The Great Redefinition: How Canada Can Win Over Global Talent

Speaker 1 [00:00:01] Hi, it’s John here, and

Speaker 2 [00:00:03] hello, it’s Theresa.

Speaker 1 [00:00:04] Theresa, welcome to 2022, I hope you’re not looking for a job, but it seems like everyone else is. What’s going on out there?

Speaker 2 [00:00:11] Oh yeah, there’s so many shifts happening. People are rethinking their work-life balance. They’re finally taking on that next job after two years of sitting still. So yeah, what’s happening? I’m excited to dig into them through this episode.

Speaker 1 [00:00:24] The great resignation, the great reshuffle of the great retirement. Maybe it’s all going on all at once and it’s going to be the biggest force or among them for twenty twenty two. And what we want to dig into on this episode is how it’s going to drive innovation. Of course, shortages drive a lot of employers crazy. They excite a lot of employers, too. But we’re in an employee market and that actually can be good for innovation. It creates opportunities, but in the right work environment where employees are driving change. This is when organizations can really take off.

Speaker 2 [00:00:59] Yeah, exactly. And despite the ominous headlines, this is actually a good news story. As BlackRock’s Larry Fink said in his 2022 letter to CEOs, workers seizing new opportunities is a good thing. It demonstrates their confidence in a growing economy. The war for talent is on. The big labor shakeout has started, so fasten your seatbelts, it’s going to be a bumpy ride.

Speaker 1 [00:01:29] This is Disruptors, an RBC podcast. I’m John Stackhouse

Speaker 2[00:01:33] and I’m Trinh Theresa Do. In this episode of Disruptors, we’re looking at Canada’s red hot labour market, what’s causing some of the dramatic shifts in who is seeking and leaving jobs and what can Canadian employers do to come out ahead?

Speaker 1 [00:01:52] After the break, we’ll hear from a Kitchener, Ontario based entrepreneur whose educational technology firm is one of the fastest growing tech companies in Canada. He’s struggling to fill key roles across his operations, and he’s trying to do the same for universities, colleges and businesses across the country. He’s got some provocative ideas about how we can all meet this challenge. But first, our conversation with a Canadian born Nobel Prize winning economist who’s made studying labor issues and understanding moments just like this. His life’s work. Our next guest has been studying, writing and talking about labor markets for more than four decades. David Card is professor of economics at the University of California, Berkeley, and director of its Center for Labor Economics. Before joining Berkeley, David taught at the University of Chicago, as well as Princeton. He’s written hundreds of journal articles and of course, in 2021 was one of three people awarded the Nobel Prize in Economics. David, welcome to disrupters.

Speaker 3 [00:02:54] No, thank you. Nice to be here.

Speaker 1 [00:02:56] I want to start with just an open reflection on what we’ve been through. Maybe we’re still going through it, but arguably the last two years has been the biggest disruption, if not shock, to labor markets that any of us can remember. I’m curious at this stage what you have found most surprising.

Speaker 3 [00:03:15] I think to me, the most surprising thing was how quickly the economy bounced back in April 2020. There was the sharpest job losses. There had been really on record. I mean, we don’t have data from 1929 and 1930, but it was just a monumental job losses. And if you think about how the recovery went from the 2008 recession, it was a very long slog to get those jobs back. And in this case that we came back really, really quickly and I was quite surprised by that.

Speaker 1 [00:03:49] What do you think made that resilience?

Speaker 3 [00:03:51] So there’s two kind of ways to think about recessions, and economists have been arguing about this since 1929. One is that the recession is caused by a drop in demand that employers just don’t want to hire anybody because they don’t see ways that they can sell their product. The other view is that employees are being kind of outrageous in their demands and will only work if employers agree to set their wages. So one actually the kind of leading view among the more neoclassical economists is recessions are times when workers take vacation. And I think that view sometimes gets more traction, especially when there’s a prolonged recovery, because it seems like, OK, the workers took a vacation and now they don’t want to come back. The demand view, I think, is workers want to supply their work. Employers don’t want it or there’s some obstacle to, you know, making that work transaction go through. And I think that what this was an episode showed is that the demand side is really the driver. The supply basically with everything withdrew. But then people were able to come back quickly as soon as employers could find a way to get them back into the job.

Speaker 1 [00:04:55] So employment, certainly in aggregate, came back with a roar. But we also have this thing going on called the great resignation or great reshuffle, depending on your point of view. Curious how you look at the so-called great resignation, which has surprised a lot of people and maybe even defies certain elements of economic thinking?

Speaker 3 [00:05:16] If you look at the ratio of job openings to unemployment, it’s at an all time high, at least in the U.S. I don’t know the exact numbers for Canada, but I assume it’s very similar. And so there’s a lot of opportunities out there. And what had been happening really since 2005 or 2006? A number of leading economists, including, for example, Edward Lazear, the WHO was Bush’s main economist, had written articles saying, We don’t have enough movement in the labor market. People are sticking with their jobs too long and we need to have more mobility to kind of get dynamism going to, you know, get people moving between jobs and filtering up the job ladder and so on. So actually, the perception was that the labor market was becoming more ossified and then this has really changed. But again, I think it isn’t necessarily bad. A labor economist tends to have the perspective of the workers. We tend to sort of take the view of the workers and say, OK, when something happens, is that good for workers, bad for workers? And this switch of jobs, almost all of it is good for workers.

Speaker 1 [00:06:21] We talk a lot on our podcast about innovation and disruption, and one of the statistics I’d argue over the years has been that lack of labor, mobility, lack of dynamism. So it’s encouraging to hear you take a positive view to this. But curious if you see this as kind of the new normal. Maybe it’s the old normal coming back, this kind of more dynamism in the in the labor force.

Speaker 3 [00:06:45] So one reason why we don’t have as much mobility in the labor market as we used to have is our average workforce is quite a bit older. So right now, the baby boom, I’m the peak of the baby boom. I was born in 56, and so we’re all 65, 66 years old and many of us are starting to retire. And so the the big, huge bulge of children born in the late 50s and early 60s is gradually going to go through. And the average age of the workforce is is going to fall a little bit and old workers don’t change jobs. So even if you’re, you know, if there’s a better opportunity, but you’re 50 years old, you’re just not going to take it because it’s too disruptive. So you so I think one thing that’s really important is understanding the. At demography of the workforce in that regard, another thing is, you know what sectors people are working in, you know, a lot of employment growth has been in sectors where these days there’s, you know, not such long term jobs for young workers, retail and things like that. But then there’s a lot of employment growth in the service sector, especially like health care and those jobs actually persist.

Speaker 2 [00:07:46] I’d like to jump on that, David. I’m curious with the different sectoral impacts that we are seeing, do you see that there will be greater job polarization over the next several years?

Speaker 3 [00:07:56] Much of the increase in supply of workers is kind of what you would call polarized. So you got a, you know, increasing number of people who have college degrees or master’s and above degrees. That’s really a growing workforce. And then of course, you have a pretty large and consistent supply of people with basically less than high school education because of immigration from low skill countries. And so if you have those two combinations of demography, you’re going to have what appears to be polarized job growth. But it isn’t really, you know, it’s not anybody’s fault, it’s just a type of type of workers you have. So as the workforce has fewer people that are exactly, you know, 12 years of education to just finish high school, then you’re going to have more of what you’re talking about. In addition, there is another kind of inequality which is generated by performance of firms. So some tech sector firms, for instance, in the area that I work in, you know, someone with a Ph.D. can start, you know, in all honesty, can start working at three hundred and fifty thousand dollars a year. That’s a lot of money. But somebody who’s working the Ph.D. teaching in a community college earns about $60000 a year. So that that gap is ginormous.

Speaker 1 [00:09:04] One of the challenges we’ve been wrestling with, and this harkens back in some ways to the work you did around fast food employment that was part of the Nobel Prize. Recognition is why we don’t see greater displacement of lower wage employment by technology, fast food being an example. Lot of repetitive tasks that arguably are automatable and yet employment in the sector continues to go up even when wages go up. And you showed how, you know, an increase of minimum wage does not necessarily lead to less employment. But it also doesn’t lead to a greater capital allocation, arguably to technology that has become more of a pressure point through the pandemic, as there have been these disruptions. And all firms have been thinking about, OK, do I need to get people back or can I use this as a bit of a transition moment to invest more in capital? We seem to be lurching back to the labor side of the equation. And I’m curious how your how you think through with that kind of long view of history and economic cycles, but also technology cycles in terms of the transition of labour to capital.

Speaker 3 [00:10:12] Well, in the in the slightly longer run, I think most Western economies are going to go into a period of declining labor force. What you’re seeing in Japan, Korea, Italy, Spain already, we’re going to see that in most Western economies, we’re basically I don’t know about Canada, but the United States is it just does no longer has the tolerance for immigration. Western Europe, most of them, those countries don’t have the tolerance for immigration, and that’s the main source of population growth. And so if we stop migration, which I predict we will be doing, which, you know, that’s what’s going on in Japan, and that’s why there’s, you know, that’s why they’re going to have declining population in China. They’re not going to have immigration. So you’re going to have declining workforce and then you’re going to have the kinds of innovations that you’re starting to see in Japan, where people are thinking, you know, pretty hard about how to replace low skilled labor, to look after old people. How do you do that exactly? And still have, you know, quality of life for the people in the shorter term, paying 50 cents an hour for workers extra or something? I don’t think, you know, that’s that is cut into the pocketbook of the owners of firms and stuff, but it doesn’t necessarily change the balance of if I had to pay a dollar an hour extra for a truck driver or try and invest in a self-driving truck. Now, in other cases, it’s it’s easier, you know, like converting some aspects of maybe fast food restaurants to some kind of other system. Actually, when I first went to grad school in New York City, there were still from the 1950s. These famous restaurants that were automatic. There were you walked in and there weren’t any people. There were just kind of rotating counters and you put money in called automatic.

Speaker 1 [00:11:55] There’s a lot of us. Exactly. I remember thinking they were so exotic when I saw them in New York.

Speaker 3 [00:11:59] It was like a totally awesome thing from your childhood movies and stuff.

Speaker 1 [00:12:04] It was that they disappeared.

Speaker 3 [00:12:05] So that technology existed, but it didn’t. It didn’t dominate, right? Is people, you know, McDonald’s works better.

Speaker 2 [00:12:12] So when we think about other levers that employers control in attracting and retaining workers, increased wages are certainly one of them. But are you seeing other non-monetary benefits making a meaningful? Dent in this issue, things like, you know, a four day workweek, remote work, as we’ve been seeing, are you seeing that play out on a bigger scale?

Speaker 3 [00:12:32] I don’t study that, you know, with my own research, I only have direct experience in two places academia and tech sector. I do consulting for the tech sector and they are definitely innovating quickly and academia. We probably were on the flexible schedule, you know, decades ago. Most of my colleagues didn’t come into work only a couple of days a week and even before the crisis. But the private sector tech companies, they are innovating quickly. So one thing, for example, a lot of those companies rely on foreign labor at the high end because there’s very, you know, acute shortage of highly skilled statisticians and computer scientists and economists. And most of the graduate students in those programs in the United States are actually foreigners. In economics, we’re half and I think in CSI and math, it’s above that. And so basically what they’re doing is setting up branch operations in Western Europe and Canada. So this is great for job opportunities in Vancouver. My favorite example is Berlin. I don’t know if anybody knows this, but Berlin is, you know, probably in many ways the most interesting place to live in Germany. But there’s no good jobs in Berlin. There hasn’t been good jobs in Berlin since, you know, at the end of the Cold War. They used to have a subsidy during the Cold War to have firms put plants in Berlin, but they disappeared. And basically lots of people want to live. There is no good jobs, but now there’s a lot of tech jobs and you can work remotely for lots of tech companies there. And so I predict that this is going to be really good for interesting high wage cities that are off the chart. So Berlin is much different than Paris or London. It’s relatively cheap. There’s lots of people looking for work. And so cities like that are going to benefit. I don’t know what’s the Canadian equipped? Was that like Winnipeg?

Speaker 1 [00:14:10] Well, it’s fascinating. There’s a great opportunity here for all sorts of communities to make themselves hubs and even destinations for those kinds of work from anywhere populations. What else should we learn from the tech sector in terms of where the future of work? Some people call it may be going.

Speaker 3 [00:14:31] I think actually the management of people is still just getting started. So we made amazing changes in like selling stuff to people. But I think we’ve made less progress in managing people and putting teams together and figuring out how to do that and how to best compensate them, how to best allow them to do what they’re doing. I think there’s enormous frontiers there. And you’re starting to see a lot of consulting companies that are coming in and telling firms how to do things, how to how to pay people, how to recruit people. Because I think that as I said, I think in the in the intermediate and longer run, we’re going to be in an era where there is actually declining workforce and shortages of talent. And that’s going to be great for workers because we’ve been in an era for, I don’t know, since 1980 80. Maybe we’ve been in roughly 40 years of pretty depressed labor markets. Basically, my entire professional career has been one where, you know, most of the time it was pretty crappy. Real wages were stagnant in North America, and there wasn’t really the kind of productivity gains that you might have thought at least passed through to workers. And so I think we’re in an era where that might be kind of a change, and that’s going to be a whole new time. And people are going to have to start thinking creatively about how to use and better utilize the people that they have instead of treating workers like commodities. So I’m a bit optimistic there.

Speaker 1 [00:15:55] David, thank you for being on RBC Disruptors. Coming up after the break, we’ll talk to a tech entrepreneur in Kitchener, Ontario, who’s at the forefront of a massive shift in the global labor force. He’s connecting students as well as workers with opportunities all over the world through his company apply board.

Speaker 2 [00:16:20] You’re listening to Disruptors, an RBC podcast. I’m Theresa Do. Canada’s transition to a net zero economy promises significant opportunities for innovation and growth, but none of it will happen without the right people in the right places at the right time. An upcoming report from RBC Economics looks at some of the big changes coming to Canada’s labor force as it sets out on the climate transition. The report maps out the sectors and jobs undergoing the greatest disruption. The way skills are shifting within specific jobs and highlights what workers and businesses will need to build the green workforce of the future. To learn more, check out the link in the show notes of this episode and visit RBC dot com slash thought leadership. And be sure to like and follow disruptors wherever you get your podcasts.

Welcome back. We just heard from economist David Card, who has some keen insights into what’s underneath the changes in the labor market right now. But to really understand what the situation feels like, you need to speak with somebody working in the trenches, trying to fill positions and keep them filled in a fast growing company. Our next guest, Martin Bestiary, is the co-founder and CEO of Kitchener, Ontario ApplyBoard. ApplyBoard has an AI-enabled software platform that lets students from around the world quickly identify and apply for university or college programs across North America, the UK and Australia. This platform takes up the middle man in education, and it’s made applying for university or college from wherever you live as easy as signing up to Spotify. And since launching in 2015, Apply Board has grown to 1500 employees and has attracted over $600 million in venture capital. Martin, welcome to disruptors.

Speaker 4 [00:18:06] Thank you very much for having me.

Speaker 2 [00:18:07] Martin, I’d like to start with your story. You yourself are an immigrant from Iran originally, and you and your younger brothers went through the international student application process to pursue post-secondary education in Canada. And it was a difficult process, and that’s one of the reasons you created your company apply board. I’m hoping if we can get your thoughts on the broader challenges confronting Canada’s labor market, how does your experience, how does that inform what we could be doing to welcome international students and immigrants into our workforce?

Speaker 4 [00:18:38] Absolutely, yes. As you mentioned in 2010, I came to Canada to get my master’s degree at the University of Waterloo, and my brothers came to do their undergrad at Conestoga College. And we left Canada. And then we decided to make this country our home and never regret that international students is, I think, the brightest part for talent shortage or enhancement for any country. And Canada is a country with one of the countries that’s really, really taking advantage of this global movement. Think about it. We can bring someone at the age of 18 or 22 for their bachelors or diplomas or postgraduate master’s degrees. Bring them, educate them. They’re young, energetic, ready to join the society. All of that adaptation to the new country, learning a new language, their college time give them the opportunity to integrate with their culture, country, everything and right away they can join the society and start contributing paying taxes, being an impactful part of the society, and I don’t think it can get better than that.

Speaker 1 [00:19:54] And that’s a great way of describing our journey as a country with international students. I’m curious because you’re part of the story, but you’re also an author, frankly, of the Canadian story and the Canadian journey. If we have a chance to write the next chapter and maybe be a bit more thoughtful about how we go about this kind of flow of international students, how can we be more strategic as a country and taking it on?

Speaker 4 [00:20:17] Yeah, and that’s exactly what we are working at Applied Birds and our Vision 2030 is to make it available for students along the board to access the best education, even if they’re poor, even if they’re from a country that there were like problems, regardless of their nationality, education, background, their family situation, village situation. We want to make it accessible, but how can the country be more strategic? So, for example, we know our health care system needs a lot of help right now, over hundred thousand jobs available literally in nursing and caregiving. All we need to do is point the ship to to the direction of which easier path to get into those colleges that get faster, processing time for the government to partner with companies like us to be able to access talent all over the board to bring the smartest and most driven people to this country, to the gaps that we have. We know software developers, we know data scientists. We know engineering in general is one of the areas that we in Canada. We really have a lot of positions of and for our country to grow and write the next chapter of the rest of 21st century. These are essential jobs.

Speaker 2 [00:21:34] Martin, we’re seeing right now just massive job vacancies in Canada. In June 2021, we saw job vacancies surged past 700,000. You know, every day on LinkedIn, there seems to be another, you know, x number of job postings listed. But if we dig underneath the numbers, anecdotally, people are saying they’re still having trouble finding a job that even though they’re reaching out, these companies have a lot of postings. They can’t seem to get past the recruitment stage, if at all. So I’m just curious, what are you seeing in your work? What are you seeing in the tech sector and beyond about what could be behind? This this tension and what should employers be thinking about as they’re looking to recruit for their companies?

Speaker 4 [00:22:17] Very good question. So there are a couple of things happening at the same time that is affecting the job market and we need to like break it down because the couple of effect is going together. So number one, the right now is a prosperous economy, as you said, seven hundred thousand job vacancies. That means we need a lot of people. A lot of companies downsized during the pandemic. Now they need to go back and those people already went somewhere else or they changed jobs, so it’s harder for them. The other thing that is happening people is almost two years that we are literally working from home, right? They are staying home. And Canada was one of the, I’d say, more restrictive countries in terms of keeping people distance. And I think too, one way or another, everyone is kind of affected that there’s something might not going the way that they want in their personal life and they need changes. The other thing that is happening is especially in the younger generation that for a long time the market was employer market and now is the employer market. And when there are so many jobs, a lot of people talked about what are the other means in life. You know, you see the rise of social challenges that we’ve seen in Black Life Matters in the United States. The environment is a big topic, right? Health care is a big topic. People want to do something good. People want to have a meaning with their life because Covid kind of opened a lot of people’s eyes that what are we doing? They are not robots. So a lot of people are looking for something to be able to have a big impact, and they’re searching for that.

Speaker 1 [00:24:04] As we come out of this pandemic and kind of think of not just the great resignation, but the great reshuffle and people moving jobs, how do we need to be thinking differently about the kind of optimization of choices out there, either before us or somewhere far away, and ensure that we’re all making kind of the best decision with the best information?

Speaker 4 [00:24:25] John, I have a mentor, his name is Howard Behar, he was the president of Starbucks for a long time. And one of the advisors he gave me is right your core values. What is your personal core value? What are you after? If you want to run or if you want to go to work, you put the OK from here to go to downtown Toronto. It takes like forty five minutes. OK, this is the part, and that’s what we are building at ApplyBoard. We are building a base for your life. And yes, we have started with international students because that was the starting point. I had to start from somewhere because that was what my life was. But what it is underneath is like, who are you? What you would like to do and what are the options for you to get there? People go and they just say, Oh, I need a job, why do I need a job? Think a little bit about it. You know, what are you seeking for? And I think our education in K-12, we need to invest more in our K-12 education of teaching students to ask why and be less worry about the content. Because content these days are commodity. You can find it on the internet. You don’t need to teach someone like necessarily all the how to write a new code because they can Google and find in GitHub a similar libraries and they figure it out. But what we need to teach them is to ask why? And that’s something that we humans don’t do it much.

Speaker 2 [00:25:57] It’s such a profound way to think about the work about think, thinking about how work fits into our lives. What do you think it would take to have more CEOs and more aspiring CEOs to think the way you do and to view the world?

Speaker 4 [00:26:13] Similarly, I think it starts from the CEOs themselves to be able to go and talk to people what they think and talk about their vulnerabilities and talk about their values. I think it’s important to talk about these things as much as it’s important to talk about market events. Market came down said This does that does that, and that’s why I love to talk to people, said what is the impact of apply board? Here’s one thing last week we had a day that for everyone to apply board employees, one students will enroll because of the work of us in that day alone, enrolled in a university. So when I go, I tell them, I tell my employees and I tell our investors. I said, today I’m sleeping better because I feel every two of us change one person life.

Speaker 1 [00:27:03] Martin, I wonder as we move towards close, what do you think will be the biggest difference about? Work coming out of the pandemic from the way it was before the pandemic,

Speaker 4 [00:27:14] the definition of work, the value of human being to themselves, to the respect of human being, to themselves, that they are not trading over time for money. We are going to a place because we want to have impact, because we love our teammates, because we want this mission to happen in the world, and I hope this is the outcome of it.

Speaker 1 [00:27:37] That’s a great point to wrap up on. The meaning of work will change. The meaning of work has changed. The economics of work has changed as well. It’s going to be amazing to watch the next few years unfold. Martin, thank you for being on RBC Disruptors.

Speaker 4 [00:27:52] Thank you very much for having me, John.

Speaker 2 [00:27:57] What a fascinating set of conversations we’ve had in our program today. Two very different thinkers and speakers on this massive issue that we’re facing right now. The great resignation. What were your takeaways?

Speaker 1 [00:28:10] Both David Card and Martin Basiri explained from very different perspectives. How work will continue to matter a lot to individuals and to the society. David Card said one of the biggest surprises for him and he’s won a Nobel Prize from the pandemic is the resilience of the labor force. People want to go back to work and many of those who are employed or who have gone back to employment are putting in a lot of hours and their quality hours because there’s a meaning and purpose and perhaps greater return to what we engage in. But it also speaks to the power of technology and even automation. If we can think about deploying technology wherever and whenever we’re so-called working and use our brains and our human ingenuity and instincts to pursue perhaps a higher purpose than just the task at hand. It’s not so much work.

Speaker 2 [00:29:07] Exactly. And that’s the optimistic view about this whole great reshuffle, right? Is that you finally now, maybe not. Finally, but you have this opportunity to seek out that work that is appealing to you if it’s not at your company. Maybe it’s another one next door. And because we can work from anywhere, the opportunities seem limitless.

Speaker 1 [00:29:25] Theresa, maybe we need to start calling it the great redefinition.

Speaker 2 [00:29:29] I like that. Although it asks the question, what are we redefining it to?

Speaker 1 [00:29:33] That’s for a future episode. That’s all for now. Thanks to our guests David Card and Martin Basiri.

Speaker 2 [00:29:39] And join us next time when we’ll explore how Canadian employers and workers are preparing for a new era of climate action. Until then, I’m Theresa Do.

Speaker 1 [00:29:47] and I’m John Stackhouse. This is Disruptors, an RBC podcast. Talk to you soon.

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