Temporary foreign workers stand in front of a job posting board during their lunch break at the Highline Mushrooms farm in Leamington, Ont., on April 14, 2016.Mark Blinch/Reuters
By now the consensus is ironclad. It stretches from the far right to the near left, from barstool philosophers to credentialed economists: Canada is taking in too many immigrants – too many temporary foreign workers in particular.
As a thousand op-eds confidently inform us, the problem the temporary workers program was designed to address, a shortage of workers in some trades, is not a problem. Or so far as it is a problem, the solution is in employers’ hands: just raise wages. The workers who businesses complain “won’t take” these jobs would take them if they paid more.
Even better, employers could automate, or provide their existing work force with more machinery and equipment, raising output not by expanding employment but by raising productivity. By permitting employers to import workers from abroad, on the other hand, the program has stifled productivity and depressed wages.
It all sounds pretty convincing, so long as you swallow the unstated premise: that the labour force is, or should be, fixed at current levels; that businesses should be restricted to recruiting from the existing pool of workers, rather than bringing in more from outside; that the market for labour is defined by certain geographic boundaries, such that any movement of workers across those lines, if it is to be permitted at all, should be regarded as unnatural and artificial.
Perhaps that still sounds right to you. Only that’s not the rule most of the time, or in most markets. If there is a shortage of, say, bananas where you live, no one insists, nor does any law require, that you offer a higher price until a sufficient local supply materializes: you are allowed to bring them in from elsewhere.
Oh come on. We’re not talking about bananas. We’re talking about human beings. All right. Every year the labour market is swamped by the arrival of tens of thousands of workers from outside the existing labour force: young people. Should employers be permitted to hire them? Shouldn’t they have to raise wages for older workers instead? Think of the productivity gains if, instead of hiring all those teenage burger-flippers, McDonald’s restaurants were obliged to use robots.
Sigh. The progression of workers through the life cycle is not to be compared to the movement of workers between locations. Okay. But employers bring in workers from out of province all the time, without controversy: How do you think all those Newfoundlanders ended up working in the Alberta oil patch? Isn’t that an “artificial” solution? The oil companies could just offer higher wages to Albertans!
Not the same! There’s a difference between national boundaries and provincial. Fine. Then what are your views on international trade? Whenever a company outsources production abroad, or purchases goods made overseas, they are “importing” labour just as surely as if they had hired them to work in Canada.
Only in that case it’s called comparative advantage, a special case of the division of labour: We specialize in the things we’re best at, other countries specialize in the things they’re best at, and we trade to our mutual benefit. Most people understand and accept this – especially those economists now leading the charge against hiring foreign workers.
Or forget trade in goods. These days, it’s as easy to outsource services. The Canadian company that hires telemarketers in India, or staffs a help desk out of Lithuania, is unlikely to arouse much opposition. But let it bring those same workers over here, and suddenly it’s a scandal. You could have just paid more to Canadians!
There’s nothing artificial or unusual, then, about firms adding labour, as a response to labour shortages, rather than raising wages. What’s artificial is preventing it: a prohibition we apply only in the highly specific case of workers moving across national boundaries in search of employment, and in no other.
There’s no more reason to forbid firms from hiring temporary foreign workers, in the name of higher wages, than there is to forbid them from hiring teenagers. For that matter, there is no more reason to force firms to automate, in the name of higher productivity, than there is to restrict automation in the name of higher employment. For any given set of input prices, there is an optimal mix of labour and capital, which employers are best left to figure out on their own.
Does that mean the temporary workers program is without fault? Hardly. Notably, workers admitted under the program are prohibited from accepting another job, on pain of deportation, leaving them vulnerable to exploitation. That argues for liberalizing the program, not shutting it down: letting workers take other jobs, in the short term, and in the longer term giving them a path to permanent residency.
The problem with temporary foreign workers, in short, isn’t that they’re foreign. The problem is that they’re temporary.