Charities could revitalize job transitions
Updated: Apr 22
Jobs outlook of the future
The future employment landscape will be much different than today. Canada will have many workers to transition into new jobs.
According to PwC analysis 'AI (Artificial Intelligence), robotics and other forms of smart automation have the potential to bring great economic benefits, contributing up to $15 trillion to global GDP by 2030. This extra wealth will also generate the demand for many jobs, but there are also concerns that it could displace approximately thirty percent of all existing jobs. [i] Governments and businesses need to work together to help people adjust to these new technologies through retraining and career changes.'
Therefore the OECD (Organization for Economic Co-operation and Development) says, 'Canada will need massive retraining, and other transition supports in the coming years or faces the unrest of millions of unemployed, or those working at much lower wages. Note that this has been fairly lacking for many displaced workers in the past.'[ii]
Thirty percent of Canada's current full-time employment levels translates to roughly 4.5 million jobs.[iii] Transition involves significant retraining, and often, new jobs will not match the income lost, especially for older workers.[iv]
Why it matters:
Long-term unemployed workers fare worse in the labour market than the short-term unemployed. Research supports state the length of time they are unemployed as the best explanation for low subsequent employment rates.[v] Many labour and social experts consider long-term joblessness a severe problem, not only for economic reasons but because studies have shown it can affect physical and mental health and even schooling outcomes for children of concerned parents.[vi]
Long term dangers and opportunities
Could even more changes be coming after 2030? How can we address this?
One solution could be a Universal Basic Income. The Canadian Parliamentary Budget Office estimates this would cost $93-billion in 2025-26. [vii]
Aside from an enormous cost, this does not get unemployed workers back to work. A UBI could reduce poverty induced by unemployment, but here is one opinion:
"Giving people unconditional cash payments does nothing to address the root causes of declining employment and wages among less educated people. Whereas a targeted wage subsidy would encourage work and increase take home pay, UBI discourages labor supply.
Instead, we should spend money helping people invest in their own human capital and making it easier for them to get to work. We should spend money on promising career and technical education programs and help low-income workers pay for child care and transportation." [viii]
So if not UBI, what about traditional approaches to job creation?
According to Seth Klein of the Canadian Centre for Policy Alternatives:
'Jobs and value can be generated any time human ingenuity and labour are combined with resources and investment capital.' [ix]
Attracting investment capital is an essential means of improving job growth. Canada has been attracting Foreign Direct Investment (FDI) at rates exceeding most developed countries in a competitive world. Yet even if this is a strength for Canada, it is not enough. Canada In 2019, Canada's unemployment at around 5% levels [x]. The COVID years have increased unemployment and reduced FDI, but no doubt both will recover. But FDI is not reliable. It varies every year.
Training is the other major part of job creation. Employers want a ready workforce, not one they need to train. Many laid-off workers do not have post-secondary education and are uncomfortable in seeking it. Training must meet the needs of industry and of the students on a timely basis, or employers find other locales with better offers.
Training is a critical element for transition because new jobs will be available. A December 2018 Dun & Bradstreet survey of AI World Conference and Expo attendees found that 40% percent of respondents' organizations are adding more jobs due to deploying AI within their business. Only 8% are cutting jobs due to AI implementation.[xi]
Is training the only solution?
We can reduce long-term unemployment and focus training on younger workers.
Training will benefit those under 50, as they have longer to use the education, have the aptitude, and are more motivated to learn new skills. The employment opportunities within the new AI economy are their future.
The opportunity for older workers
Canada can reduce long-term unemployment for older workers by offering full-time employment doing what is now considered volunteer work at charities.
Such jobs would be paid for by the Government and provide good pay, job security, and fulfilling work. Some might enjoy the work so much they make this their career. Others might use the paid work to take steps to find other employment. This approach offers practical and valuable transition solutions to a devastating issue.
Using volunteer work would keep these older workers engaged in the workforce and productive. It is much easier to find a job while you are working than when you are unemployed. These older workers would be classified as employees that do work now considered volunteers' work. As employees, the full suite of employee benefits applies. These jobs would be meaningful, helping serve Canadians in their time of need. Having a greater purpose at work is a critical factor in employee engagement and any enterprise's success. Older workers, depressed by being dismissed, get an added lift of being needed.
Moreover, volunteers report gaining valuable skills in interpersonal relations, communications, organizing and technical or office work.[xii] Precisely what older workers need.
Charities can gain efficiencies, too, by managing fewer part-time volunteers.[xiii] Employees vs volunteers will acquire greater skill levels, exhibit less turnover, support more significant investments in training, and unions would support their roles.
How charities could create more good jobs today
Charities are already doing well at job creation, primarily in the Education and Health segments. Charities and non-profits are a significant element in our economy. Employment by charities and non-profits climbed to 2.4 million persons in 2017 who contributed to $169B in Gross Domestic Product, an 8.5% of the total Canadian GDP.[xiv] In addition to paid employees, charities have over twelve million volunteers, an annual equivalent of over eight hundred thousand full-time jobs [xv].
Imagine if charities could pay some portion of these volunteers at the average wage level for Canadians of $29 per hour. The charities would be paying about $73K per year[xvi] per worker. If the number of older workers in the program is 25% of the 800K volunteers, the annual cost comes to $14.6 B per year.
How governments could add these new jobs without new taxes
First, the Government borrows $250 B and invests the money in stocks. Although this involves more debt, the debt is backed by valuable, sellable assets, which can offset the debt. So, the net debt is zero.
The $250 B grows each year until it reaches a value of $2 T around year 36. At that point, half ($1 T) is used to pay back the accumulated debt of $250 B per year plus the accumulated 36 years of wages cost of the $14.6 B each year, plus interest at 2.5%. By the year 50, all debts are paid, and the Government has a fund that yields $1 T every 12 years perpetually. This on-going fund can assist any government initiative. Note this occurs without raising taxes or incurring long-term debt.
These computations do not account for the employees' taxes, plus the incremental gains of a society having fewer dependents on government supports.
Good paying jobs increase paid taxes and donations
High employment is helpful for both governments and charities. Employed workers pay taxes and do not require supporting unemployment supports.
Employed workers give to charities more than twice the annual amount given by unemployed workers[xvii]. To help charities get more donations, we need high employment. Higher wages are good for charities. At higher income levels, individuals give more and are more likely to donate.
Over the last twenty years, average Canadian wages have grown from $16.66 to $29.51 per hour in 2020[xviii]. After adjusting for 141% inflation[xix] over that same period, wages are up 26% in real terms. Charitable donations per CRA data[xx] went up a comparable 136% after inflation. To help charities get more donations, we need good-paying jobs.[xxi]
The role of charities in our future
Charities can create and offer employment that does not require extensive training and nor easily displaced by automation. Charities can provide good-paying full-time jobs if funds are made available.
The more the charitable sector grows, the more significant the role in our economy. The more charity can influence society's direction, the more we meet our collective social goals.
[i] How will automation impact jobs: PwC UK [ii] Canada could do more to help laid-off workers - OECD [iii] Thirty percent of 15,220,500 full-time employment on Feb 2021, per Add/Remove data - Labour force characteristics by province, monthly, seasonally adjusted (statcan.gc.ca) [iv] The False Promises of Worker Retraining - The Atlantic [v] The Consequences of Long-Term Unemployment: Evidence from Linked Survey and Administrative Data | NBER [vi] Long-Term Joblessness Is Canada's Latest Economic Problem | HuffPost Canada Business (huffingtonpost.ca)
[viii] Yang and Warren: Universal Basic Income Idea Is a Bad Idea (businessinsider.com) written by Melissa Kearney, the Neil Moskowitz Professor of Economics at the University of Maryland. Kearney’s research focuses on poverty, inequality, and social policy in the United States. [ix] How to Create Good Jobs in BC | Canadian Centre for Policy Alternatives [x]Unemployment rate increases for second month in a row (statcan.gc.ca) [xi] Is AI Going To Be A Jobs Killer? New Reports About The Future Of Work (forbes.com) [xii] Volunteering in Canada (statcan.gc.ca) [xiii] The Demand for Volunteer Labor: A Study of Hospital Volunteers (core.ac.uk) [xiv] Non-Profit Sector Continues to Grow | Imagine Canada [xv] Volunteering in Canada: Challenges and opportunities during the COVID-19 pandemic (statcan.gc.ca) [xvi] $29/ hour x 40 hours/week x 48 weeks/year = $ 56K per year per worker, plus an overhead of 35%, for a total of 73K per year. [xvii] RHF_30years_Report_eng_FNL.indd (imaginecanada.ca) [xviii] Employee wages by industry, annual (statcan.gc.ca) [xix]$100 in 2000 → 2020 | Canada Inflation Calculator (in2013dollars.com) [xx]Summary of charitable donors (statcan.gc.ca) [xxi] ibid