Muskens: Several factors have led to shrinkage of skilled work force

These days, a smaller share of a business's profits go to the labourers who help earn it.

My father worked for a large company during the economic boom of the 1970s, and he received numerous wage increases as profits were shared with employees.

Unfortunately, this doesn’t happen as much as it used to. Recent statistics show labour’s share of overall corporate income and profits (in just about all sectors) has decreased since the early 1990s.

Twenty-five years ago in most rich countries, such as Canada, about 66 per cent of the income generated from a country’s economy went to the labour that produced it. Today it’s only about 62 per cent.

This may explain why you hear so much about the rich getting richer—the so-called one per cent—and the decline of the middle class.

In the United States, labour groups blame this on manufacturing companies turning to third world countries to reduce their labour costs. Now you have a country that imports more products and services, and where 54 per cent of new jobs created in the last two years were in the service sector; traditionally lower-paying employment.

Today, minimum wage in the State of New York is $7.64 an hour and just this last week employees in fast-food chains in New York City were considering unionization, and contemplating strike action for higher pay.

Outsourcing labour to reduce costs and relying more on imports aren’t the only problems. Technology also plays a significant role in the need for labour. Over the years many of us have witnessed the implementation of software to reduce labour costs. In manufacturing, many industries have invested in powerful computers and robotics to pare production costs.

Studies have shown that technology has removed many middle-income jobs where workers required specialized skills. This in turn led to job growth for the highly skilled (workers with strong technical/computer skills and those with post-secondary education) and where automation doesn’t work that well, i.e. in the low-paid service sector.

Education plays a key role in ensuring we have the right labour pool to meet the needs of employers. That is why you now hear that Canada has a skills shortage, not a worker shortage. Some refer to this as a skills gap between what the worker can offer and what the employer is looking for.

This is why we need to encourage all young adults and those who are unemployed to consider careers where they have specialized skills and abilities to apply for those high-skilled jobs. And this doesn’t always mean four years of university. Many trades programs start with a level one technical training which can be less than two months and have students working through their first apprenticeship.

Along with degrees there are many technical one year certificates and two year diplomas in a number of areas.

Companies will always look for ways to improve production and keep costs down.  Most will be looking for those workers who have the ability to lead the company forward through innovation, whether it’s technical, business insights or understanding the needs of the customer.

It’s why economic impact surveys keep reporting that investment in post-secondary brings significant returns; not just to students but to taxpayers as well.

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