It was only a matter of time. Whenever the economy heats up, business people reward themselves with bigger salaries and hefty bonuses.

“We’ve earned it,” they tell themselves as they put orders in for the latest BMW or gas-guzzling monster SUV.

But when ordinary, wage-earning workers begin asking for a bigger piece of the pie, they’re usually denounced as greedy and short-sighted.

Over the past few months, this double-standard has re-surfaced with a vengeance in Alberta.

As groups of unionized workers — from nurses and paramedics in the public sector to construction and energy workers in the private sector — have tabled aggressive contract positions, a wounded cry of protest has gone up from corporate boardrooms and business press.

One prominent columnist described unionized Alberta construction workers as among the most “coddled” in the world and called their wage demands “absurd.”

Calgary Herald, Page A23, Sat Sept 1 2007
Byline: Gil McGowan

A well-known business professor and an influential energy industry analyst both warned darkly that the wage demands being advanced by Alberta workers threaten to drive up inflation, undermine our province’s “business-friendly” reputation and scare away oilsands investment.

One B.C.-based construction boss went so far as to say that unionized workers were “holding a loaded gun” to the head of Alberta’s economy and that all workers (not just those deemed “essential”) should be stripped of their right to strike.

In the face of these kinds of verbal assaults, some working people might start wondering if, just maybe, the bosses are right. But they shouldn’t allow themselves to be sucked in by all the hype and mock indignation.

The truth is that the wage increases being sought (and won) by unionized Alberta workers have been reasonable, fair — and entirely appropriate.

In most cases, unions have been asking for increases of between five and seven per cent a year. This might be out of line in other provinces, where the cost of living has been increasing by about two per cent annually.

But in Alberta, inflation shot up by more than five per cent in the first six months of this year — and in June it rang in at a whopping 6.3 per cent over the cost of living in June 2006. That’s three times higher than the national average.

In this climate, wage increases of anything less than five or six per cent represent a cut in take-home pay and purchasing power.

Given the unprecedented growth in the Alberta economy — and the fact that inflation-

adjusted wages have remained essentially flat for the past 15 years — is it unreasonable for workers to aspire to something more than treading water?

If the working middle class can’t get ahead during a boom, when exactly can they?

In response to the claim wage increases will drive up inflation or discourage investment, two things need to be said.

First, growing unionized wage demands haven’t caused Alberta’s overheated economy — they’ve been a response to it.

If the only way the boom can be sustained is by convincing workers to take cuts to their inflation-adjusted take-home pay, then the boom is probably not sustainable.

Second, threats about “capital flight” are overblown. Even factoring in rising costs for things like labour and building materials, the Conference Board of Canada projects that the Canadian oil industry is on track for $12.6 billion in profits this year — not a record, but very healthy.

What really determines whether energy companies invest in Alberta is not labour costs — it’s global demand and international prices for oil.

As Newfoundland Premier Danny Williams recently demonstrated, in a world of rapidly disappearing “cheap” oil and galloping demand from monster economies like China and India, energy companies will (however reluctantly) pay more for the privilege of exploiting publicly-owned energy resources.

Oil executives may bluster and rattle their sabres — some of them may even take their balls and leave the sandbox for short periods. But as long as we have the resource the world wants, they’ll be back.

Having said all that, union members and leaders agree that inflation is a real concern for Albertans. It bites into both corporate profits and individual workers’ standard of living.

But workers are not causing the problem — they’re just trying to avoid being swamped by the rising economic tide.

The real cause of overheating in the Alberta economy is the decision by energy companies to develop an unreasonable number of oilsands projects at once — and the decision by the provincial government to stand passively on the sidelines.

If our leaders in government and business really want to tame the excesses of the economy, then what we need — as former Premier Peter Lougheed has urged — is a plan to regulate the pace of development so that it doesn’t outstrip the ability of our labour force or infrastructure to handle the growth.

We also need rules to ensure upgraders and refineries are built here — as opposed to having valuable “downstream” jobs shipped down pipelines along with our oil to the U.S.

Left to their own devices, energy companies will never do this. And none of them will willingly put the public interest ahead of their corporate self-interest. Only government can effectively play the role of referee, traffic cop and steward of the public interest.

Unfortunately, our barely visible premier, Ed Stelmach, has made it clear he has no plans to “touch the brake” or address the energy industry’s Wild West approach to development.

This stubborn refusal to stand up for the public interest may cause Alberta’s economic house of cards to come tumbling down. But let’s be clear — that collapse will be the result of business and government policy failures, not wage demands.

So what’s my advice to working people?

Don’t be afraid to use the power that the market is giving us to drive hard bargains and grab the biggest piece possible of Alberta’s economic pie.

Smart people take advantage of market conditions to get the highest possible returns. The labour market is a market like any other, so we’d be suckers if we fell for corporate guilt trips and missed out on this opportunity to make gains.

Calgary Herald, Sat Sept 1 2007
see also Edmonton Journal, Mon Sept 3 2007
By Gil McGowan
AFL President