What economic impact assessment has been done in terms of job impacts
Victor Godin
The Vancouver Sun
The B.C. government coalition has made it unequivocally clear that its intention is to cool the housing market and lower sales prices. What isn’t so clear is what economic impact assessment has been done in terms of job impacts.
Housing construction is a job bonanza for skilled trades. In April, B.C. celebrated Skilled Trades Month and the province’s post-secondary institutions promoted their growing skilled-trade programs. Students are increasingly attracted to these education options. Therefore, the question of the impact on jobs of the government’s housing-price-reduction mission is critical.
The jobs that could be affected by slowing sales and squashing prices are significant. The Canadian Home Builders Association states that in Greater Vancouver there are over 56,000 well-paid jobs in homebuilding trades, generating $3 billion in salaries annually. How many of those jobs will be lost?
The potential job impact goes beyond Vancouver. The government reports that 140 communities throughout B.C. rely on a strong forest industry. Has there been a calculation of how much of that wood comes into the B.C. homebuilding market? Does government know how many of those small-town jobs will be lost if the homebuilding market is smothered. Then there are the 80-plus First Nations in B.C. who have dependence on logging. For some of them, that’s their only economic option. Has anybody assessed the impact of the housing policies that will shrink their market opportunities?
Of course, governments always claim that they have economic studies to prove their policies are growth generators. This is what a former Clinton Whitehouse adviser and Princeton economics professor, Alan Blinder, calls “ The Lamppost Theory.” He defines it in a new book as follows: “Politicians use economics like a drunk uses a lamppost for support, not for illumination.”
So undoubtedly, some government economist in Victoria was sent to his cubicle to create a model to support the government’s housing-market gambits. It’s fluff.
Regarding the contention that building multiple-family units will cover the job losses resulting from stagnating private home building, it is risible. The jobs per-square-meter comparisons between single and multiple-family units in the building phase aren’t even close.
As for the job generation stemming from upkeep expenses, the gap is even wider. A homeowner routinely has tradespeople doing upgrades, redecorations and repairs. On the other hand, the occupant of a highrise unit might buy rubber washers for the kitchen sink every five years.
What is clear is that the affordability problem will increase and killing a job-creating sector isn’t a solution. Three factors will drive this. First, technology will affect job growth. When Elon Musk, founder of Tesla, described his new battery plant, which will be the biggest factory in the U.S., he said, “ It will be a building where machines build machines.”
Add to that the growth of what we call gig jobs, as well as the move to shared workspaces. Combined, this means fewer people producing more.
To get a glimpse of this future, it’s interesting to see the announcement this month by Cisco, a leading high-tech company. Cisco said it was donating $60 million Cdn to help with a homeless problem in a particular urban centre. That place is Silicon Valley, the technology heart of the U.S., where 8,000 people are sleeping on the street.
The real solutions to the affordability issue come down to making B.C. an attractive investment climate and for local governments to be an active part of that mission. It doesn’t seem on the radar for either.
Money walks. When governments erect investment barriers, money walks elsewhere. While preening about erecting barriers to home ownership, governments should also be asked to define their strategies for encouraging large business investments that create thousands of well-paying jobs.
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