The Demographic Crisis in Atlantic Canada

By James O’Keefe-Daw (AIMS on Campus Student Fellow) 

Atlantic Canada is facing a demographic crisis, coupled by an aging population and outmigration of youth. If creative solutions are not found, this crisis will lead to further serious economic problems in the future.

Atlantic Canada

Atlantic Canada is comprised of four provinces, Newfoundland and Labrador, Nova Scotia, New Brunswick and Prince Edward Island. In 2014, Newfoundland and Labrador, Nova Scotia and New Brunswick experienced more deaths than births, and this trend is still continuing. A recent Statistics Canada’s publication shows that if the current demographics in Atlantic Canada persist, the population share of the provinces in 2063 could account for less than 5% of Canada’s population.

The population’s aging is accelerating as a result of baby boomer immigration to the region. Seniors are being enticed to move east by Atlantic Canada’s inexpensive real estate, slower pace of life and easy commutes. The region is attracting individuals who are looking to retire and settle down more than those prepared to work.

An Atlantic Provinces Economic Council report found that conversely, 1.3% of the youth population is leaving Atlantic Canada. This is causing the demographics to shift even more in favour of an older population. Job opportunities and higher wages are among the reasons why youth are leaving. Young workers make $20.49 hourly relative to the national rate of $23.55. Also, male and female youth earn 24% and 10% more respectively than their peers who stayed.

Newfoundland and Labrador

The problems Atlantic Canada is facing are more pronounced in Newfoundland and Labrador. Recent findings from Memorial University’s Harris Centre research on the population shifts and projected effects on the province are alarming.

The Harris Centre found that from 2016 to 2036, Newfoundland and Labrador is projected to have more deaths than births and the overall population is expected to decline by nearly 8% even when migration trends are accounted for. Furthermore, even a replacement of 70% of the current labour force would not be sufficient to maintain the workforce population to 2036.

Interestingly enough, however, the North-East Avalon’s population is projected to increase by 15.36% in 2036. Those moving within the province are relocating closer to urban centres. Rural Newfoundland and Labrador is not faring well. The Northern Peninsula’s population is expected to decrease by 40% with an average age of 54 years old.

Economically, operating communities in rural Newfoundland and Labrador costs taxpayers. For example, it was recently disclosed that the ferry service in St. Brendan’s, a small community of 114 people, costs $6 Million a year to operate.

 

Consequences of the Demographic Shift

The parliamentary budget officer’s 2017 fiscal sustainability report found that Newfoundland and Labrador currently must increase revenue or reduce spending by roughly $2 billion to be sustainable fiscally. The demographic shift adds to this problem where the increased population will increase the province’s health-care expenses by almost 7% of the current GDP (the largest in the country.)

Nova Scotia’s youth outmigration is costing the province $1.2 billion less in lifetime after-tax income and an estimated $46.4 million in net future taxes. With the province spending $250,000 by the time a student graduates university and likely experiences outmigration, it is causing problems.

Recommendations

Reallocation of Resources

A combination of fewer youth and an increasingly aging population means that the reallocation of resources to accommodate the demographic shift would be worthwhile. Michael Haan, an associate professor at the University of Western Ontario argues that the demographic situation has led to an “infrastructure mismatch.” Effectively, he argues that due to their being fewer young people there is not a need for as many schools. He suggests that “Converting schools to retirement homes is something to think about.”

An AIMS report on demographics argues that rather than focusing on the “cost” of the population aging, one should look at how to reallocate resources to accommodate the shift in demographics. This leads to questions that planners should keep in mind such as how many teachers are required and are there enough services available for older people and the like.

Being proactive about planning for the future is critical to assuring that Atlantic Canada is equipped to handle the demographic shift.

Increased Job Opportunities for Youth and Immigrant Retention

International students in Newfoundland and Labrador leave the province after graduation because of the poor availability of jobs in the province, isolation and the high cost of living/low pay.

Job opportunity is lacking in Nova Scotia as well where 42% of university degree holders aged 25 to 34 work jobs that do not require a degree.

If Atlantic Canada were to have higher wages and more job opportunities for youth and immigrants in the region, it could retain them.

Conclusion

Every province in Atlantic Canada is aware of the demographic problems in the region and each government is crafting a plan to solve the problems. The situation in Atlantic Canada is difficult and is projected to only get worse. However, careful planning on where to allocate resources and strategies to retain youth and attract immigrants are steps that can be taken to can help the problem at hand. Atlantic Canada is resilient and, hopefully, will persevere through such trying times.

Action Plan for an Aging Population

By Patrick O’Brien (AIMS on Campus Student Fellow) 

The Government of Nova Scotia is leading a new proposition to change how we think of the aging population, the benefits provided, the obstacles surrounding “aging” and the impact it has on our economy. By 2030 the Government of Nova Scotia estimates that one in four people will be over the age of 65, which shows a major change in demographic we will have going forward.

The “SHIFT” plan will make investments in transportation and affordable housing for those who want to retire in their own communities. It will seek to promote health and wellness, and promote participation in the labor market as the primary objectives. This is all capable with $13.6 million committed to the plan by the Premier Stephen McNeil with as many as 50 objectives to be completed by the end of 2020.

There are many positive aspects of the plan that could help the economy and community. Increasing the participation of older adults in the labor market lowers the unemployment rate for the province, which is 8.7% compared to 6.3% for the rest of Canada. It also brings experience and wisdom to these roles, not to mention that because there is such a large presence of older adults in many rural communities of Nova Scotia, it could increase competitiveness for the small businesses that adopt the hiring of older adults.

Another benefit of the plan is promoting healthy living, including exercising lessons. This also limits social isolation, which in a finding by the SHIFT program was found to increase the likelihood of smoking, drinking, and enabling the individual four to five times more prone to hospitalization. Implementing these strategies and educating the public on the matter will reduce the chances of an elder adult going to the hospital and therefore reducing healthcare costs.

Notwithstanding, there are many obstacles facing this initiative.

The main challenge for the SHIFT program will be the encouragement of older adult employment. First the employer may believe that the older adult is less productive than a younger hire, or may not want to pay the premium for workers compensation to the employee if he/she was to get hurt on the job. From the outlined reasons above, for example when the Government of Nova Scotia stated it “will work with employers” it could be assumed that some sort of training cost to mentor employers during the process will be a part of the program, or potentially a subsidy for said employment, however this is yet to be confirmed.

Should there be a subsidy for the employment of the elderly, this would increase the number of older adult hires, and would limit the hiring of younger employees and immigrant workers as well. Although this does improve the cost efficiency of hiring for the employer, one could argue it may not be as effective as hiring a younger, and more energetic and motivated individual. This would create an uncompetitive hiring process, limiting the number of new participants added to the labor force 15 years of age and older looking for work but are unable to acquire employment. This could factor into an increase in the unemployment rate.

The SHIFT program will be a positive step forward for the economy in Nova Scotia by better involving and demonstrating the importance older adults have in our economic development, in addition to the wisdom and experience they can share to improve our quality of living through labor participation, volunteering, and mentoring. However, and arguably most importantly, it will be of great interest to see how the government will maneuver around the many challenges this program will yield, in addition to implementing the necessary change.

$15 minimum wage would be bad for the Atlantic Provinces

By Henry Gray (AIMS on Campus Student Fellow) 

Growing up in New Brunswick, the local McDonald’s provided a perfect entry into the labour market and an excellent way to begin to earn income for myself to save up for university. My job at McDonald’s taught me general, transferable skills to prepare for a career: work ethic, time management, teamwork, and customer service. As eager as I was at 14, the majority of my spare time was occupied by personal endeavours such as listening to indie music, and most of my mental energy at work to thinking up ideas for songs to write. Many of my colleagues were well worth the wage, but my efforts were not worth much more than the $9 an hour the province mandated that my employer pay. Certainly not the $15 an hour rate that minimum wage workers in Alberta are slated to enjoy as of October 2018.

 

So what would have happened to me had New Brunswick set the minimum wage at $15 while working at my local McDonald’s? In the best-case scenario, I would have been paid $15 an hour for singing between serving customers at the cash register. In the worst-case and far more likely scenario, and indeed this has been the reality for many minimum wage workers, I would have been out of a job.

 

As Matthew Lau and Marco Navarro-Génie discovered in their paper “Revisiting the Minimum Wage in Atlantic Canada” (2017), minimum wages, which have only gone up over the past several years and are slated to continue to do so, hamper the ability of young people to gain employment and to acquire employable skills.

 

The Atlantic Provinces hold the dubious distinction of having the most people per capita at or near the minimum wage in Canada. This is indicative of a weak economy, and the result of raising the minimum wage will thus be felt most severely here. While labour unions and anti-poverty activists have been known to suggest that raising the minimum wage will help unskilled workers and the poor, this policy will, in fact, disenfranchise and marginalize them even further. Some members of this already vulnerable population may be subject to the loss of their jobs, as their employers may not be able to afford to keep them on at an artificially inflated wage, while others may be prevented from entering the labour force altogether if their labour is worth anything under $15 an hour. To be certain, those who keep their jobs will be making more money, but for those who do not make the cut, a minimum wage hike represents unemployment rather than a pay rise. Moreover, my former employer, McDonald’s, has produced out self-serve kiosks, part of a trend towards automation that will only grow more widespread as minimum wage hikes drag labour costs upward.

 

Rather than reducing income inequality and empowering marginalized people, the minimum wage actually hurts those it is intended to help. It increases unemployment among the lowest skilled members of society, leads to greater demand for government welfare spending, and causes economic growth to falter, leading to less economic opportunity for all.

 

As Lau and Navarro-Génie recommend, provincial governments would see far better results by reducing the barriers to employment, raising the basic tax exemption, and unleashing the private sector to allow it to create jobs and wealth.

 

Legislating further increases to the minimum wage would actually further increase youth unemployment and exclude many unskilled workers and those in a lower socio-economic class from the labour force. Young people in Atlantic Canada are far better off given economic opportunity to better themselves, to learn skills that can be further developed later, to learn how to manage money, and to contribute to the economy.