Some tips for finding a job

While I hope noone loses their job, it's not looking good. Here are job hunting tips that worked for me. These might be of general interest but are aimed at technical writers in Waterloo.

Post your resume on monster.ca, workopolis.com, and linkedin.com. Keep in mind that employers and recruiters search these sites electronically, so make sure you include all the keywords, software and skills that they will use when looking for someone for a job you want. Look at job ads to figure out what those words are. Set up an alert from Monster to get emails with new job postings. Every few weeks, update your resume on Monster and Workopolis (updates trigger interest).

On LinkedIn, get three people to give you recommendations. (Apparently it is not uncommon for employers and recruiters to filter searches to people with at least three recommendations.)

Register with the major recruitment companies in your town and in any town you would be willing to work in. Try to make an appointment to meet with one of their recruiters and treat it like a job interview. Ask them for advice about your resume. I am registered with a bunch, including Procom, Ian Martin, ProVision... I can't remember them all. Here's a site that has links to some recruiters and similar companies: KW Jobs, but there are loads out there.

Set up a job alert at indeed.ca. Before my recent job switch, I got a daily alert from indeed.ca of all writer jobs in Waterloo Region and Toronto. Indeed is a little different from other sites because it trawls through corporate careers pages finding job postings, so catches some that aren't posted on Monster or wherever.

Bookmark sites that have job postings you're interested in, such as Southwestern Ontario STC, Data Shaping, Charity Village and Mobile Dev Jobs.

If you're interested in living in the US, two must-see sites are dice.com and the US STC job bank.

There are millions of online sources of advice, but here's a good one: STC job bootcamp. My main piece of advice is to have a friend revise your resume. The biggest mistake on resumes is that people don't sell themselves sufficiently: an objective person can point out where you need to beef up your sales pitch.

The University of Waterloo careers department has a boffo career consulting service. If you are a UW alumna, you get three free sessions; otherwise there's a modest fee. It is well, well worth it. You can sign up on this site, which also has lots of great info: UW career action.

I wish everyone well.

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Culture of Layoffs

Another story about another company laying off a percentage of their workforce. This time all we're told is that 81 employees were laid off, representing 5% of the workforce, and that the company "ended production of some unprofitable products".

I wonder what would happen if companies were expected to report more information about layoffs - and by "expected" I mean by law where possible, and by convention and community standards otherwise. And if they don't provide the info, newspapers should investigate and get the goods.

The information I'm looking for has to do with the negative side of layoffs. How long, on average, had these people worked there? What percentage got a good performance ranking in their last review? What sort of severance did the company provide? What was the total direct cost to the company of the layoffs (severance, out-placement, travel and consulting fees required by the move)?

If all these details were provided, would the market automatically react as strongly to reward companies that lay off a big chunk of their workforce?

I once worked for a publicly-owned company whose management was committed to avoiding a take-over. Every time the stock price fell they laid off employees to bring it back up. There were so many layoffs that they didn't use the terminations to get rid of low performers: terminations were totally a function of what someone was working on, and the best and the brightest regularly got cut. This culture of continuous layoffs created a totally dysfunctional company with a decidedly subpar product, but it also kept it successful.

That kind of success is a market distortion. Unproductive - even antiproductive - behavior is rewarded. It's a systemic failure.

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Parental Benefits for the Self-Employed

The government has proposed an addition to EI: parental leave for the self-employed.

However, there's no EI for the self-employed if they lose their job and can't find another. This policy means that the only way the self-employed can get EI is to have a baby.

The old argument was that you couldn't let the self-employed participate in EI because the worker decides when to work and when not to work. However, self-employment is a lot more complicated than that now. We have multi-month contracts that are renewed on a rolling basis. We have to work through agencies so that the companies can protect themselves from civil suits or government regulators, since we are essentially regular full-time employees (who just happen not to get any holidays or benefits). The business of self-employment has become so bizarre lately that the agency I am forced to work through deducts EI from my pay cheque but I am not eligible for EI.

This proposal is not just unfair to the rest of the self-employed. It's also unfair to all those regular employees who pay into EI. If the self-employed are not paying into EI, then why is EI being used to provide parental leave for them? If they do this, why not use EI to pay for other government benefits wholly unrelated to paying in?

This new proposal by the government just reeks of pandering. It has no relation to good policy or fair policy.

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Labour Day

This Labour Day, I call on all workers to resolve to do their jobs better.

Unions, I call on you to root out corruption in your ranks. It is your right to defend your members when they're accused of wrong-doing, but it's your responsibility to safeguard against their doing wrong.

Government, I call on you to find a way to reform your relationship with civil service unions, and to make commitments to ensure that all Canadians get the same benefits as your unionized employees. Further, you need to strengthen employment regulations to protect workers - all workers, including part-time and contract.

Corporations, I call on you to operate for the benefit of shareholders, employees and society - not for the enrichment of the handful of people at the helm.

If we all took seriously the need to do better, what a world we could have.

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Executive Compensation

The Globe & Mail published their most bone-headed editorial ever this week. The logic was so assinine that I wonder if they were trying to undermine their own argument.

It went like this: People are concerned about executive compensation. That concern was justified when CEOs didn't, on average, make less bucks last year after share prices fell - so people are saying there's not enough of a link between pay and performance. But wait! "The good news" the Globe says, "is that such a link is becoming the holy grail of compensation design."

At which point thoughtful readers everywhere started thinking: Well that's not right. Canadian CEOs weren't responsible for the biggest financial crisis ever to strike the five inner planets. When crisis hits, do we not need the best CEOs we can get to protect us? Performance metrics are a pretty sucky idea.

Of course performance metrics are just one aspesct of a huge issue of behavior so unethical it should have serious jail time attached. The Globe might have mentioned that fifty years ago, CEOs made 20 times what frontline employees made while today they make 300 times frontline wages. They might have cited the growing cries to create some legal protection for shareholders and employees, say by reducing the ability of the guys at the top to remunerate themselves, or by putting firm limits on how much they can suck the corporations dry... viz a maximum wage. Noone would expect the Globe to say that as long as the CEO-director cabal continues to run major corporations as a giant cookie jar for their own super-sized enrichment, we're not living in capitalism but just a corrupt oligarchy... but it seems rather pertinent too.

I'm not saying there's anything wrong with making $919M in one year, like the CEO of Och-Ziff Capital Management. There are situations in which making a bundle is perfectly ethical. For example, if I were ever to publish my collection of poems about bi-valve evolution, it would of course sell many copies and I would become very wealthy. If I got $2 per book in royalties, I might make, what... about $200 million in the first year. (I'm not completely acquainted with the income of poets but it's something like that.) I don't think there's any issue of unfairness in that income - after all it's volume that caused the figure to be so high.

But the incestuous little community of CEOs and directors, who set their own remuneration levels and move from company to company scratching each other's backs, is hoovering up vaster and vaster percentages of profit purely because they have the power, balls and lack of shame to allow them to grab other people's money. I'm not saying that they aren't qualified or that they shouldn't be well compensated, just that (1) they shouldn't have the nearly-unfettered ability to take as much as they like and (2) no-one deserves labor income in excess of $100,000 a week.

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Tarts and the Law

The ABA Journal reports that some US judges are asking women lawyers to stop wearing short skirts and low-cut blouses to work because the judges find it distracting.

You have to respect the dilemma of the judges, being forced to work with women who want to be treated like professionals but dress like sluts. However, fixing the problem is not trivial.

The ABA Journal provides a fashion web site called Corporette that provides dress code advice for female lawyers. Recent headlines include "Can Oxford Shoes Be Worn to Work?" and "Ponytails at the Office: Yay or Nay?"

But there's still a problem. Even if all female lawyers always wear conservative, unrevealing clothing, what will the judge do if an attractive witness appears? Or a provocativley clad accused? What about tarty looking spectators?

And even if all women in the court room don burkas, what if the judge is the kind of guy who likes to imagine an attractive body beneath clothing? Should we prohibit all fit, young, or big-breasted women from court rooms? What if the judge has a foot fetish? ...Force all women to wear boots?

All females in a court room could be made to sit behind a screen so that the judge isn't apt to get a hard-on looking at them, but then there's still the problem of that tempting female voice... It's just too much for a judge to listen to. We could try a voice-alteration device, or perhaps just prohibit women altogether.

Of course, another solution would be to decide that men who are unable to do their jobs around attractive women are unfit to do their jobs. Maybe only women are fit to be judges. And managers. And teachers. And counsellors. And people with any responsibility or authority.

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Buy American

It turns out that the "Buy American" provision in the US stimulus package will mean the government can't buy from American economic giants IBM, GE and Proctor & Gamble, all of which derive over half their revenue outside the US.

That's just one small indication of the problem with protectionism. We live in an integrated world, and it's simply no longer possible to "protect" jobs at home.

Some have argued that the Buy American provision will protect only 1,000 US jobs, but has the potential to lose many times that. The reasoning: the provision will mostly affect steel and iron, which are capital-intensive industries. It is estimated that banning government imports of steel will increase US output by 500,000 tonnes - or 1,000 jobs. On the other hand, retaliation could have huge effects. If other governments reduced US imports in their government procurements by just 10%, the US would lose 65,000 jobs.

Another writer reminds us that a "Buy American" provision in the building of a California bridge would have resulted in a $400M increase in the price of the bridge, just because of higher domestic steel prices.

I can't verify these numbers, and I don't know the specific effects on Canada from US protectionism. Recently I heard a steel union representative talking on CBC; he was very confident that US steel companies would not lay off workers here because they had recently invested a lot in the steel factories. A few days later a big US steel company laid off all 1,600 employees at one plant. My point: logical arguments about how "rational" economic agents will behave are not very reliable.

The Buy American provision has another bad consequence: it is leading Europeans like Angela Merkel to criticize growing US protectionism - including even recession-related expenditures like the auto industry bailout, which she calls "distortion and protectionism". Merkel could be laying the groundwork for a troubling new round of trade battles.

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The New World of Employment

At banks, government offices and many other employers, a large proportion of the staff is on contract - in some cases as many as 50%. This has been going on for a long time; the incentive for employers is that they don't have to pay vacation, holidays, benefits, CPP, or other costs of having full-time employees, and they can ditch people at will. Contracts tend to be three months in length and the contractor is informed within the last few weeks whether it will be rolled over. In many cases it is rolled over for years and years, but the contractor never has any job security. Even within a contract period the employer can sever the contract, usually with only ten days notice.

A while back a Royal Bank contractor who'd been on contract for many years was let go and sued for severance. Since then the banks don't hire contractors directly; they go through staffing agencies to protect themselves from law suits. These agencies collect money from the employer and pay it to the contractor; for this middleman role they often pocket at least 15% of the contractor's gross. In many cases they do nothing other than pass through the money: the contractor gets the job, negotiates the contract, and then is directed to an agency. In some cases the employer contacts the agency to find candidates, and while there are cases where the agency performs a useful service, in many cases they do no more than leaf through workopolis and monster.

The staffing agency business appears to be completely unregulated. You'd think that there might be limits on how much they can charge for their services, or rules about having to disclose to contractors how much they're skimming off their backs, but there don't appear to be any at all. I've heard rumors of people who got shafted by unscrupulous staffing agencies, finding out too late that much more than 20% of the employer's payouts were staying in agency pockets. And once you have a relationship with an agency that has contracts with employers, your options are limited.

Employers use contractors to reduce their costs, but some contractors like being on contract because they can reduce their taxes. They are self-employed, and so can deduct the costs of driving to work and working at home and the like. (Strangely, though, the self-employed cannot deduct health costs or the costs of buying benefits.) Smart contractors form co-ops with a few other contractors and so reduce health costs, as well as share accounting and incorporation costs.

White collar labor is a seller's market right now, so it doesn't seem so foolish to be a contractor at the moment - lose the contract and you can move into another one quite quickly. (I can attest to that: I posted my CV on workopolis a while back and have been flooded with offers from staffing agencies.) But with the economic downturn starting to get serious, that's likely not going to last.

The self-employment white collar world is chaotic and unregulated, and everyone is taking advantage of the situation. It creates distortions that are unproductive. For example, contractors can write off the vehicle they drive to work, so are incentivized to buy expensive gas guzzlers. Short-term budgets lead employers to think they're saving money by using hired guns, but they end up with a work force that lacks experience and institutional knowledge, and who takes care not to get their budgeted work done before the deadline. Staffing agencies are expensive, but add very little to productivity. Their necessity for domestic contracts also makes off-shore contracts more affordable. This is a situation that is crying out for some government attention.

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More Bad News

Nortel employees and ex-employees have been sent letters informing them that they are now considered creditors. This appears to be a head's up that their pensions are toast.

If this country were run for the good of the people, rather than the good of the rich and the corporations the rich use to get richer, then there would be some effective protection for corporate pensions. It's bad enough that virtually noone outside the civil service gets pensions anymore; now those few remaining holdouts are starting to default.

Update

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Stimulus Package Part 1

The IMF is advising countries to implement stimulus packages that are 2% of GDP. Canada's GDP is now $1.3 trillion, so by IMF standards the stimulus package should be $26B. Some estimate 2% at $32B. Others favor a smaller package, with a floor of about $10B.

There are many forms the stimulus could take, and it should probably be multifaceted.

"New Deal" Projects
Ideas like infrastructure projects and renewable energy development are good, but they will be slow. It could be two years till the money enters the economy that way, while we need stimulus now. It's not even clear we will need stimulus then. These can be part of the plan, but not the whole plan.

Into people's pockets
Sending cheques to citizens is a quick, effective way to boost the economy. Critics counter that consumers might use the money to pay off debt or put in savings, thus negating the stimulus effect. I challenge the conclusion that saving the money reduces the stimulus effect. Consumer confidence will be bolstered by putting more money in the hands of citizens, no matter what they do with it directly. If they save it or use it to pay off debt today, they will feel less financially vulnerable next week. The stimulus effect is still faster than most other options, even if it takes months instead of days to see a boost in consumer confidence. This option is a red flag issue for ideological non-productive responses to the crisis: some on the right will oppose all direct help to people and want to make all support go to corporations. Some form of direct consumer stimulus should be included in the package, whether it's a cheque, tax break, or whatever.

Corporate Handouts
Giving tax breaks, subsidies or other forms of wealth transfer to companies may help retain jobs, but it's risky in that the agenda of the decision-makers may not match the agenda of the government: they could spend the money on management bonuses, foreign travel, saving, send it to the US head office, whatever. A broad-based payroll-tax break might be good, but there's no way to regulate or even oversee how the money is spent. This may be a good area to pursue, but if so, I favor a plan that regulates how the money is spent.

Social Safety Net
Automatic stabilizers, as I've said before, are the most effective form of stimulus, particularly unemployment insurance, so it may make sense to increase UI. (The Globe recently quoted Mark Zandi, chief economist of Moody's Economy.com, as saying that each dollar spent on UI in the US has been shown to generate $1.63 in the economy.) The current top UI payment is $2,000/month per person, and it's not clear that that needs to be raised. But making UI available to more people is an option, or increasing the lower levels of payment. Increasing money for UI training programs is also a good idea, as is providing more government money to help people relocate for work, and giving grants to groups like food banks and shelters.

Retooling Society for Sustainability
This crisis is an opportunity to make some changes that otherwise would not find political will. We are a car-based country. Increasingly we waste huge proportions of our school budgets busing kids all over the place. We build far-flung subdivisions that can't support public transit and then we run empty buses to them. We build big box stores on the outskirts of town. We let developers plan our cities. When the economy hits bottom and people can't afford to drive their cars, we should have policies in place to work in a more efficient, less polluting, more sustainable way.
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That's a start. I imagine (and hope) that in the next few weeks we will all learn a lot more about fiscal stimulus packages. We need to learn more. If the stimulus is 2% of GDP, each Canadian will pay an average of about $1,000 on this stimulus package. For a family of four, that's $4,000. If the stimulus doesn't work, millions of us will lose our jobs. We definitely all have skin in this game.

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France: Enlightened, Progressive - an Evolved Democracy

When France opposed the US invasion of Iraq there was an unbelievable backlash in the US. (We all remember "Freedom fries".) Jokes abounded (and still do) about the French. Some of them were even pretty funny. But it seems likely that they originated in the office of Karl Rove or his ilk, in the now all-too-familiar scenario of the Bush administration striking back at its political opponents.

Recently, however, France's reputation is on the rise. As the Bush administration continues to bomb, torture, wire-tap and generally act like a bunch of murderous thugs, France is emerging as a state of enlightenment that is taking a lead in progressive international affairs.

Michael Moore helped with his portrayal of France in his new film SiCKO. France appears as the most evolved form of democracy in the world - where the state runs more for the benefit of the people rather than overemphasizing the wishes of lobbyists and political donors (as most of us western "democracies" do). French people have the best health care in the world, the strongest employee protection laws, and so on. (And no, the capitalist system did not collapse.)

This week France has been in the news twice in high profile cases. First, Cecilia Sarkozy, wife of the newly elected French president, negotiated a deal with Libyan president Moammar Gadhafi to free Bulgarian medical staff who were facing the death penalty in Libya. (It makes you think that Libya must have been desperate to find a solution to the mess, and that the rest of the world must have been negligent, if Libya was so willing to release the prisoners after speaking to such an unofficial source.)

Then we learn that President Sarkozy named Bernard Kouchner as his new foreign minister - that's the same Kouchner who founded Doctors Without Borders - and in his first week in office, Kouchner convened a summit which led to EU troops mobilizing to help ease the suffering in Darfur. Everyone else seems to be just wringing their hands. (The UN is considering deployment, but is said to be "years away" from being able to send troops.)

I think it's time we all start paying a lot more attention to France, and think about using it as a role model. (In the French press today: a law has just been passed that no income tax will be charged on wages paid for overtime.) Here are some English-language sites I've bookmarked:

The Tocqueville Connection
French News
Expatica
Le Monde Diplomatique

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The Bad Guys Always Win

It was with a deep pang of bitterness that I read that Thomson Newspapers is bidding to take over Reuters plc. I have worked for both companies. In the 1980s I worked for a Toronto company called IP Sharp Associates. Reuters purchased IPSA and I continued to be a Reuters employee until I was laid off in the early 90s. Later on in my career I had a contract as a business analyst in the IT department of Thomson's head office, then in Toronto. I left for a job opportunity in Africa, but my boss at Thomson nearly wooed me to stay as a permanent employee. Luckily I didn't, as Thomson moved its headquarters to the US a few months later and laid off most of the Toronto staff.

Both Reuters and Thomson are layoff-happy organizations. Layoffs are seemingly part of regular annual plans. They don't just get rid of deadwood. In fact, at least at Reuters my impression was that internal politics were so ferocious that layoffs had little to do with merit.

When Reuters took over IPSA they sent over an HR manager from their UK headquarters who was obviously chosen for her vicious ruthlessness. Layoffs began with tearful employees being escorted from the building by two big beefy security guards. We all knew that layoffs were coming when we saw those guys enter the lobby. By the time I got the axe, a year or more into the purge, the system was a little more humane, but still pretty brutal.

At the time I was laid off I was in a management team of more than half a dozen extremely bright, extremely dedicated people. Most of our careers never recovered. Some went into sales, some took jobs with much lower responsibility. Only a couple eventually worked their way back up to lesser management positions.

If Thomson is successful in taking over Reuters, life does not look good for employees at either company. Lives will be uprooted, people will be traumatized... all for what? Layoffs are inefficient, a quick jolt to the balance sheet with heavy long-term costs. It's bad business and it's a completely unacceptable way to treat a workforce that has given a company loyalty and dedication.

It's insane that as voters we don't demand that there be regulations protecting employees from layoffs, along with regulations curtailing the outrageous compensation of senior managers. France has such rules and still manages to maintain a vibrant capitalist system.

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Churn

In the newspaper business, the word "churn" refers to the turnover in subscribers. Since there is a cost associated with attracting subscribers, low churn is an indicator of efficiency.

On This Week With George Stephanopoulos today, George Will provided a startling statistic: In the US every year, one-thirteenth of all jobs are lost. More jobs are created, but there is growing churn in the workforce, largely caused by globalization. This trend is not going away. If anything, employment churn will increase.

Other than during recessions, high employment churn is a new thing. We probably can't do anything to improve the degree of churn, but we need to adjust to it to help displaced workers. We need improved employee protection around the area of lay-offs and severance pay. We need better institutions to help people retrain and find work. We need UI payments to kick in sooner.

Our current systems were created not only for a time of lower employment churn, but also for a time of greater unionization. In today's world, most people do not have a union ready to fight for them. We need strong employment regulations that protect everybody. As in places like France, we need the state to step up and provide protection. But this isn't going to happen unless we demand it.

Unfortunately, elected officials all have extremely generous pension plans and the civil servants who provide much of the legislative initiative are already protected by the most powerful union contracts in the country. Stronger employment protection isn't going to happen unless the people rise up and make it an election issue, and even then it won't happen quickly.

If we don't act soon, many Canadians are going to find themselves in deep distressing poverty when they retire. When young people think their investment strategy is adequately preparing them for retirement, are they considering that they will almost certainly be laid off at some time during their career... and most probably will have to start again at a lower paying job? And that they may need to dip into their retirement savings during the period that they're unemployed? That stock market/housing market collapses could wipe out their personal retirement savings?

We do not have adequate employment protections for the current world.

Related Posts
In Praise of Regulations
Employee Protection

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Marking the Transitions of Others

I saw an acquaintance in the grocery store the other day. Pushing our carts in opposite directions, we passed close enough to touch and I said Hi quite audibly, but he kept his eyes straight ahead and pretended not to see me. We used to work together and he was let go in one of those secretive ways companies have - I didn't realize he was gone until months after he left. (During a downsizing of the Corel corporation, it came to be known as the animals-at-the-watering-hole syndrome; employees saw themselves as gazelles congregating in the dark, oblivious that their herd was being picked off.)

We should have had a going-away party for the guy, if only because we live in a small town and shouldn't be embarrassed to meet in the grocery store. In the software development world (where I work) a lot of people get fired or laid off - the work is very demanding and the market is volatile. Being let go is a time when you need support and encouragement, not silence and embarrassment. Those of us who are his former colleagues should have given him a card that said, "We'll miss you! Good luck!"

It's a given that we'll help family and close friends transition through the important events of their lives, but what do we owe to coworkers, neighbors and acquaintances? We pay taxes to finance services for people during times of need, but isn't there also a direct obligation?

A transition that often isn't handled well is moving. Where is the friendly welcome from neighbors? Many people would like to be friendlier with their neighbors, so why don't they reach out? There are probably a number of reasons other than indifference: They don't know if they're intruding; they don't know what to do; they don't feel part of the community themselves and so feel awkward welcoming other people to it.

Death is a transition that we're pretty good at marking, in part because religions have provided ceremonies and conventions that help us know what to do. We all know how funerals work: there is an implicit open invitation and the format is predictable. When the loved one of a friend dies we can attend the funeral, send flowers or a condolence card, or just say, "I'm so sorry for your loss." Would it were always so clear-cut.

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U.S. Not the Land of Opportunity, New Studies Show

Recent studies in Britain and Germany, reported this week in the Economist, show that European countries have much more social mobility than the United States.

The studies measured the income of fathers and sons. A socially immobile county (one where the incomes of fathers and sons are the same - the rich stay rich and the poor stay poor) was given a 1. A completely socially mobile country (one where the prosperity of sons is not at all predetermined by their fathers) was given a zero. The scores reported in the Economist were:

Nordic countries: 0.2
Britain: 0.36
USA: 0.54

The Economist went on to say,

The biggest finding of the studies is not, however, about overall social mobility, but about mobility at the bottom. This is the most distinctive feature of Nordic societies, and it is also perhaps the most significant difference with America. Around three-quarters of sons born into the poorest fifth of the population in Nordic countries in the late 1950s had moved out of that category by the time they were in their early 40s. In contrast, only just over half of American men born at the bottom later moved up. This is another respect in which Britain is more like the Nordics than like America: some 70% of its poorest sons escaped from poverty within a generation.

The Nordic countries are distinctive in one further way: the sons born at the bottom (into the poorest fifth) earn roughly the same as those born a rung above them (the second-poorest fifth). In other words, Nordic countries have almost completely snapped the link between the earnings of parents and children at and near the bottom. That is not at all true of America.

...The obvious explanation for greater mobility in the Nordic countries is their tax and welfare systems, which (especially when compared with America's) deliberately try to help the children of the poor to do better than their parents. One might expect social mobility and economic flexibility to go together—in fact, to be two sides of the same coin. But to the extent that redistribution is an explanation, it implies the opposite: that social mobility is a product of high public spending, a bit like the low incidence of poverty or longer life expectancy (on both of which Europe also does better than America). But greater public spending tends also to be associated with less economic flexibility—which is why Nordic countries have sought to limit the more arthritis-inducing features of their tax-and-spend programmes.

...For Europe, the secrets of greater social mobility are, first, tough redistribution policies that particularly benefit those at the bottom; and, especially in Nordic countries, a more supple and less class-ridden education system, running from top to bottom. America could learn something from that.

The studies are “Non-linearities in Inter-generational Earnings Mobility” (Royal Economics Society, London) and “American Exceptionalism in a New Light” (Institute for the Study of Labour, Bonn), both by Bernt Bratsberg, Knut Roed, Oddbjorn Raaum, Robin Naylor, Markus Jantti, Tor Eriksson, Eva Osterbacka and Anders Bjorklund.

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Employee Protection

Since my last blog in praise of regulations, I have been thinking about what might happen if a movement started to promote stronger regulations in favor of employees.

We might think of this movement as an evolution of unionism from favoring a few groups of employees to a fair and universal system of employment standards. That this is overdue is clear from something I wrote a few weeks ago about the plight of upcoming retirees who aren't employed by government. While those who work for governments either directly (civil servants) or indirectly (school and university employees) have guaranteed, indexed, and very generous retirement pensions and benefits, virtually nobody else in society does. Those in private industry unions who thought they had pensions are finding that there's a movement in the corporate world to reduce or eliminate them, and those who have relied on the stock market to increase their savings have learned how quickly their savings can evaporate. And many just can't afford to save for retirement. As the baby boomers start to retire, we will see a sharp divide of haves and have-nots that I have described as a looming humanitarian disaster.

So point one in my employment standards package is going to have something to do with retirement benefits. Perhaps it will be as small as continuing employee health benefits when an employee retires (defined as quitting after the age of 65) and providing a severance package to retiring employees. Perhaps it will be more. Perhaps it should be structurally different: have employers contribute more to unemployment insurance or the government pension plan to cover retirement.

Point two might address the issue of layoffs. Since the 1980s, layoffs have become a fixture in the white collar working world. This kind of layoff is very different from the temporary laying off of factory workers when there's no work to do. Here's an example of the problem. In my town there is a company that lays off a lot of employees every year or two. In between they are active hirers and they hire for the same sorts of job that they lay off. The CEO recently boasted that his stock price does so well because he is responsive to market forces. In other words, he hires a worker (who probably is quitting another job to go there) knowing that if the stock slips he will put the person out of work, get a price boost, and rehire someone else.

Currently, severance laws do not have much teeth for employees. They could be improved. For example, a laid-off employee could get a minimum three month's salary (not overly generous when you consider how long it takes to find a job in the white collar world) plus health benefits extended for a certain amount of time. Perhaps companies should also have to prove that certain conditions exist to lay people off.

Some may counter that companies use layoffs to rid the company of deadwood employees who are reducing productivity. But if the employees really are unproductive, then this should be dealt with more fairly, following existing laws for firing. Layoffs are widely used to circumvent the laws of dismissal, often with minimal severance. Employers are frequently lax in their hiring process because they know that they can easily rid themselves of the employee if they don't work out.

A third issue is job contracts. I am forced to sign a job contract if I want to work, and the employer does not allow any negotiation of what it contains. I may have to agree to not work in the same industry for two years after I leave the company. Employees need some legal protection in what they are forced to sign.

Other than retirement, layoffs and job contracts, I'm not sure what our new employment standards should contain. I come from the white collar high tech world and would expect that representatives of other industries and employment types would need to contribute their own priorities. We should look at protections that are provided in union contracts and European laws as a start for our list of protections that should be universally applied.

But say we have a package of employment standards that we want to be enshrined in law. Step two is the political process of getting this proposal accepted. Again, I'm just sketching out some ideas here, but it's a fair guess that the main counter-argument is going to be that such a law will lead to companies moving jobs to other countries, thereby increasing unemployment.

We should remember that the current Canadian maternity benefits standards did not have such an effect, even though in many companies women are now entitled to over a year's leave at fully salary, with a shorter paternity leave also included. Also, while France arguably has over-the-top employee protections, the unemployment rate is less than 10%, and is partly caused by other structural factors. For example, French productivity is much lower, largely because on average American workers work 1,822 hours a year, while French workers work 1,431 hours a year.

Also, in the last 35 years the remuneration of the directors and officers of corporations has increased dramatically. Compensation of CEOs has increased 1300% in that time, versus a 13% increase in average employee compensation. When we're talking about the compensation of directors and officers of corporations, salary is only part of the mix. We got a rare peak into executive perks during the divorce proceedings of General Electric CEO Jack Welch, which revealed a slew of enormous perks in addition to salary, bonus, stocks, and pension. There are tricks that make compensation difficult to measure, such as huge loans that are forgiven when the CEO leaves the company. To get an idea of the money value of stock options to head honchos, go to http://finance.yahoo.com/, type a stock symbol or company name in the "Get quotes" box, and then scroll down the page and click on "Insider Transactions" in the left column. (Pure off-topic gossip here: if you type in the stock symbol MSFT you'll see that in February 2006 Bill Gates sold $1 billion of Microsoft stocks. Yikes.) For example, if you look up the stock symbol SY (for Sybase), you'll see a lot of transactions where high-ups exercised options at far below market value.

The dramatic rise in CEO compensation shows that companies can be competitive and increase payouts. In a company of 1,000 employees, a $1 million increase to the CEO is equivalent to a $1,000 rise in remuneration to each employee.

This leads me to think of another kind of citizen protection we should have in place: annual reports should be required to include a financial ratio that shows total remuneration of officers and directors as a percentage of profits. Perhaps there should also be regulations governing how they remunerate themselves.

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In Praise of Regulation

Reading about the French protesting their government's attempt to lighten the employment regulations for workers under 26, I started thinking... why don't we in North America have more regulations that protect citizens from corporate interests? I like regulations. I think regulations and public education are the two things that make society work.

There are areas of our society that are heavily regulated. The investment industry makes very very sure that there is a ton of regulation and enforcement so that everyone can keep raking in the bucks. Industries like real estate and banking also make sure there's a lot of government regulation when it helps them do business.

There are, of course, all kinds of good regulations that we never think about, like city planning, food and drug regulations, consumer safety laws, rules of the road, etc.

But there could be a lot more regulations to help individuals interact with two related groups: entities that have a disproportionate amount of power and money-making interests. It seems that we need some catalyst to create the public will to push that kind of regulation through (otherwise, government defaults to protecting corporate interests). In Canada, we seem to have the will to address some issues (maternity leave was an easy sell, gun control was not) and in the US there seems to be will to create regulations that keep business running smoothly.

In the US, the stock market crash of 1929 created a public will to regulate corporations, and a similar will arose in 2002 after some corporate scandals led to the Sarbanes-Oxley Act. Canada's anti-corruption regulations are 75 years behind the US. Arguably the most important difference in US and Canadian corporate regulation is that in the US a publicly traded company that owns another publicly traded company has to pay income tax on the dividends it gets from the company it owns. This discourages corporate structures like the one Conrad Black set up in Canada, where he owned a company that owned 10% of a company that owned 10% of a company and so on for about 10 companies deep, and he could tunnel finances from a low-down company up to himself. It's a scandal that Canada allows so much corporate corruption (Conrad Black would never have been prosecuted under Canadian law, but is facing massive fines and serious jail time in the US) and yet there is zippo public discourse about it. In fact, thousands of people invest in those low-down companies without having any idea how horrible an investment they are. (That's where the need for public education comes in.)

In terms of regulations protecting citizens from money-making interests, we have consumer regulations convering fairness in advertising, but sometimes it seems that the rules are designed to con the public into thinking that ads are true while being completely insufficient to ensure that they are. In that sense (which isn't wholly fair), the regulations are designed to benefit the money-making interests more than the consumers.

There are a lot of conusmer protection regulations I remember from 20 years ago that quietly slipped away. There used to be a law (perhaps municipal) that magazine racks couldn't display pornographic magazines except in the top rack with the photographs hidden. The pop bottling industry used to have to offer a certain percentage of bottles that were refillable. Planes weren't allowed to land or take off between 11 PM and 7 AM. Magazines couldn't run liquor ads. Billboards were almost completely outlawed in Ontario.

Sweden is known as a highly regulated country. Their agricultural sector didn't collapse when they created stringent regulations governing treatment of animals. Europe in general has been much more progressive in forcing money-making interests to adhere to community standards.

France isn't doing so well economically so their employment regulations are a bit of a tough sell, and anyway I think they probably go too far, but the French show that a country can give some teeth to employee protection. In France, federal employee laws surpass the protection of the strongest unions in North America. It's very difficult to fire a French worker, workers can take their employer to court over all sorts of issues, they get lots of holidays and so on. I think it is also France that has extremely strong regulations in favor of renters. You see the pattern here: citizens are forcing their government to give citizens more power in their relationships with employers and landlords. Hmmm... we could do that.

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