Higher union wages boost economy: CLC

Carleton professor says labour group’s argument ‘bogus’

The difference in wages between unionized and nonunionized workers in Ottawapumps an extra $78 million into the local economy, says a new study released Wednesday by the Canadian Labour Congress.

The CLC report looks at 30 individual communities, as well as provinces and the country as a whole, and finds that, on average in Canada, unionized workers earn almost $5 more an hour than non-unionized workers.

That figures grows to $6.93 more per hour for the estimated 274,400 unionized workers in the National Capital Region.

The average hourly wage for unionized workers in Ottawa-Gatineau was $31.52, compared with $24.59 for workers who don’t belong to unions.

The CLC says the so-called “union advantage” — the difference in wages between union and non-union payrolls — translates into more than $78 million every week in spending at local businesses and for community services.

“People spend most of their money where they live. Where else would they spend it?,” said Ken Georgetti, the CLC’s president.

He said the additional money is good for the “vibrancy” of the community, helps local businesses and improves the quality of life in communities.

Past CLC surveys have shown that places with higher union density have a greater mix of businesses and more service sector jobs in chiropractic services, optometry and physiotherapy — all things not part of wage packages but often contained in union benefits packages, Georgetti said.

But Ian Lee, an assistant professor at Sprott School of Business at Carleton University, called it a “bogus” argument.

While Lee admits that union membership benefits the individual, the higher wages paid to unionized public sector workers lead to higher taxes that offset any additional spending at local businesses.

Meanwhile, in the private sector — where levels of unionization have been decreasing for years — higher wages often lead companies to downsize, automate or find other ways to reduce labour costs because they aren’t in a position to pass those costs on in a competitive market, Lee said.

“The gain of the unionized worker comes at somebody else’s expense,” he said.

Frances Woolley, an economics professor at Carleton University, says unionization has had an effect on wages, but not across the board.

She says unionized jobs pay well at the low end and badly at the high end.

Woolley used the example of unionized administrative assistants in the public sector, who tend to earn more than their private sector counterparts, while assistant deputy ministers employed by the federal government earn less than their private sector counterparts.

The figures used in the CLC study are based on the average annual wages for 2012 contained in Census Metropolitan Area surveys conducted by Statistics Canada.

Unionized workers who are female earn, on average, almost $7.50 more per hour than non-unionized female workers, and there are now more unionized women than men in Canada for the first time ever, Georgetti said.

More than 40 per cent of the workforce in OttawaGatineau is unionized, compared with 32 per cent nationally.