Chow must call for pay freeze in future contract negotiations

Author: Jay Goldberg 2024/02/06

Toronto Mayor Olivia Chow says the city is broke. She wants to push through the largest property tax hike in Toronto history because the city’s finances are supposedly in shambles.

Yet at the same time Chow tells Toronto taxpayers the cupboards are bare, the city was busy handing out huge raises to employees.

That has to end.

More than 400,000 Ontarians are currently working more than one job just to put food on the table. A major reason why is the growth in the size of government and the ever increasing tax burden taxpayers are facing.

Under Chow’s watch, the city of Toronto gave out more than $90 million in pay raises last year to more than 29,000 employees. Over 72 per cent of Toronto’s government employees got a pay raise in 2023.

The pay raises given out in 2023 were a record for the city. Last year’s pay raises cost nearly three times as much as the raises handed out in 2021. And pay raises in 2023 went to 3,100 more employees.

Since 2018, the city of Toronto’s spending increased by more than 50 per cent. The size of the city’s operating budget in 2018 was $11.1 billion. Today, Chow and her supporters are trying to push a $17 billion budget through council.

The share of Toronto’s budget that goes solely toward paying the salaries and compensation costs of city employees is roughly 47.4 per cent, according to a Fraser Institute report.

That means about $8 billion of this year’s proposed operating budget will go toward salaries and compensation costs.

The Fraser Institute also estimates those employed by the government make roughly 8.5 per cent more than those employed in the private sector.

If the wage premium in the city of Toronto is roughly in line with that estimate, Toronto could save $680 million this year simply by bringing the salaries of city employees in line with the private sector.

The upshot? If Toronto politicians were able to undo all 2023 pay raises and lower employee compensation in line with the private sector, taxpayers would save $770 million.

Chow’s 2024 budget is proposing a property tax hike of roughly $401 million. Saving money on labour costs would allow Toronto to freeze property taxes at 2023 levels and the city would still have hundreds of millions of dollars to meet some of Chow’s targeted spending priorities.

All of this is to some degree conjecture. There are wage agreements in place today that lock in cost-of-living pay hikes, in large part because 85 per cent of the city of Toronto’s employees are unionized.

But the point is Toronto could be saving a fortune on employee compensation if city politicians simply had the backbone to stand up to big unions.

If Toronto really is broke, as Chow keeps telling taxpayers, she should insist the salaries of city employees are frozen in all future contract negotiations until the city gets back on sound financial footing.

It simply isn’t fair to continue asking struggling taxpayers to foot the bill for city employees to get pay raises when they’re already overpaid to begin with.

Politicians love to talk about making sure certain taxpayers pay their fair share. But it’s time to insist that certain workers earn their fair share.

Politicians shouldn’t be asking hardworking taxpayers to pay more only to see city employees get pay hikes that don’t line up with the realities taxpayers are facing.

To make government employees earn their fair share, it’s time to end their wage premium. Chow could start to move Toronto in that direction by announcing a blanket pay freeze in all pending contract negotiations.

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