York professor debunks US criticisms of Canadian labour market

A group of Canadian scholars, including York University sociology Professor Norene Pupo, has issued a collection of academic research regarding the US Employee Free Choice Act, and the emerging “Canadian connection” to the ongoing US debate over the provisions of that Act.

The research is published today in a special edition of Just Labour: A Canadian Journal of Work and Society. The journal is published electronically by the Centre for Research on Work & Society at York University and is downloadable by clicking here.

Left: Norene Pupo

The special edition contains 10 articles by prominent Canadian university professors and other researchers specializing in labour market issues (including Pierre Fortin, former president of the Canadian Economics Association, and Michael Lynk, associate dean, academic, of the Faculty of Law at the University of Western Ontario). The articles review the implications of Canadian collective bargaining experience for the ongoing US debate over President Barack Obama’s labour proposals.

“There has been an attempt by some business lobbyists to demonize Canada’s experience, as part of their all-out campaign to oppose the Employee Free Choice Act,” said Pupo, director of the Centre for Research on Work & Society at York. “But an objective, scholarly review of the evidence proves that, if anything, Canada’s labour market functions better than America’s.”

In several provinces, Canadian labour laws include features similar to those proposed in the Free Choice Act (including majority sign-up provisions and first-contract arbitration). Moreover, Canadian unionization is significantly higher than in the US (with over 30 per cent of Canadian workers covered by a collective agreement, versus 14 per cent in the US). However, Canada’s unemployment rate is lower than the US and job-creation has been faster over the past decade.

Several articles in the special edition critically examine the claim (made by some US opponents of the Employee Free Choice Act) that unionization in Canada has destroyed jobs and resulted in higher unemployment here. One US researcher, Anne Layne-Farrar, claimed in a commissioned study (based on extrapolating Canadian data) that the Act would destroy over two million US jobs and increase unemployment dramatically.

Three articles review in detail Layne-Farrar’s methodology and findings, noting several weaknesses in her approach. These include the inappropriate use of non-stationary (time-trended) data for econometric regressions, the exclusion of other relevant determinants of employment and unemployment, and the arbitrary and inconsistent extrapolation of her Canadian findings to the US context. Correcting Layne-Farrar’s approach for these problems, it turns out there is no statistically significant link between unionization and unemployment in Canadian data – and no reason to expect negative labour market consequences from the implementation of the Free Choice Act in the US.

Pupo said she hopes that the special edition of her centre’s journal will promote a more informed debate by Americans regarding the implications of unionization and collective bargaining. “The claim that unionization destroys jobs and raises unemployment is absolutely not supported by the Canadian empirical experience.”

The special issue also includes a comparison of key labour market statistics in Canada and the US:

  • In 2008 (before the current recession) Canada’s unemployment rate (using comparable US statistical concepts) was 5.3 per cent (compared to 5.8 per cent in the US).
  • Canada’s unemployment advantage has widened during the recession. Adjusted for comparable concepts, Canada’s current unemployment rate is more than 2 percentage points lower than in the US.
  • Canada’s employment rate (employment as a share of working-age population) is now almost three percentage points higher than in the US.
  • During the decade ending in 2008, Canada’s labour market created new jobs twice as quickly (averaging two per cent per year) as the US.

For more information, contact the Centre for Research on Work & Society