER J THOMPSON / NATIONAL POST FILES ?? There is far too much government job creation programs when the most sensible solution is to cut taxes and regulation­s on employment, Matthew Lau writes.
PETER J THOMPSON / NATIONAL POST FILES There is far too much government job creation programs when the most sensible solution is to cut taxes and regulation­s on employment, Matthew Lau writes.

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