Wednesday, July 16, 2008

Somebody's getting rich (But it aint you.)

Over at the Church of Mothra, Matthew notes a Globe and Mail article attempting to explain the seemingly inexplicably glum mood among those working in the oil and gas sector - a ubiquitous bunch here in Calgary. Although the original article pins the sour mood on regulatory uncertainty and price volatility, Matthew thinks the blame lies elsewhere.
I believe there's another reason for the frowns and worry lines crossing the faces of oil and gas people here in Calgary. The same article, written for the Lifestyles section of the paper, would have an entirely different spin. Yes, there is a dark mood brewing among the people who work in the petrochemical business here. I've seen this mood a lot, having recently had the chance to work among a large number of Calgary's oil and gas people. And, for the most part, I don't believe any of it is directly caused by any of the above stated reasons.
Matthew points out that while the price of a barrel of oil has increased by 580% in the last twenty years, the 99% of the people working in the industry who aren't taking the elevator to the executive floors aren't seeing anywhere near that kind of an increase in their pay.

For those who think Calgary is nothing but fleets of Hummers travelling from mansion to board room and back again, think again. As of May Calgary's homeless population surged to over 4000 people living in shelters or the streets and that is almost certainly an under count missing a lot of couch surfers.

Some of whom are working in the oil and gas industry and desperately trying to put together the security deposit and first and last months rent to get a place of their own.


rabbit said...

That's not the way I see it.

A lot of Calgarians in the oil and gas industry are doing very well. Most own significant amounts of stock in the companies they work for, and have had their house values double or more over the last few yeras. And many professionals in their 50's are considering retirement.

I don't know why anyone would think that salaries should be proportional to the price of oil and gas. There will be some correlation, but never proportional.

The number of homeless people is likely due to housing prices. Jobs are everywhere, but rent is expensive. Graduates are slow to leave their parent's home because of this.

Cliff said...

"I don't know why anyone would think that salaries should be proportional to the price of oil and gas."

Why not? Most large companies I've worked for the people on the front lines are creating more wealth than the ones in the boardroom. And in this specific instance the disparity is huge - both in rate of pay and frequency of pay increase.

We accept the current state of affairs because we always have, but in Alberta in particular the argument for steadily and massively slashing away at the tax burden on corporations and the wealthy the last few decades has been the trickle down theory that it would roll down hill and create new jobs and industry. Hasn't happened. Just the reverse in fact.

The central concept of the free market is 'Scarcity increases value' so labour in Alberta should be pretty valuable but employers have a thumb on the scale with anti-worker provincial labour laws and super exploitative guest worker programs.

Which won't cover the labour scarcities as the boomers all start retiring at once. Expect Canada - even Alberta to join in the big surge to the political left sweeping the American continent.

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