Federal Employment Growth Unsustainable

Commentary, Core Public Sector Reform, Public Finance & Fiscal Federalism, Public Sector, Lee Harding

Why work for yourself when taxpayers can pay you instead? In the past seven years, more Manitobans than ever have chosen the job security and benefits of federal employment, while the self-employed have begun to vanish.

Statistics Canada snapshots show the most stunning growth of total salaries in one category of worker: federal government public administration (excluding military). In March of 2015, workers of this kind were paid a total of $68.2 million in Manitoba alone. In 2022, they were paid $114.4 million. That’s a 68 per cent increase.

By comparison, total salary dollars paid to Manitoba’s provincial bureaucrats grew just 8 per cent during that time. In the economy overall, they grew 27 per cent.  This means total pay to federal bureaucrats in Manitoba grew 8.5 times as fast as provincial ones and 2.5 as fast as the overall economy.

The federal snowball is partly owing to faster wage growth and partly to more hires. In this March 2015 to March 2022 span, The number of Manitobans over 15 years of age grew 8.2 per cent, but the total number working grew just 5.7 per cent. Drilling down further, public sector employees grew 8.4 percent, private sector employees 7.2 percent, and the self-employed dropped 4.3 per cent.

So what’s going on? Demographics suggest that boomers are retiring and the young get government jobs of high security, high benefits, and high pay. The pandemic boosted this trend as their businesses were crippled or destroyed by public health orders, particularly the catastrophically damaging C19 lockdowns and the “response benefit” that disincentivized people from working.

Annual Access to Information requests by the Canadian Taxpayers Federation also illustrate the problem. Each year the CTF asks how many federal employees make more than $100,000. In 2015, 43,424 federal employees made six figures, rising to 74,925 in 2020, and 114,433 in 2021.

The pension bills for these workers will burden taxpayers for decades. The formula for payouts is 2 per cent times the average of the best five years of salary times years worked. A federal employee working 35 years making an average of 100,000 in their final five years will be paid $70,000 per year until death. That’s rich.

Meanwhile, Justin Trudeau labelled many small business owners as tax manipulators while campaigning in 2015, something even the Canadian Press called “a little baloney.” The Canadian Federation of Independent Business changed the government’s mind on a few damaging federally proposed-tax changes, but some got through. Now the CFIB complains that carbon taxes “pile on too many costs for smaller companies.”

Businesses can’t take on debt indefinitely, unlike the federal government, which borrows $144 million daily without a blush. The only options left for Canadians are a tax revolt, voting out the government, or a job working for the feds. The third option is the easiest for an individual, but over the long term leaves us collectively in trouble.

A federal government that gobbles everything displaces private property and private enterprise. These are the wealth-building institutions of a democratic society, while ever-increasing debt benefits no one but the lenders. It’s ironic to watch Ottawa’s ever-increasing demands in the name of “sustainability.” The ever-growing debt and taxation of the federal government is the most unsustainable thing Canadians face.

 

Lee Harding is a research associate at the Frontier Centre for Public Policy.