Job-creationism myths
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.