Say Goodbye To The East Coast Discount, Or Say Goodbye To Your Talented Employees
The Saturday Huddle is a weekly column that features opinion, analysis and reflections on Huddle stories, podcasts and business news in the region. Derek Montague is a Halifax-based reporter for Huddle.
Let me ask you a quick question. Do you own a business in Atlantic Canada where your employees can work from home? Are they uber-talented, and integral to the success of your company?
Congratulations, you are now officially competing to retain those important employees with the national, or even international market. Assuming your employees are checking from time to time for a better paycheque and new opportunities, you will soon have to pay much more to retain their awesome talent.
In other words, the Toronto standard of pay will soon be the norm across Canada. This is the end of the “East Coast Discount.”
Depending on whether you are the person writing the cheques or receiving them, this idea is either financial heaven or financial hell.
And if you are a business that’s now competing with Toronto dollars, the gap isn’t a small one to close. According to Statistics Canada, in 2019 the average after-tax income for families and “unattached individuals” was between $53,000-$56,000 in New Brunswick and Nova Scotia. In Ontario, however, that number was $66,000.
These numbers will vary depending on the type of industry you are in. But it’s not farfetched to imagine an employee calling you one day and saying you need to up his or her salary by 10 or 15 grand to retain them.
I already know of two people who are now working in the Maritimes, from their homes, for companies West of here. They have told me the salary difference is night and day.
For eons, people believed they could give and take less in Atlantic Canada because it was more affordable to live here. That perception, whether it was ever true to begin with, is quickly eroding.
First off, runaway inflation has made life way more expensive–period. No matter where you are right now, there are no deals. The rental market is unaffordable; the grocery stores, with their gouging under the guise of inflation, are sending more people to the foodbanks.
I remember a time when the East Coast Discount (kind of) worked. In 2011, I had just graduated from St. Thomas University. Like many recent arts graduates, my degree felt like it wasn’t worth the paper it was printed on in the working world.
It didn’t help that the job market in Fredericton at the time stank. The only places that seemed to be hiring were gigantic call centres. I remember during group interviews and training seeing my fellow down-trodden peers, fresh out of our grad ceremony, looking for any work possible.
Think about all the government money that has been spent since the days of Frank McKenna to attract call centre jobs to New Brunswick. You would hope that with all the government subsidies those jobs would be high-paying.
I had two call centre jobs a decade ago and both barely paid over a minimum wage. How does that New Brunswick saying go? Aim for the stars, land in a call centre?
Perhaps the wages have improved with time, but my peers and I (all single) were barely getting by. I don’t know how my colleagues with kids survived.
But I survived the East Coast discount. Fredericton had a lot of cheap student rentals. I may have been taking home a mere $1,400 or so a month after taxes, but my rent was $550 for a bachelor apartment, utilities included.
I don’t think I need to stress that those days, in any Atlantic Canadian city, are over.
Also over are the days when people are easily convinced that the cost of living evens out between Toronto and Halifax or Toronto and Saint John.
With so much of our economic world-changing, with the pandemic and record-high inflation, more and more studies are being done on the cost of living. The early results have shattered any justification for an East Count discount.
The most eye-opening study was on youth affordability. It showed Halifax was the least affordable city for young workers out of 27 in the country. Other Maritime cities didn’t fare much better.
Talking to Huddle, Robert Barnard of Youthful Cities brought up how tired East Coast youth are of hearing about an East Coast Discount. They know it’s bunk.
RELATED: Halifax Ranks Last In Canada For Youth Affordability
Barnard said people used to look at Toronto as the unaffordable boogeyman because they often compare home prices, not other costs of living. As Barnard noted, most people are not even thinking of being able to afford a house right now, so that market doesn’t matter in their calculations.
Instead, it’s the cost of rent, utilities (much cheaper in Ontario than in Nova Scotia), food, public transportation, and, of course, wages-where Atlantic Canada is lacking. When you look at those factors, Toronto isn’t such a big bad city after all.
It’s interesting to look back at the call centre industry. The pandemic has changed everything. It was once taboo for call centre employees to work from home. There were security concerns, for example. When I worked in that industry, we weren’t allowed phones or even paper at our desks, in case we were up to illegal shenanigans.
But workers had no choice but to work from home during the pandemic. And now, even with restrictions lifted, I know of call centre employees who are still allowed, even encouraged, to keep doing so. One person who works inside the industry told me the chance to work from home is now used as a hiring incentive.
And now that call centres are no longer forced to have hundreds of employees all tethered together under one roof, they too can be wooed away by a national, or even global company.
This is the part where I’m supposed to present a silver lining. But there is no easy solution if you find yourself in a position where offering $15,000 more to an employee can’t be done without raising the price of your services.
Atlantic Canada has a smaller population and a much smaller corporate market, which is one reason why it’s harder for smaller companies to offer Toronto-style wages.
But this is the reckoning that is coming to Atlantic Canada. Say goodbye to the East Coast discount, or say goodbye to your invaluably talented employees.
You are now competing on a national and global scale.