The analysis of labour markets in canadian sociology

The Analysis o f Labour Markets in Canadian Sociology

MICHAEL R. SMITH

In this article I focus on four major concerns in Canadian sociological analyses of the labour market: (1) the distribution of employment of varying quality among different groups; (2) aggregate trends in the quality of employment and the incidence of unemployment often associated with globalization and technological change; (3) the effects of the relative dependence of the economy on resource extraction; and (4) various comparisons of Canadian labour market performance with that of Sweden, usually to the disadvantage of the former. I argue that these concerns have generated useful research, to varying degrees, but have tended to produce needlessly pessimistic conclusions.

Research and writing on labour markets by sociologists in Canada tends to fall into one of two broad categories. L There is a b o d y of research by Canadians, usually using Canadian data, that examines exactly the same problems as those studied elsewhere. The bulk of this work is inspired by the general sociological concern with relative disadvantage. As we will see, it also has strengths and limits that are present in similar work p r o d u c e d in the United States and elsewhere. There is also work that examines the distinctive characteristics of the Canadian labour market and of the policies and institutions that have shaped it and cont inue to do so. Much of this work, particularly within English Canada, explores the issue of differences b e t w e e n Canada and the United States or it addresses the related question: Why is the Canadian labour market not more like that of a social democrat ic country like Sweden? 2 Of course, this distinction be tween the general and the particular is not watertight. Some studies address bo th sorts of issues at the same time. None the l e s s , in wha t fo l lows I first consider Canadian treatments of what I call the s tandard problems of labour markets and then go on to examine the forces that have p r o d u c e d wha t eve r can be cons idered to be distinct about the Canadian labour market.

Standard P r o b l e m s

Who Gets the Best Jobs?

In Canada, as e lsewhere , identifiable categories of the popu la t ion have jobs inferior to those of others. Average pay is p robab ly the best single gauge of

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this. But pay and other characteristics of employment are often inferred from occupation. A traditional concern of Canadian sociology, in both languages, was the relative quality of jobs occupied by French- and British-origin Canadians. French Canadians, on average, did worse (Porter 1965: 91-98; Canada 1967). This prompts two questions: Why the difference in job quality, including pay? And, what has been the trend in the difference? P a r t of the difference in pay by language was associated with different levels of education, an outcome readily interpretable in human capital terms. But there was a large residual difference. What is striking is that this difference has entirely disappeared. Net of education, there is no difference in pay between anglophones and francophones in Quebec (Vaillancourt 1988: 157-159). This is true at the national level too (Lian and Matthews 1998). 3

So interest has shifted to two other categories of the population: visible minorities (particularly immigrants) and women. Women have lower average pay than men, but the gap has narrowed (Guppy 1989; Fillmore 1999: 280-281; Davies, Mosher, and O'Grady 1996; Armstrong and Armstrong 2001: 41). Why has the gap narrowed? First, occupational segregation by gender has tended to decrease (Fox and Fox 1987). Second, women's levels of education have con- verged on those of men (Geschwender and Guppy 1995: 71-72; Wanner 1999). What explains the residual gender gap? One factor is the occupations in which women usually find themselves employed. Women have continued to flow into traditional women's occupations, many of which have relatively low pay (Fillmore 1990: 283-285; Fox and Fox 1986). Second, there is some evidence that, when women take jobs, they have lower expectations than men with respect to pay, possibly because they had received lower pay in previous jobs (Desmarais and Curtis 1997). Third, there is some-- though limited---evidence of a lower return to education to women (De S~ve and Carter 1980). Fourth, it is still the case that women tend to accumulate less human capital than men. In particular, the fact of child rearing tends to reduce women's work experience (Boyd 1986; Cook and Beaujot 1996). Finally, there is the possibility of discrimination by employers.

Here Canadian researchers run into the same problem as their U.S. counterparts. The average pay of males is higher than that of females. This difference is reduced by the addition of a number of controls (education, experience, possibly the demand for a particular set of skills). There is always a difference remaining. The question is, what accounts for this difference? The temptation is to infer that any remaining difference reflects discrimination. But this inference requires both an absence of measurement error and confidence that all relevant factors have been controlled. Both assumptions are, for most studies, wildly implausible. They are particularly implausible for large aggregate studies con- taining a wide range of occupations. Such studies will rarely include adequate measures of occupational demand. This problem is recognized in at least some of the U.S. research; a recent paper by Budig and England (2001: 220) lays out the issues very well, without solving them.

One way of reducing the magnitude of the problem of unmeasured effects, including demand differences, is to analyze a single occupation. Thus, for example, in a careful and interesting article, Ornstein and Stewart (1996: 461- 482) examined pay differences between Canadian male and female university

106 The American Sociologist / Spring 2002

teachers. They found that after controls for "age, highest degree, rank, career timing, field, institution, and productivi ty" (p. 474) there was a less than 3 percent difference in male and female p a y - - a di f ference that s e e m e d to be diminishing over time, moreover. 4 0 r n s t e i n and Stewart interpret their results in two ways. First, they interpret the residual itself as ev idence of discrimination, trying to reinforce the plausibility of this v iew by downplay ing the possibili ty of measurement error (p, 470). Second, they argue that factors that explain the pay d i f fe rence- - l ike r ank - - themse lves involve a discriminatory process: discrimination they assert, means that w o m e n have b e e n less likely to be pro- moted. Both interpretations are p l aus ib le - -bu t no more than that. Their measures of productivity are problematic (number but not quality of publications). Their "field" categories seem not to distinguish either economics or manage- m e n t - - u n a m b i g u o u s l y h i g h e r p a y i n g f i e ld s tha t p r o b a b l y c o n t a i n an overrepresentat ion of men. And they assert, rather than demonstrate , that the promot ion process has been discriminatory.

It remains clear that, in Canada as e l sewhere , a major factor in reduc ing w o m e n ' s pay is (as well as the occupa t ions in wh ich w o m e n end up) the disruptions caused by child care. In another s tudy of a single occupat ion Robson and Wallace (2001) found no difference in earnings b e t w e e n male and female lawyers, after controls for hours of work, exper ience , and occupat ional spe- cialty. Women lawyers ea rned less because , on average , they w o r k e d less hours and had less exper ience than their male counterpar ts , p r e s u m a b l y to some substantial degree because of child care responsibilities. This could be interpreted as ev idence of a failure on the part of law firms to adapt their practices to women ' s particular needs. Kay and Hagan (1998: 741) make precisely that argument. This interpretation, however , raises issues of cost and performance that cannot be blithely dismissed.

The state of research in Canada on w o m e n ' s earnings, then, tends to run up against the same interpretative difficulties as does equiva lent research elsewhere: quantifying discrimination with a residual is fundamental ly unsatisfac- tory, and labour market ou tcomes for w o m e n are substantially inf luenced b y the choices with respect to occupat ion and child care that w o m e n make, which are in turn influenced by social pressure. That social pressure may itself be v i e w e d as a form of discrimination. But it is important to distinguish it from discrimination that might operate through employer decisions, s

Visible minorities also tend to get paid less, as do immigrants. This earnings disadvantage for visible minorities persists, even after controlling for educat ion (Lian and Matthews 1998; see also Li 1988; Canadian Council on Social Devel- opmen t 2000). The same issue of discrimination as a possible explanat ion is, of course, posed in their case. There is some rather direct ev idence of discriminatory behaviour with respect to visible minorities. The classic and much cited study here is that of Henry and Ginsberg (1985). They sent equivalent ly quali- fied white and non white researchers to apply for jobs advert ised in the help wan ted section of a newspaper . The success rate of the white researchers was much higher. For this sample of jobs, which was heavily we igh t ed towards sales, there was then evidence suggesting bias. There is, further, some experi- mental evidence suggesting a t endency in the wider popula t ion to judge non whites as less competen t than whites (Foschi and Buchan 1990).

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However, Canada's pattern of immigration over the past decades means that there is a considerable overlap be tween non white and immigrant status. It is possible that all or part of the wh i t e /non white differential is accounted for by the particular properties of immigrants, including the cost of somet imes being unable to speak either English or French, or of speaking either language with a heavy accent. This issue has been most carefully examined by de Silva (1992). He found the following: (i) immigrants tend to earn less than non immigrants; (ii) controlling for educat ion and exper ience reduces the difference; ( i i i ) f o r those immigrants who completed some or all o f their education and~or labour market experience outside Canada, the rate of return on educat ion is lower than for the native born; ( iv ) fo r those immigrants who completed all o f their education and experience within Canada, there is no difference with the native born in the rate of return to education; (v) after controls there is no difference in earnings by count ry of origin for all but two groups: immigrants f rom the Carribean and East Asia---other non white groups are not disadvantaged. (' De Silva concludes: "the evidence goes against the view that there is systematic discrimination against immigrants on the basis of colour" (1992: 34). Consistent with this interpretat ion is unpub l i shed research by Henry ( repor ted by De Silva), who used the same method as in Henry and Ginsberg (1985) and found some evidence of a negative effect on hiring chances because of accents rather than because of skin colour.

All of this tends to suggest that the non white earnings deficit in Canada is substantially explained by: (1) lower levels of immigrant educat ion (Reitz 1998), (2) employer reluctance to hire people with strong accents, and (3) the fact that employers are, rightly or wrongly, likely to discount the value of their immigrants' Canadian work exper ience and /o r education. It is not expla ined by a tendency on the part of employers to pay non white employees less for the same job. A detailed study of hiring and promot ion decisions in a large Toronto head office supports this interpretation. Barnard and Smith (1991) found that visible minorities tended to be hired into lower positions than their formal level of qualification and exper ience warranted, but once in those positions, experi- enced no promotion disadvantage. There was some evidence, in fact, that their subsequent promotion probability was higher than that of their non minority colleagues.

Most of the sociological research in Canada on w h o gets what jobs is clearly designed to document inequalities, including discrimination. However, the evidence tends to show, first, that any discriminatory difference be t w een French- and British-origin Canadians has disappeared; second, that occupat ional seg- mentat ion by gender has been diminishing; and, third, that non-whi tes with equally interpretable educational credentials and work histories tend to get paid the same as whites. Moreover, claims with respect to the role of discrimination in female wage determination rest on the methodological ly fragile base of the residual. Discrimination no doubt occurs (see Li [2000] for a forceful claim to this effect for immigrants). Nonetheless, while one would hardly k n o w it f rom the character of the prose used to report m u c h of the sociological research, there is a surprising amount of good news in the findings.: Indeed, we can add another piece of good news that tends to get neglected. We k n o w that Jews were at one time systematically discriminated against in access to educat ional


institutions and employment . We also know that whatever disadvantage was imposed on them in, say, the first half of the twentieth century, their subsequent occupational and earnings outcomes suggest absolutely no relative disadvantage presently (Weinfeld 2001)--a clear cut example of the possibilities for escaping disadvantage provided by the relative openness of Canadian society. My guess is that results for the U.S. are similar.

T h e S truc ture o f t h e L a b o u r Market: P a t h o s o r B a t h o s ?

Canada and other OECD countries share the same technological and international environment. There are the information technology revolution and the series of changes subsumed under the broad heading "globalization"--increased trade, a rise in the economic importance of direct investment, and so-called "hot money" flows. As is the case elsewhere, most Canadian sociologists have a rather pessimistic view of these developments. Both technology and globalization are thought to conspire to eliminate jobs, to polarize those that remain into a proportionately smaller share of well-paid jobs and a rising share of poorly paid ones, to cause the reduction of trade union rights, and to lead to greater employment insecurity as a result of an employer quest for flexibility--imply- ing unemployment , part time employment , temporary employment , and self- employment (e.g., Teeple 1995: 64-67, 113-117; Marchak 256-263; Veltmeyer and Sacouman 1998; Broad 2000).

Now, it is easy to find examples of groups of workers with a precarious employment status (Fox and Sugiman 1999; Menzies 1993); to document examples of labour displacement that might be a product of technological change or foreign compet i t ion (Corman 1990; Wall 1994; Leach and Winson 1995, 1999); to find management initiatives that change working conditions in ways that employees do not like at all (White 1990, 1993); and to describe particular union defeats (Noel and Gardner 1990; Panitch and Swartz 1993). What these findings m e a n is another matter.

There have always been workers in precarious employments . ~ Agricultural labourers and port workers were particularly clear examples of this. But agricultural labourers, who were an important componen t of the Canadian labour force in the 1950s, have almost disappeared from the census, and port workers now have relatively secure employment . As Leach (1993) observes, flexible working arrangements are nothing new in the clothing industry. Hard data on trends in employment or u n e m p l o y m e n t durat ions tends not to suggest an increase in employment instability for the period covered by the relevant stud- i e s . 9 Nor do particular cases of employment loss demonstrate a general process of job elimination as a result of either technological change or globalization. It is, therefore, useful to consider the effects of technological change and globalization more generally.

Does technological change eliminate jobs? In a brilliant treatment, Carnoy (2000: 20-38) has shown that the last decades of technological change have been associated with growth in employment and that countries investing less in technology have no better e m p l o y m e n t records than those investing more. Does technological change reduce the average quality of the distribution of jobs by reducing skill levels? Apparently not. The existing research suggests a rood-

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est amount of skill upgrading during the pos twar per iods examined (Myles 1988a; Boyd 1990) and little change associated with computer izat ion (Hughes and Lowe 2000). Enormous caution needs exercising in interpreting these re- suits. Myles, for example, infers skill upgrading from the occupat ional classification contained in the Canadian Classification and Dictionary of Occupations (equivalent to the U.S. Dictionary of Occupational Titles). But this sort of data source is f lawed because per iodic upda t ing of occupa t iona l scores r educes their comparabili ty over time, and because there are reasons to bel ieve that the classification itself is f l awed--wi th , in particular, much more occupat ional de- tails available on male- than female-dominated jobs.l~ Nor are subjective measures of skill demands or changes in skill demands reliable, as Russell (1995, 1997) has shown in two interesting articles. Nonetheless , the most reasonable conclusion from the relevant sociological research is that there is no ev idence of a declining average skill level of jobs in Canada, and some evidence to the contrary. 11

With respect to globalization, a good test of its effects on Canada is p rov ided by the Canada-United States Free Trade Agreement (FTA) that came into effect in 1989, and the North American Free Trade Agreement (NAVFA), also involving Mexico, that came into effect in 1994.12 Together, these agreements reduced tariffs, limited government rights to impose import or export restrictions, required national treatment of each countr ies ' g o o d s (so that, for example , Canadian safety standards imposed on children's clothing could not be different for imports from the United States than for domest ic producers) , o p e n e d government procurement to firms in the other treaty countries, p rovided for national treatment for investments and services not already covered by restrictive provisions, increased the mutual access of financial institutions, and establ ished a trade d isputes se t t lement p rocedure . Given the p ropor t iona te impor tance within the Canadian economy of trade and investment f lows to and from the United States this provides a good test of the effects on the Canadian labour market of changes usually subsumed under the heading "globalization."

Smith (2001a) examines this issue in some detail. Aggregate e m p l o y m e n t in Canada fell and u n e m p l o y m e n t rose after the FTA came into force. But the same thing happened in other countries. The onset of a general ized recession provides a better explanation for this than the effects of the FTA. NAFTA came into force during the period of recovery, and the fall in u n e m p l o y m e n t and rise in employment that were already underway continued. It is true, however , that employment fell in the t rade-exposed manufacturing sector after the FTA came into force, and that the declines were concentra ted in those industries in which the tariff" cuts had been the largest. There were negative effects of the agreement on employment . But, in aggregate, these were modest .

Nor have the agreements led to a deterioration in either the quality of jobs or to a process of polarization. The jobs created by the trade agreements seem to have been, on average, of a better quality than those that were destroyed. This is because the agreements led to an increase in trade. Trade-related jobs tend to be more highly skilled than non trade-related jobs (see Trefler 1999). In aggregate, moreover, inequality in Canada did not rise from the mid 1980s to the mid 1990s, nor did "polarization," which is not quite the same thing as inequali ty (see Wolfson and Murphy 1998). 13


Finally, there is the matter of the state of Canada's unions. It is possible, as Panitch and Swartz (1993) have done , to assemble a litany of federal and provincial government legislative intrusions into the free collective bargaining process--part icular ly bearing on public sector employees . Whether or not these were warranted or ill-advised is not at issue here. What is at issue is the secular trend in the strength of the labour movement . Organized labour has always had its defeats as well as its victories. Does the evidence suggest a secular weaken- ing tendency that might be attributed to globalization or technology? It does not (Smith 1999a: 205-206; Smith 2001a: 31-34). Since the early 1970s union mem- bership in Canada has risen substantially, and union density rose slightly until the beginning of the 1990s and has remained approximately constant since. Nor has union membersh ip been concentra ted in sectors like services, where the bargaining power of l abou r - -whe the r organized or n o t - - m a y be thought to be weak. The bulk of the union membersh ip in Canada is concentra ted in manufacturing, public administration, education, construction, and health and social se rv ices - -where unions are often strong and effective.

Moreover, the evidence suggests that it is not t echnology or globalization that determines the relative strength of organized labour but the political environ- m e n t - - i n particular, the provincial political environment . The vaguely socialist New Democratic Party (NDP) took power in Ontario in 1990, shortly after the signing of the FTA, and in 1993 passed legislation that was unambiguous ly generous to organized labour. Among other things, it b roadened access to collective bargaining, s t rengthened successor rights (the right to retain union recognition w h e n a unionized workplace is transferred to a new owner) , made the dismissal of unionized employees harder, and accelerated the certification process. All this, however, was undone w h e n the NDP lost office and was replaced by a distinctly conservative Progressive Conservative government . It would be easy to show similar shifts in policy in British Columbia, where government has also alternated be tween parties of the left and the right.

Canadian sociologists have done a good job of document ing particular examples of lay-offs, precarious employment , and union defeats. Like their American counterparts, many have been strongly t empted to infer from these a broad t endency towards insecurity and polarizat ion in the labour market . On the whole, however , the e v i d e n c e - - m u c h of it p rovided by other socio logis ts - - tends not to support this broader interpretation. 14 Heavy-handed sociological treatments transform the pathos appropriately associated with the position of the underprivi leged into bathos.

T h e D i s t i n c t i v e n e s s o f t h e C a n a d i a n Labour Market

The Legacy of Staples

Much begins with staples. Like other areas of European settlement, during most of its economic history Canada was e n d o w e d with very large amounts of land and the resources that go with the land, as well as small amounts of capital and labour. The abundance of land meant that economic activity was or iented to the export of the staples that land could p roduce- - fu r s , fish, timber, and minerals. The capital required to do so was supplied by foreigners. The labour force

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grew through immigration. The so-called staples approach to Canadian economic history emphas izes the effects of fore ign capital ( see Bert ram 1963; Watkins 1963).

First, it is argued, since it is foreign capital that funds investment, it is the preferences of foreign capital that shape the economic structure. Foreign capital seeks to strip resources and p roces s them e l sewhere . This leads to an e c o n o m y lacking both backward and forward linkages: capital goods are supplied from the investing country, w h e r e c o n s u m e r goods are also manufac- tured, using Canadian raw materials (Watkins 1989: 20-21; 1997: 22-23). Sec- ond, locally enterprising Canadians could involve themselves in the financing of staples extraction. This, combined with the relative weakness of manufacturing, laid the foundat ions for a dominant capitalist class that was heavily or iented toward finance (Naylor 1975: 278-279), in particular, toward financing the rail- ways that were critical for resource extraction (Clement 1977: 50). Third, this financial class was habi tuated to advancing capital with a relatively low risk attached to its investments. Consequent ly , w h e n they f inanced manufacturing investment they tended to neglect smaller, more risky, domest ic capitalists in favour of larger, more secure American direct investors (Clement 1977: 292- 293). Fourth, the weaknesses of Canadian capitalism p r o d u c e d by the dependence on staples led to a fairly interventionist state, in particular in financing the transportation infrastructure required for extracting staples (Aitken 1959). Moreover, the tariffs established by the Nat ional Policy of 1879 can be interpreted as an at tempt by the federal government to ove rcome the fundamenta l w e a k n e s s of Canadian manufactur ing (Clement 1977: 51-52; Williams 1991: 185-186). Fifth, the tariffs of the national policy, combined with the weaknes s of domest ic manufacturing, caused U.S. manufacturers to create branch plants within Canada to supply the Canadian m a r k e t - - w h i c h themselves b e c a m e a source of nationalist laments (e.g., Levitt 1970).

Suppose, for the moment, that all of this is true (and ignore the issue of the relative weights of the factors listed above, which has led to much debate) : what might have been the c o n s e q u e n c e s of these factors for the Canadian labour market? The following answers are scattered throughout the literature:

I. There is something called a "staples trap" (Watkins 1963: 63). Because foreign entre- preneurs are oriented to the exploitation of staples for foreign markets they tend to neglect the domestic market. This implies less economic growth and lower wages than would otherwise be the case (e.g., Drache 1984: 52-53); is

II. Resource extraction has become increasingly capital intensive, which has led to the displacement of significant numbers of Canadian workers (Clement 1989: 46);

III. Resource-based industries are typically highly cyclical. Consequently, the employment of many Canadian workers is unstable, either because they work in resource- related jobs or because of multiplier effects from a downturn in the resource sector (also Clement 1989: 46);

IV. The periodic severe downturns that have been produced by collapses in staple prices have led to recurrent lay-offs. These disrupted the process of union growth (Drache 1984: 51-52);

V. The consecutive exploitation of staples is one of the sources of fragmentation of the labour market, preventing the formation of a "free-standing working class culture," both because of the distinctiveness of the employment experiences associated with each staple and because staple exploitation was associated with waves of immigra-


tion, which posed major challenges for working class organization (Drache 1984: 46; see also Phillips 1989: 79);

VI. Furthermore, the development of manufacturing in the form of American-owned branch plants encouraged the spread of American unions, with their particular business union orientation (Phillips 1989: 80).

These are all plausible arguments. That does not, however , make them true. To what extent have Canadian sociologists brought ev idence to bear on these interpretations? Is that evidence convincing?

There is strong evidence that, where staples are extracted, the characteristics of the technology of extraction and processing substantially shape local labour markets. This is well demonst ra ted in an important body of research carried out in British Columbia. Marchak's (1983) pioneer ing study of three forestry-depen- dant t o w n s - - w h i c h tend to be remotely l o c a t e d - - f o u n d that the primary division of labour in the towns involved gender, with men in production, skilled trades, professional, or managerial occupations, and w o m e n in clerical or service work, or in a small number of professions. For men, in aggregate, years of educat ion was not a good predictor of income, but possession of a trade qualification w a s (p. 133); and age predicted income, up to age 54, after which there was some decline (p. 143). The quality of jobs t ended to be related to the nature of the employer: large pulp and paper mills provided relatively secure, durable, employment - -espec ia l ly foreign o w n e d ones; small logging firms and sawmills provided less secure emp loymen t (pp. 183-184, 188-191); and there was a broad pattern of replacement of labour within all three sectors (p. 191). Overall, Marchak concludes, "in forestry, as in mining, the deple t ion of the resource base ultimately spells the demise of the d e p e n d e n t communit ies" (p. 323). There is the ultimate insecurity of communi ty collapse (see also Marchak, Aycock, and Herbert 1999: ch. 5). '<'

There are similarities in the West Coast fishing industry. Formal educa t ion seems to do little for the fishers themselves (who are overwhelmingly men), so they do not acquire it. However, fishing is a seasonal occupation, and those with more educat ion are better equ ipped to find work during the non-fishing season. The res t - - the bu lk - - t end to d e p e n d on unem pl oym en t insurance (Guppy 1987a: 178-180). ~7 Fish processing on shore is equally seasonal and is carried out by both w o m e n and men but with substantial gender segregation. Women tend to be found in the less well-paid jobs (Guppy 1987b). In terms of level of economic activity, fishing communit ies show similar problems of volatility in economic activity and decl ine to forest products firms (P inker ton 1987). A difference in the forest products industries is that divisions within the industry have made it difficult to construct industry-wide unions. The fishers are divided be tween those w h o own their boats and those w h o are employees and (along with the shore workers) are also divided along ethnic lines. The division between aboriginals and non aboriginals is particularly salient (Marchak 1987).

These studies suggest that resource extraction tends to create communi t ies within which w o m e n are economical ly marginalized, educat ion is less important than vocational skills for a large part of the labour force, and e m p l o y m e n t is fragile, to varying degrees. In small, low capital, operat ions (sawmills, fish processing plants) employment tends to be unstable over the business cycle. In large, heavily capitalized, strongly unionized paper mills, emp loymen t tends to

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be relatively stable across the business cycle, but in the long term is th rea tened by the possible exhaustion of the fibre source, along with a secular t endency toward the replacement of labour with capital. This sort of pattern also charac- terizes the mining industry (Clement 1981). The parts of the Canadian labour market directly involved in staples extraction, then, are marked by the production characteristics of the process.

To show h o w a particular regional e c o n o m y has been shaped by staples product ion, as Marchak and her collaborators have done, is a cons iderable accomplishment. But the staples trap is a macro theory. What evidence do we have that e m p l o y m e n t options have ben l imited by its existence? There is some. Marchak (1983: 2-13; 1995: 62) reports that Canada 's forest p roduc t output has b e e n concent ra ted at the lower va lue-added end of the product range ( though there was some improvement in the 1980s) and that there is a negligible Canadian presence in the manufactur ing of equ ipment for the industry. Still, does this absence of backward and forward l inkages apply across resource industries? And is it possible that these apparently d e p e n d e n t characteristics of the resource extraction industries are to some degree offset by a strong upstream and downs t ream presence in other, non resource -dependen t industries?

Clement and Williams (1997) provide the most recent, systematic t reatment of this subject involving a sociologist. They observe the following: (i) compa- nies concentra ted in resource extraction are overrepresented among Canada's exporters, many of which are foreign owned; (ii) this pattern is reinforced by a transportation system deve loped to facilitate resource exports; (iii) nonetheless , automobiles are extremely important, account ing for a large share of total manufacturing exports. Clement and Williams (p. 54) go on to assert the following: "Failure to innovate and to export is reflected in the comparat ively small share claimed by manufacturing in Canada's gross domest ic product" and "Canadian manufacturing has a lower-than-normal share of manufactur ing jobs in its em- p loyment profile" and this "underscores the human cost of emphas iz ing resource production over trade in fully manufac tured goods."

Of course, it does nothing of the sort. And the evidence they present does not really support their conclusion. Take, first, the evidence. It shows that as compared to Japan, Germany, Sweden, and the U.S., Canada has a smaller share of manufacturing in GDP and manufactur ing employmen t in total civilian employment. As compared to Germany the difference is quite large in each case. But as compared to the U.S. and Sweden the difference for the most recent point in time (1989) is very modes t indeed. Is And the differences have narrowed over time! This is not overwhelming evidence for a staples trap, but, in any case, this evidence tells us nothing about "human cost," which is measured by living standards, broadly related to the quality of jobs available. Manufactur- ing jobs are not intrinsically superior. We do have at least one study document - ing moves into a communi ty based on resource extract ion--For t McMurray- - motivated by a strong desire to improve employmen t quality (Krahn and Gartrell 1983).

As Carroll (1986: 5) has emphasized: Canada is rich. At first sight, the average living standards of its populat ion suggest that a staples "trap," if there is one, is not such a painful national condition. In my view, this aggregate issue


has not been sufficiently addressed in the sociological literature. But there is

pertinent information readily available. Dungan (1997: 30-34) shows that, as compared to other industries, the average pay in some of Canada's principal resource industries--mining, primary metals, and pulp and paper-- is very high indeed, and the difference has been rising. Given the secular replacement of labour by capital in the industry this, of course, is precisely what neoclassical economic theory would lead one to expect. Labour productivity is rising rapidly and earnings tend to rise with productivity. Using a more rigorous method than Marchak (input-output analysis) he also shows substantial backward linkages for both the mining and primary metals industry (pp. 142-144). The forward linkages are also substantial, though their importance in the Canadian economy has been declining as the service sector has expanded (p. 197). International markets in the minerals industry, at least, were not notably volatile from the 1950s to the early 1970s, though they were much more unstable thereafter (Webb and Zacher 1988: 150-152). And labour productivity in Canada grew faster than productivity in the U.S. throughout the 1970s, though there has been a relative deterioration in performance since then (Coulombe 2000: 20), as has been the case for its rate of growth in GDP per capita (Fortin 1999: 8).

So, the extraction and processing of some of Canada's principal staples provides excellent living standards to those employed in the industries, probably provides more backward and forward linkages than are suggested in the sche- matic presentations of Watkins and his ilk, and seems to have been accompa- nied by good aggregate economic performance until the beginning of the 1970s, when volatility in many commodity prices increased, and Canada's relative economic performance deteriorated. This is not the place to discuss the sources of post 1970s deterioration in Canada's economic performance, but the asser- tion that it resulted from the substantial resource extraction component of the economy should be considered to be, at best, not proven. Overall, it is not obvious that there are any n e t human costs produced by Canada's strong presence in resource industries.

What about the purported effects of staples extraction on unions? Canada has a lower density than most other rich capitalist countries. Of 18 countries on which Western (1997: 17) reports data, Canada has the sixth lowest level. Staples-related immigration may have contributed to this (though I have seen no systematic treatment of the issue). However, while union density has been declining in most rich capitalist countries (Western 1997: 24) it has been stable or rising in Canada (Smith 2001a). Moreover, one is inclined to think that the unions representing many of the employees in the resource-extraction industries are among Canada's strongest. Some evidence for this is provided by Dungan (1997: 30-38), who shows that the relative returns to labour in mining, primary metals, and forestry, wood, and paper products, are much higher than relative returns to capital--which is what one might expect in a strongly unionized environment.

The overall strength of the Canadian labour movement is certainly weakened by segmentation. The spread of U.S. unions into Canada has contributed to this. In Quebec, for example, there are two major union federations, usually bitterly opposed to each other, one originating in various "international" unions and the other an autonomist, Quebec-based, federation created in opposition to the

Smith 115

international unions (Tremblay 1972). There have been related splits in the English-Canadian part of the union movement (Laxer 1976: Ch. 13). But another major source of segmentation is Canada's linguistic division. The relations between Quebec- and English-Canadian unions have been generally problematic, preventing collaboration and sometimes leading to splits, managed in one way or another. For example, early in the 1970s the F~d~ration des travailleurs du Quebec (FTQ), which contains Quebec's international union component, sought and secured substantial autonomy from the Canada-wide federat ion--the Cana- dian Labour Congress (G~rin-Lajoie 1982: 240). So it is entirely plausible that Canada's staples-related structure has weakened the Canadian labour movement. But I know of no serious research that attempts---even crudely-- to parti- tion whatever effects staples might have from the linguistic division and any other factors.

The S w e d i s h Siren

The earlier discussion of the effects of staples is inspired by concerns and analyses within the so-called "Canadian political economy tradition." This tradition has a number of characteristics: it is, we learn from one of its leading sociologist practitioners, "materialist," "holistic," "historical"; its "key methodological insight is to seek out tensions and contradictions within society as the basis for social change and struggle"; and the "motivation is to know how societies are and can be transformed" (Clement 20001: 406). This is inspiring stuff.

In practice, however, this has very often meant comparisons with Sweden. Much of Canadian political economy appears to be inspired by regret at the fact that Canada is not Sweden. This regret takes several forms. There has been a considerable investment by Canadian sociologists in the study of Swedish society in general and its labour market in particular. Through the late 1980s much of this had a celebratory character. A good example would be a paper by Myles (1988b) that compared the disappointing performance of the welfare state in Canada and other Anglo-American democracies with what had been achieved in Sweden. Moreover, it was argued that the social generosity of Sweden produced better economic performance. At the end of his article Myles went on to identify low unemployment and an economic flexibility suitable for the exploitation of advanced technology as key indicators of superior economic performance and argued that these were present "not in spite of the welfare state, but because of it" (p. 49). The general logic here is that economic security, of the sort associated with the Swedish welfare state (broadly construed), induced workers to cooperate with managers in pursuit of higher productivity (see also Mahon 1987; Muszynski and Wolfe 1989).

The natural extension of this was to try to identify where Canada went wrong. In an ingenious study Laxer (1989) argued that the role of staples in shaping the Canadian economy has been exaggerated, that Sweden, whose geography also encourages the extraction and processing of staples, managed to escape the staples trap. In a Barrington Moore-inspired analysis Laxer argued that it was the Canadian class structure that made the difference. Sweden had a politically powerful set of independent farmers. Farmers tend to distrust banks


and limit their capacity for making money through note issue, which deflects bankers' attention to financing domestic industry. They also tend to favour defence expenditures, which tend to support domestic industry. Canada's linguistic division meant that it was incapable of developing the same sort of politically effective farmers movement.

Then, of course, at the beginning of the 1990s, the wheels came off the Swedish economic bus (so to speak). In the context of two decades of relatively poor growth performance it became financially impossible for the Swed- ish government to minimize the rate of unemployment by stocking the unem- ployed in training programs, a tactic that it had been using for some time. 19 Until the downturn at the beginning of the 1990s Canadian social democratic sociologists managed to ignore Sweden's indifferent growth record. But, when slow growth was joined with high unemployment, celebration of Sweden became something of a challenge3 ~ This was not only a problem for Canadian sociologists. Similar celebrations of Sweden were widely produced (e.g., several of the essays in Goldthorpe 1984).

What is striking about most of the celebratory work is that it rests on the same sort of evidence--broad aggregate comparisons of unemployment, inequality, and government expenditures (though often neglecting serious consideration of growth rates). This is all very well. However, when Myles, for example, claimed that the economic security provided by the Swedish welfare state led workers to cooperate in pursuit of productivity increase, he had no direct evidence for this.

There is, however, a body of Canadian research that stands outside the main- stream of Canadian sociology in its attempt to test directly for this sort of effect. Using both survey data (collected for the purposes of the research project, therefore genuinely comparable) and detailed studies of three manufacturing industries that are important in the two countries--pulp and paper, steel, and telecommunications--it found the following: (i) in the three industries lay-offs, temporary or permanent, w e r e more common in Canada than in Sweden but, in both countries, the preferred method for downsizing was attrition; (ii) Canadian managers were allowed less latitude by union representatives to redeploy labour within the workplace, but had more latitude to go outside the workplace to find skills that they needed; (iii) Canadian managers had more latitude to respond to skill shortages by increasing the pay of those in short supply- -and their Swed- ish counterparts complained with some vigour about their lack of latitude on this issue; (iv) while the survey data showed that Canadian employees were more likely than their Swedish counterparts to be willing to take a pay cut to keep their jobs this difference was n o t explained by a higher degree of anxiety about unemployment on the part of the Canadians; (v) nor were the somewhat more positive attitudes toward flexibility within the Swedish sample explained by a greater amount of employment security; (vi) w i t h i n Canadian pulp and paper mills there is little evidence of an effect of employment insecurity on willingness to be flexible or inflexible with respect to technology and work organization. 21 The most general conclusion from the research is that the theory that security leads to flexibility that has been asserted in many publications, Canadian and non Canadian, and that has been applied with such vigour in the critical appraisal of Canada's labour market policy performance, is not consistent with evidence collected with the intention of directly testing the theory.

Smith 117

C o n c l u s i o n

There is a strong tradition of Canadian empirical research on the l abour market. It has documen ted differences in the quality of jobs in which different kinds of peop le are found. It identifies cases of groups of workers w h o end up in inferior jobs or no jobs at all as a result of impersonal market forces that might be subsumed under the heading of globalization or technological change. In each case, particular Canadian research is part of a b roader b o d y of research that addresses the same issues in the United States and in other countries whe re serious sociological research takes place. At the same time, there is another strong b o d y of research (strongest in the variant genera ted by Marchak and her collaborators) that shows h o w the resource-or ientat ion of Canada 's e c o n o m y shapes the work exper iences and lives of part of the Canadian labour force. As a result of these various bodies of research w e k n o w a lot more abou t bo th Canada in particular and a number of b roader social and economic processes that shape labour market outcomes.

Across these three research d o m a i n s - - e m p l o y m e n t outcomes , trends in job quality and unemployment , and the effects of resource extraction on employment expe r i ence - - the re is a c o m m o n strength. All three areas of research are inspired by a concern with the underdog: with identifiable groups w h o end up with worse j o b s - - f r a n c o p h o n e s before the 1980s, w o m e n , visible minorities, and immigrants; with the effects of impersonal market forces on those employees least e q u i p p e d to deal with them; and with the particular effects of resource extraction on workers and their communit ies . In its concern for the underdog, the heart of sociological research in Canada (so to speak) is certainly in the right place. But this solicitousness with respect to the unde rdog is also a weakness . A concern with the underdog slips rather easily into a d o g g e d determination to find that things are going badly for pretty much any group other than capitalists, no matter what the ev idence actually shows.

I do not doub t that some of the differences in earnings b e t w e e n groups can be explained by discrimination. For example, Henry and Ginsberg (1985) s h o w e d that this was the case for visible minori t ies for some jobs. Yet the relative economic success within Canada of formerly discriminated-against g roups is s t r iking--but is at best grudgingly a c k n o w l e d g e d in otherwise compe ten t schol- arship. Jews have overcome quite de te rmined discrimination and, on average, n o w do very well indeed. Suitably analyzed, the data suggest that f rancophones are doing fine both inside and outside Quebec . Women earn less than men but the difference has been narrowing fairly rapidly. Most visible minorities only do poorly w h e n they rely on an educat ion received outside Canada. I w o u l d argue that these are all ev idence of the remarkable o p e n n e s s of Canadian society, to the recognition of which the Canadian discipline seems to be strongly allergic. It appears to be equally loath to recognize the precar iousness of the inference that discrimination explains the difference that remains b e t w e e n the pay of men and w o m e n after appropria te controls.

Within the context of a broad record of scholarly accomplishment , the staples tradition of political e conomy displays another, but related, weakness . O n the part of sociologists, in particular, it has s p a w n e d a series of illuminating studies of resource e m p l o y m e n t in mines, mills, forests, and fisheries. It has b e e n


m u c h l e s s s u c c e s s f u l a t t r a n s l a t i n g t h e f i n d i n g s f r o m t h e s e s t u d i e s i n t o s e n s i b l e m a c r o - l e v e l i n f e r e n c e s . F o r e x a m p l e , it is n o t e n o u g h to s h o w t h a t t h e r e is a c e r t a i n p r e c a r i o u s n e s s a t t a c h e d to m a n y r e s o u r c e s e c t o r j o b s . A s s e s s i n g d a m a g e f r o m r e s o u r c e e m p l o y m e n t r e q u i r e s c o m p a r i s o n w i t h t h e a l t e r n a t i v e s : H o w w e l l o f f w o u l d t h e e m p l o y e e s in r e s o u r c e t o w n s h a v e b e e n in d i f f e r e n t e m - p l o y m e n t s ? = S imi l a r ly , w h i l e it is p o s s i b l e to s h o w t h a t m a n y c r i t i c a l i n p u t s i n t o t h e p u l p a n d p a p e r i n d u s t r y a r e p r o d u c e d o u t s i d e C a n a d a , t h a t o b s e r v a t i o n a l o n e s e e m s to l e a d to a s u b s t a n t i a l u n d e r e s t i m a t e o f t h e b a c k w a r d l i n k a g e s f r o m t h e i n d u s t r y .

C o n n e c t i n g w i t h m y p r e v i o u s p o i n t a b o u t t h e e f f e c t o n c o n c l u s i o n s o f a d o g g e d s y m p a t h y - w i t h - t h e - u n d e r d o g , th i s m a c r o w e a k n e s s b e c o m e s m o s t ev i - d e n t in t h e w o r k i n s p i r e d b y r e g r e t a t C a n a d a ' s d i s s i m i l a r i t y f r o m S w e d e n . For , w h i l e S w e d e n ' s e g a l i t a r i a n i s m is in m a n y r e s p e c t s a d m i r a b l e a n d w o r t h y o f c e l e b r a t i o n , t h e f u r t h e r c l a i m t h a t it c o n t r i b u t e d to s u p e r i o r S w e d i s h e c o n o m i c p e r f o r m a n c e w a s n e v e r w e l l d o c u m e n t e d . A n d m o r e s p e c i f i c r e s e a r c h t e n d s t o c o n t r a d i c t t h e c l a i m . T h i s is a n a r e a w h e r e h o p e f a i r l y c o n s p i c u o u s l y t r i u m p h e d o v e r r e a s o n . Bu t th i s p a r t i c u l a r v i c e is c e r t a i n l y n o t l i m i t e d to C a n a d i a n s o c i o l -

o g y .

N o t e s

1. What constitutes "sociological" research for the purposes of this article is not a straightfor- ward issue. For tile most part I operationalize this as writing by people with training in sociology and/or appointments in sociology departments. But for some purposes this is an unreasonably restrictive definition. In particular, as Clement (2001) makes clear, the Canadian political economy tradition has involved sociologists, political scientists, and some economists addressing and debating common questions. Consequently, in particular when dis- c0ssing work published in Studies in Political Economl: or by authors who publish in that journal, I will sometimes use a broader definition of "sociological." I also cite researchers from other disciplines when the evidence they have presented is pertinent.

2. A good case can be made that comparisons with Australian economic history are likely to be more instructive than are comparisons with either Sweden or the United States since Australia and Canada share two critical characteristics: (1) both were colonies of Great Britain and (2) resource extraction has been and remains a distinctively important source of their GNP. Nonetheless, there have been important differences in their trade policy. In particular, the trade focus of Canadian policy shifted away from Britain earlier than did that of the Austra- lians. See Pomfret (2000) and Rooth (2000).

3. For reasons of space, in what follows I do not distinguish between studies of income and of earnings, though for many purposes the distinction is important.

4. "Career timing" includes the age at which full-time teaching began, years employed at other universities, time employed at more junior ranks, and time at rank held at the time of the study.

5. For a still useful analysis of this issue in terms of discrimination before the market and discrimination within the market, see PheLps Brown (1977).

6. Li (2001) has produced a related analysis that is designed to contest de Silva's interpretation. His main point is that foreign degrees have a negative impact on the earnings of immigrants but not on native-born Canadians. This seems to me to be largely beside the point. The issue is the interpretability of the qualification. It is likely that most native born Canadians who studied out of the country did so in the United States or Europe, areas within which the interpretation of the quality of the degree is less problematic.

7. See, for example, the exceedingly grudging presentation of relative improvement in women's occupational attainment and earnings in the most recent edition of Armstrong and Armstrong's text (2001: Ch. 2),

8. The general argument being made here is outlined in Smith (1999a).

Smith 119

9. For excellent, thorough, treatments of the issue of trends in employment instability in the United States--that turn up little evidence of deterioration--see Neumark (2000).

10. See Cain and Treiman (1981) and Betcherman (1991: 96). 11. By far the most common conclusion from the research of economists is that skill levels have

risen. For a review of that research see Smith (1999d, 2001c). Even Livingstone (1999), who has a generally pessimistic view of things, acknowledges that there has been a small increase in skill levels in the postwar period.

12. Useful sources on these are Lipsey and York (1988) and Lipsey, Schwanen, and Wonnacott (1994).

13. To be specific, the measurement of inequality "focuses on relative income shares across a broad range of a distribution" while polarization "focuses more on proportions of persons or population shares at the two ends of the distribution" (Beach, Chaykowski, and Slotsve 1997: 135-137).

14. For some discussion of why globalization may not have the negative effects anticipated, at least in the magnitudes anticipated, see Smith (2001b).

15. This view is criticized in Carroll (1986: 24-31). 16. A similar pattern can be read from the studies of Nova Scotia, using very different methods,

of Apostle, Clairmont, and Osberg (1985a, 1985b). 17. Unemployment insurance is now called employment insurance. 18. For output the percentages are: Canada, 17.5 percent; Sweden, 19.7 percent; the United

States, 18.9 percent. For employment they are: Canada, 14.6 percent; Sweden, 18.9 percent; the United States, 17.0 percent.

19. On Swedish economic performance see Lindbeck (1997). On the use of training programs to stock the unemployable see Johannesson (1995) and Blanchflower, Jackman, and Saint-Paul (1995).

20. For an interesting attempt to interpret the recent economic history of Sweden in a way that is compatible with Canadian social democratic premises--for example, by emphasizing the effects of globalization--see Olsen (1998). See also Clement (1994), who combines globalization processes with changes in class strt,cture and interests.

21. See Smith et al. (1995), van den Berg, Fur~ker, and Johansson (1997), Smt, cker et al. (1998), van den Berg et al. (1998), Smith (1999b), and van den Berg et al (2000). For evidence of a positive effect of employment insecurity on flexibility see Smith (1999c).

22. On this sort of issue it is always useful to ask the following question: Why would resource sector workers have chosen to make themselves worse off by taking jobs in resource towns rather than in metropolitan areas? It is always possible to answer that they made a mistake. But my view is that the attribution of stupidity for the purpose of constructing an explanation should always be undertaken with some caution.

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