Canada Post, The Strike, and The New Reality

I realize that anytime the government stares down and tries to “break” a union strike there are going to be some strong opinions on both sides.  So at the risk of offending people here are my thoughts on the current Canada Post situation.  I would love to be shown some stats that challenge my view as I do not pretend to be an expert on negotiations, but I would ask that any comments please be kept respectful!

Harsh Realities With The Strike

I think this strike is symbolic of a greater movement that Canadians and the rest of the Western World are going to have to get used to.  With a free market economy around the planet, jobs and wealth are flowing outwards to the millions and millions of people in the emerging markets.  We cannot stop this, and the idea that the wealthy should fit the entire bill for this financial shift is not practical (and I believe it is unethical, but that is another argument).  The idea that the middle class is shrinking is looked at all wrong in my opinion.  I believe the middle class is just earning less on average, but that doesn’t make them poor.  We have to get used to looking at the middle class in a world perspective, instead of through the very narrow view of the last 50 years in North America.  On a world scale, $50,000 per year is most definitely middle class!  Sure you might not be able to afford a second home, two trips a year, or the premium television package with a salary like that, but maybe the reality is that in the coming years we will simply have to learn to adapt to this reality.

We Have Already Seen One Version Of The Future…

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We are seeing proof of this in the European debt crisis.  The bottom line is that governments cannot afford to sustain the social services we have become accustomed to at the current rates of taxation.  In fact we couldn’t afford it years ago either, and Canada realized this to some extent (a larger extent than most), but European countries such as Greece did not.  Private industry that is squeezed harder and harder all the time cannot continue to sustain public sector jobs that offer massive competitive advantages over their private sector counterparts.  The funny thing is that people are up in arms about this and we have just started the descent into the retirement of the baby boomer generation.  Everyone had better keep praying that we are able to continue consistently skim the cream-of-the crop off of the countries around the world by taking their well educated elite via immigration.  Because if we cannot, this is just the beginning of the public sector stresses.  The answer cannot only be more taxes on the wealthy (although I agree that some compromise is in order here) to subsidize the private sector.  It doesn’t take a genius to figure out that this will chase away the very entrepreneurs who create jobs in this country.  We need innovation more than ever before, and our low business tax rates are a key to this.  Taking away a couple more percentage points from the “working-rich” such as lawyers, doctors, etc. can only go so far.  Eventually we have to confront the reality that the world is changing and that our standard of living for people who do not have higher levels of education is just not sustainable.

The Ever Divisive Issue of a Strike

That brings me to the more concrete issue of the current Canada Post strike.  According to stats I got from a variety of media outlets, the current Canada Post employees make about $24 an hour or $54,000 per year.  The Post is offering a deal that allows that to stay the same (with yearly bump ups for inflation), but has new workers accepting a bit of pay cut during their first few years of service.  The starting wage would dip to $18-19 per hour depending on whose story you read.  After seven years their salary would rise to $26 per hour.  I’m not going to get into any debate about who works harder or trying to quantify how hard a Canada Post worker works.  This doesn’t really make a difference to the financial argument anyway.  Suffice to say, a Canada Post worker walks a fair amount in a day, and it is not easy during the hottest and coldest months.  The market is not dictated by how hard people work, but rather demand for services.  This is the reality of setting a value on the service provided.

Leverage?  What Leverage?

Canada Post employees do not need any post-secondary education, and relative to others in that same category I would say the average salary of $54,000 is pretty good.  If I had went to work right out of high school for Canada Post instead of paying for 5 years of post-secondary education (full course load every semester) I would be much further ahead by any comparison until about 20 years or so into our careers.  This number gets ever crazier if you consider investment timeframes (although this too is irrevelevant to the overall argument).  The fact of the matter is that demand for a full time postal service is dissipating.  There is an 8% unemployment rate in this country, and the job requires no special skills other than some degree of physical endurance.  The union is bargaining from a position of intense weakness for this strike.

This would have likely been settled a long time ago if it wasn’t in the union’s best interest to keep the debate going.  Think about what the motivation of unions generally is. In order to keep their standing within their workforce they have to prove their value.  What better way to show how important you are than a drawn out labour war where you try to cast yourself in an indispensable light.

An Alternate Proposal?

I know that $54,000 isn’t a lot of money these days.  I know that it doesn’t go as far as it used to.  The bottom line is that we should get used to it, and that on a world level it will still allow for a pretty great lifestyle.  My solution would be to allow the employees to work at $24-$26 dollars per hour, and then trim the Canada Post service days to only serve on Monday-Wednesday-Friday and extend their hours to 12 hour days.  With lower levels of mail, the drop-off in production would equal it out.  My guess is that the union would never go for this as it would eliminate a large portion of their employees, but this is a realistic business solution.  I would predict that most people would find this service quite liveable as more people are automating their bills which were a large portion of important mail anyway.  Likely a private competitor would spring up to provide express services in the Tuesday & Thursday time slots and this would be a great competitive balance for both labour and Canada Post.

Related: Money Transfers for Overseas Education

No One Will Starve

My father worked his butt off in the lumber harvesting business his entire life.  He had to work in all the same outdoor conditions as Canada Post employees, and for much longer hours, doing much harder work (sorry, I guarantee there is no debate here, just trust me on this one).  If he averaged $54,000 per year (or the equivalent allowing for inflation) he would be lucky.  I’ve never heard him complain once.  He has made sure to invest in his own retirement plan because he knows that he doesn’t have a government defined benefits pension to fall back on.  He never took sick days because he didn’t have them.  He took vacations to spend time with his kids, but not 7 weeks worth (after 28 years a Canada Post employee gets 7 weeks paid vacation, they start at 3 weeks), and they certainly weren’t paid.  He and my mother managed to save around 40K through the RESP program for my brother and I to split to help us with post-secondary expenses.  So please don’t try to tell me that the Canadian government is trying to impoverish anyone here, they are simply reacting to world conditions and making sure that we don’t become the next “Greece” on the world stage.