Last month, Bank of Canada Governor Stephen Poloz presented a solution to the nation’s unemployed youth: if you’re still living in your parents’ basement and you can’t find work in your career field then perhaps you should volunteer in your respective industry.
Speaking to a House of Commons committee in November, the central bank head was asked what his regular advice is to the jobless youth, in which Poloz responded that young, educated people without experience must at times work for free in order to stay up-to-date with their fields and to put something on their resume.
Poloz conceded that hiring hasn’t kept up with the country’s improving economy, which is something he projects will change within the next two years Until then, the best route to take is volunteering.
Here are his entire remarks pertaining to the matter that generated nationwide headlines:
"When I bump into youths, they ask me, you know, ‘What am I supposed to do in a situation?’ I say, look, having something unpaid on your CV is very worth it because that’s the one thing you can do to counteract this scarring effect. Get some real-life experience even though you’re discouraged, even if it’s for free."
This drew the ire of many youth groups in Canada. Claire Seaborn, the president of the Canadian Intern Association, told CBC News that these comments are "extremely problematic" because they devalue labour laws, diminish the abilities that today’s youth have and are unsympathetic towards the socioeconomic issues related to unpaid internships.
"Mr. Poloz’s comments seem to suggest that all young people are extremely inexperienced and live in their parents’ basements and don’t have anything to contribute to the workforce," said Seaborn.
Although the Bank of Canada has been an inept institution much like the other central banks around the world, Poloz’s statement does seem somewhat justified. In today’s economy, the labour market is highly competitive and human capital is either immensely high or quite low. For every job, there are 10 others applying for it with greater education and experience. If an unemployed youth can’t find work and has relatively no experience then they should perhaps decide to participate in an internship or volunteer in their fields.
Canada currently maintains a youth unemployment rate of nearly 14 percent. Of course, minimum wage laws are part of the problem, but volunteering can be the remedy to finding work with better pay. Indeed, it’s better to have something on your resume than nothing at all, especially if it has been nothing but chronic joblessness.
The common argument is that businesses want to pay their employees zero, which is entirely disingenuous when one considers economics. Companies are always competing for workers - just take a look at North and South Dakota, Alberta andSaskatchewan - and will try to beat out their competitors for the best labour possible, and this consists of higher wages, benefits and other perks.
With that being said, if a person decides to voluntarily work for free at a company then it’s something that’s agreed upon between the two parties and has nothing to do with government. If the individual doesn’t want to work there anymore as they feel they have the necessary experience to seek out a better paying job out there then they are free to do so.
Internships and volunteer gigs have allowed millions of workers to gain success in their career fields. An enterprise isn’t going to hire a 21-year-old with a Bachelor’s Degree in liberal arts and no experience a $50,000 salary in today’s economy. If this type of person wants success then it’s likely that they’ll have to volunteer to obtain other skills. Colleges and universities do not perform an adequate job in preparing today’s youth for the real, working world.
Here is what the Mises Institute’s Jeffrey Tucker wrote on the issue:
"It would be one thing if an employer could forgo housing and other benefits and just pay a really low salary to first-time employees. But that is not the case today. The state and its heavy hand have seriously restricted the right of employers to negotiate salaries. The government provides a canned model of employment — wages, benefits, working hours — that it applies in every situation, even those where it cannot possibly be fruitful, which is especially with applicants right out of school.
"Look at the unemployment rate among 20-somethings — now at 25 percent and rising. It is more than twice the national average, and this is for a reason. The costs of hiring far outstrip the value of new workers to firms. During a recession, these marginal workers are avoided. There must be some solution that the market provides, if only for young people to not be completely shut out of the division of labor. The rise of the internship is the market’s finding the workaround to government regulations, evidence of the tendency of liberty to grow up like grass in the cracks of sidewalks."
The global economy doesn’t want a generation filled with sociologists, experts in 15th century English literature or painters. Today, and the future, needs professionals in the hard sciences, technology, engineering and mathematics. There are labour shortages in an array of areas, but there aren’t enough skilled workers to fill those positions.
Remember, no one has a right to a job. It’s simple economics: when there is demand for labour then there will be a supply. This will then lead to (hopefully) a negotiation of salary, and if the job applicant’s skills are in demand then businesses will compete for this individual. Anyone can push a broom, but not everyone can work the oil rigs. Anyone can flip burgers, but not everyone can construct a computer. The market then determines what those wages will be.
Emotionally, we may vilify Poloz. Logically, Poloz is correct - just not in monetary policy.
Photo by John Loo via Flickr.