On higher wages and more taxes – a few thoughts

I have interesting conversations in my role here with GNB.  Lots of folks offer a wide variety of commentary on what government needs to do to get the economy moving in the right direction.

Most people talk about the need for “high wage” jobs to “keep our young people home”, etc. etc. etc.  but they don’t have a clear idea what that really means.  The following table shows the number of workers by sector in New Brunswick (3-digit NAICS) and how average employment income in that sector compares to the provincial overall average employment income.

You will notice that eight of the top 25 sectors by employment are publicly funded industries.  You will further note that all but two of them offer well above wages.  We can have an argument about why this is the case but at the end of the day it is really hard to see how you will see any employment growth in those sectors without overall population and GDP growth.  Public services respond to growth in demand which should correlate to population growth over time (with adjustment for demographic trends).

You will also notice the 16,000+ high wage professional services jobs in New Brunswick – again mostly serving local demand in New Brunswick.  If the population is not growing, don’t expect the demand for lawyers and doctors and electricians to increase.

This bolsters my case for a big increase in the population under 40 in New Brunswick.  As I have argued many times before – while there are some chicken and egg challenges here at the end of the day 1,000 new families creates the demand for somewhere in the range of 900 new jobs – nurses, doctors, teachers, electricians, lawyers, etc.

employmentintens

The other statistic that I wanted to share with you this morning is the average income taxes paid by age cohort in New Brunswick as this also bolsters my argument that we need to see a significant boost in the population under the age of 40 in New Brunswick.  The prime tax paying years for the average New Brunswicker are between the ages of 35-54.  The number of people employed in those age cohorts is dropping as well as in the cohorts that will be moving into those age brackets in the coming years.  We need to back fill the pipeline of younger workers that will provide the lion’s share of taxes in the years ahead.
avgtaxes

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2 Responses to On higher wages and more taxes – a few thoughts

  1. GP says:

    If I’m reading this right, government workers are massively overpaid in NB, whereas everyone else makes far less than people elsewhere in Canada. No wonder people are leaving in droves (unless they manage to score a cushy job at taxpayers’ expense)

  2. As I read it, the only way you can make a decent wage in New Brunswick is to work for the government, as private industry in the province dramatically underpays employees.

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