Negative side effects

Posted on August 24, 2012 | Atlantic Business Magazine | 0 Comments

It was iconic American president John F. Kennedy who was first credited with the phrase ‘a rising tide lifts all boats.’ He was using the term to defend accusations of pork barrelling levelled over a dam-building project he supported, implying that everyone would prosper from the development. Like all aphorisms it sounds true when first heard, but a closer look reveals that even prosperity comes at a price, and tides can sometimes swamp boats as well as lift them.

When St. John’s resident Cheryl Cline needed an electrician she figured it would be a simple matter to find one. She soon learned differently. Cline used up all her connections trying to find someone, to no avail. Then she started going through the telephone book. That proved equally fruitless.

“People wouldn’t even come out to see the job,” she says. “When one finally did, we were blown away by his quote.”

Finally the man who did the original wiring, who was too busy to take on the new project, gave her the name of someone to try.

“If it wasn’t for that referral we never would have found someone,” she says. “Even then it took a long time.”

Cline’s plight is a familiar one and, for some trades, the situation is only going to worsen as major projects in Newfoundland and Labrador ramp up, effectively vacuuming up all available workers.

Statistics Canada numbers point to a shortage of skilled trade workers across the country in the coming years as baby boomers retire from the workforce and inadequate numbers of younger ones step in to fill the breach. In Newfoundland and Labrador, which already has an older than average population, the situation is critical in some trades.

Boilermakers, electricians, ironworkers and welders are forecast to be in such short supply by next year that projects could be delayed or deferred. The situation is only somewhat better for other trades such as crane operators, sheet metal workers and truck drivers that are crucial to megaprojects like Hebron and the Lower Churchill development. Those two projects alone need 5,700 (mostly skilled) workers.

Projects like these, and a healthy oil and mining industry, are dramatically slowing the out-migration trend as well as bringing new people to the province, and that’s helping to fuel a hot real estate market. Prices are soaring. In 2002, the median price for a single detached house in St. John’s hovered around $100,000. Anyone who bought into the market at that point did themselves a favour. In 2012, that number has climbed to $319,000. And despite alarms being raised in the rest of the country about bursting bubble and declining sales – down four per cent on average over this time last year – in St. John’s, 65 per cent more homes were sold in June 2012 than in June 2011.

Rental figures are equally explosive, especially for people on fixed incomes. Vacancy rates in St. John’s hover around two per cent and in some parts of the province the numbers are even worse, leaving people scrambling for a place to live.

At the Off-Campus Housing Office at Memorial University, co-ordinator Raymond Critch says the problem there isn’t so much with the number of rental units available as it is with the cost of renting.

“What would have been worth $500 a month in 2002 is now going for $900, well above the rate of inf lation,” he says. As a result students are taking on more part-time work – not just one, but two part-time jobs in some cases – in order to cover their rent, and that’s affecting their studies.

For students the problem is a temporary one. Others find themselves in the crunch with no way out.

Lana Payne is the president of the Newfoundland and Labrador Federation of Labour. While she thinks the province has done a lot to be commended for with its newfound prosperity, she worries about housing. “In St. John’s, Labrador West and other communities there’s been a huge increase in the cost of living. This will be the single biggest factor regarding who gets left behind,” she believes. “We must make sure we invest in affordable homes.”

At a stakeholders’ meeting in November 2011, Newfoundland and Labrador Housing was told in no uncertain terms that the number one issue they face is affordable housing. The demand for commercial property may be even worse.

“Companies are looking for Class A office space in the downtown, but the vacancy rate is 0.2 per cent,” says St. John’s mayor, Dennis O’Keefe.

Rental problems are trickling past the downtown core. For years a small plaza on the outskirts of town that housed such homely businesses as a dentist’s office, a corner store and a Chinese restaurant ticked along quite comfortably. Then in May all the tenants were given notice. The owner had decided to convert the building to condominiums.

The Community Sector Council, a nonprofit socio-economic advocacy agency which rented space in the building for over 25 years, found itself looking for a new home on a very tight time line, and facing very different conditions.

“When we moved in in 1985 we were in the driver’s seat and the owner had to compromise,” explains CEO Penny Rowe, “Now there’s no room to negotiate.”

The city faces other problems as well, including an aging infrastructure that’s increasingly stressed to the limit.

“As the economy continues to grow, prices escalate,” O’Keefe says. “Road and bridge work that cost x number of dollars last year is now growing, and $500,000 becomes $800,000.”

Although Newfoundland and Labrador is far from a dangerous place to live, prosperity has also helped it buck another trend. Crime rates, while generally declining across the country, are up in the latest ‘have’ province. The Crime Severity Index measures the seriousness of a crime. While the numbers are down nationally by an average of 22.5 per cent over the last 10 years, that number has risen by almost 17 per cent in St. John’s. And the problem isn’t confined to the capital city. The index increased 13 per cent across the province in the last year alone. The numbers of crimes committed are also on the increase. Robbery was up 53 per cent and car theft was up 66 per cent in the last round of statistics for the capital city. Prosperity means more people to steal from and more stuff to steal.

But the big increase is in drug crimes. Arrests for drug production were up 22 per cent. Importing and exporting drugs was up 60 per cent and trafficking was up 41 per cent. Those numbers don’t surprise Sgt. Marc Coulombe of the RCMP. “Drug trafficking is a crime of opportunity,” he says. “Where there is prosperity, organized crime will move in to sell drugs.”

Not only does drug consumption increase, but the types of drugs involved change. People who have more disposable income start taking more expensive drugs.

“In Yellowknife, when the diamond mine opened, I saw people go from smoking pot to smoking crack cocaine,” says Coulombe. “Now in Newfoundland and Labrador people are going from cannabis to prescription drugs like OxyContin and fentanyl, which is a hundred times more potent than OxyContin.”

Yet, despite all the problems, people are remarkably upbeat.

“The alternative to growth is stagnation and if you stagnate you die,” says O’Keefe. “It gives me great pleasure to look out my office window and see that huge crane where the Woolworth’s used to be.”

Payne voices a similar sentiment: “It’s better to have these challenges than the problems we had before. For 500 years we found a way to share the poverty. The real challenge is how we now share the plenty.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Comment policy

Comments are moderated to ensure thoughtful and respectful conversations. First and last names will appear with each submission; anonymous comments and pseudonyms will not be permitted.

By submitting a comment, you accept that Atlantic Business Magazine has the right to reproduce and publish that comment in whole or in part, in any manner it chooses. Publication of a comment does not constitute endorsement of that comment. We reserve the right to close comments at any time.


With ABM

Help support the magazine and entrepreneurship in Atlantic Canada.


Stay in the Know

Subscribe Now

Subscribe to receive the magazine and gain access to exclusive online content.

    Your Cart
    Your cart is empty