Rising Wages?

[Cyper]

There seems to be some question within the planting contracting community as to whether or not wages for planters need to rise. Well perhaps not so much a question as a fear. Along with all of the other inflationary pressures contractors are facing, wage increases will just add to the difficult task contractors face in bringing themselves to raise their bid prices enough to cover very significant and necessary pricing adjustments.

Although inflation in real terms is nearing double digits and interest rates are rising as a result, for 2022 planters wages are likely to remain at levels similar to the last couple of years. Obviously this needs to change and quickly if we hope to keep attracting planters to keep on planting. I think the biggest challenge for contractors to achieve this will come in the direct award market where contractors negotiate with logging companies to come up with prices. Historically this has been heavy slogging. Obviously logging companies, often beholden to share holders and other profit oriented owners have a vested interest in keeping prices down. Contractors love having the stability and guaranteed work and are willing to shave pricing to accommodate this end.

Here's part of a report from National Bank financial:

“The Canadian labour market continued to defy gravity in March. After a spectacular
hiring spree in February, a pause would have been quite normal. This, however, did
not occur. Instead, private sector hiring continued, particularly in the sectors hardest
hit by the pandemic, where employment levels are now at a cyclical high. We are
also pleased that job gains stemmed from full-time employment. These
developments have allowed the unemployment rate to reach an all-time low in the
country. This is partly due to the significant drop in Quebec's unemployment rate to
a new record low, but we also note that all but two provinces have unemployment
rates at or below their pre-crisis levels. After this recent boom, it should
come as no surprise that employment gains will likely moderate from here on out.
The tightness of the labour market means that while companies still have very
elevated hiring intentions according to the Bank of Canada's latest Business
Outlook Survey, they may have difficulty finding candidates. Considering strong
competition, companies are planning to raise wages at an unprecedented rate to
attract/retain talent.

I'd suggest that planting companies also plan to raise wages at an "unprecedented rate" if they want to attract workers in the future.
We've all heard the stories of fast food workers being offered $20 an hour or more and signing bonuses. We're all aware of the many paid statutory holidays, medical and dental benefits and pension plans that so many Canadians enjoy. Planters have a need and a right to hold out for fair wages in the future. It's time for planters to be very picky about who they sign up to work for.

[Scooter]

I'm an eternal optimistic, but I think that 2022 will be an eye-opener for a lot of contractors, and the bidding in fall 2022 will take a necessarily large jump. It has to.

Any contractors that try to engage in low-bid practices this coming fall are almost throwing away the future of their companies. This past fall, it only took a couple of low bidders to start a cycle of depravity that is coming back to haunt everyone this spring and summer. The chickens are coming home to roost.

[jdtesluk]

I warned the industry of the potential COVID-rebound in other sectors last fall. Already at that point I was seeing adjustments in hiring strategies in tech and service sectors in bids to recruit people back into jobs hit hard during COVID.

The way I see it, this is perhaps the biggest "shuffling of the deck" that we have ever seen in the labour market for this generation. There has been a massive disruption of employment, and (what I argue would be shown by research to be) unprecedented turnover. In some sense, it is like a giant game of musical chairs. For workers, the focus is finding a good seat. For employers, the issue is getting the right people into your particular set of seats - or ensuring you get enough people at all. During the downtime, lots of people in lots of jobs have had time to ponder "what they want to do with themselves" and it is not just planting where we see people suddenly expressing the idea that the rewards are not enough. Service workers, grocery workers, teachers, nurses, transit....lots of sectors with people unsettled. Yet, we are likely going into a period of economic downturn, and it is unlikely that there will "enough" for everyone to get what they want. The question for this sector is whether or not it recognizes its own vulnerability in this larger sweeping change, and whether or not they have the collective will and vision to take steps to adjust. I know for certain that some of them have the vision - the will seems to come and go. The collective part....a work always in progress.

Labour markets are fickle and complex with different hydraulics pushing and people in and out of different sectors. It can sometimes take several years for any given push or pull to manifest in a problem for employers...by which time it can be too late to adjust. My main concern right now is with key personnel. If your applications go down by x-amount, but you still fill your ranks, you can get by. However, if you lose 20% or more of your crew bosses, or even one key supervisor, that can cause real chaos and significantly affect success for everyone. No doubt that as other sectors kick into recovery mode, that some of the planting industry's best will be enticed away to jobs with better rewards.

Gas prices and other cost rises will also have their say in how this turns out. Those with narrow margins this year may really feel the squeeze. Throw in any late finishes due to having too many trees, not enough people, and even a short COVID shutdown could really cause a problem.

Cyper, you point about workers being choosy is tricky. Not all workers can be picky. Experienced vets for sure can be picky; rookies not so much. Not only do rookies have less leverage in picking an employer, but they also tend to have less reliable information upon which to make their choice. If you rely on reddit or KKRF, every company sucks and all of them are underbidding. I think most vets have a decent grasp of what trees should be worth in any given situation, but the rookies just happy to not be slinging fries in the DQ takes a few years to figure that out.

I think your point about the direct award market is dead on. That is where the most of the action is. It is made complicated when those licensees have the leverage and work contractors against each other. When you call in 8-10 contractors with the implication that any individual company's piece of the pie can be handed to another, while at the same time threatening to scream "collusion" if those contractors band together to demand better pay, you have a real powerful position. Industry groups can lobby and offer financial arguments about what is "best for the industry" and the "needs of labour" but realistically the line-charts and saving a few hundred grand rings louder in the ears of those ruling the corporate ladders in forestry companies. Realistically, the hold-out almost needs to come from labour, but without organization that is unlikely to occur on any sort of a large or effective scale.

This is a pickle. It seems that the best prospect for change actually is disaster for some company or another or a few. Part of me always say..wait, there are always good people in any company, and I don't want to see anyone go down in flames. However, given the challenges of stimulating change based on good arguments, seeing peers get s%&t-canned may be the best motivator at this point. This is a pickle.

[Scooter]

At times I actually look forward to sitting on my front porch and watching the world burn.

[jdtesluk]

Well, on June 1, minimum wage is rising from 15.20 to 15.65, so there's that.
Realistically, I can't see it going much past 17 in the near future, given the needs of the service sector.
Even if it hit that, it would only amount to an extra $170-200 per paycheque on those needing top-up, so not quite the stimulus that affected the industry when we went from $10.45 to 15.20 in 2015-2021 (~45% increase).

I think we are likely to see some significant unrest over the next few years. I think the strikes in transit are just the start. Hard to say what that unrest will look like outside of traditional union environments. Labour unrest can manifest in many ways, from declining quality of or commitment to work, migration to other sectors, organizational drives, protests....all sorts of things. However, these periods of unrest and financial hardship can also bring new perspective if your sector is doing better (or worse) than other sectors that occupy similar locations with respect to labour pools and opportunity.

Make no mistake, I think planting is among the hardest jobs there is, and the effort and focus it takes are more than the majority of other jobs. I also acknowledge the seasonal elements mitigates the flash of the daily earnings. However, on a sheer opportunity level, I also think it is a rare job that people can get right out of high school or without technical or educational credentials in terms of earning potential, and there may be a very real limit to how far the industry and employers will be able to or willing to adjust to appease labour demands before they simply radically alter recruitment strategies (employers) or silviculture or bidding strategies (licensees).

[Scooter]

Your last sentence is one to consider. We've seen many comments from Newforest about how it is impossible to convince Americans to plant trees, so imported foreign workers are used. Will Canada move in that direction? If that were to become the case, it might be a race between TFW's and drones that alters the composition of the existing workforce.

[RPF]

I think we need to go back a few decades to the root cause of this predicament we currently see the industry. I remember in the early 1970's, my dad was working for a major logging company in northern BC and he told me during planting season, the company would hire tree planters directly and pay them union wages with benefits. This was common practice at the time, but slowly over the years individuals would come forward with proposals that they could plant trees much cheaper than hiring union workers. Obviously this was to the benefit of the logging companies and they took the contractors up on their offers while at the same time slowly getting rid of their union crews. The unions put up a small fight, but the writing was on the wall and within a rather short period of time the tree planting industry was transitioned into what it is today.

With the union jobs lost to contractors, the race-to-the-bottom was on. During the early days of this transition, many planting contractors were simply hiring anyone with a pulse to plant trees at a fraction of the union wage, with no benefits, and no safety / camp standards in place. Meanwhile, while the workers were treated slightly better than slaves in those early days, many contract owners became rather wealthy, and the logging companies were realizing significant cost savings to their reforestation budgets. It was a "lose-win-win" situation and as Meatloaf so eloquently sang, “Two Out Of Three Ain’t Bad” so the industry merrily continued along. Regrettably, it was the individual tree planter who bore the brunt of this transition which arguably continues in some form today.

Although working conditions have greatly improved due to government regulations, many of today’s tree planters are still working with no long-term benefits in place, such as health or pension plans, etc. As long as the human nature of greed is allowed to run rampant among contractors and logging companies, workers don’t stand a chance in gaining any significant ground. As was suggested in a previous post, one way to improve wages and benefits is for workers to have a strong “unionized” voice. I witnessed this attempt on a small scale about ten years ago, and I think it would have worked if everyone involved remained steadfast in their desired outcome. But again, the greed factor reared its ugly head and some people were “convinced” to drop that communist way of thinking.

The point of this message is to simply provide some context to how we got to this point. I don’t have a quick solution to improve wages and benefits for individual planters, but I do feel that there is a shift in everyone’s attitudes, and I remain hopeful that one day tree planters are compensated more fairly and treated with more respect.

[jdtesluk]

Great summary RPF. Few have explained it so clearly and concisely. Certainly there is more to the story, but this sums it up well.

[mwainwright]

Really great post, I love these glimpses into the history of the business. I started planting trees in 2002, so much of that is before my time. Hearing these kinds of accounts often gives me some good context for how the industry got to be the way it is today.
As far planters being paid more, and treated more respectfuly, I feel like that day has at least started to arrive. Anecdotally it seems like prices and earnings are on the rise in many places.

[Cyper]

I know an old planter who was a rookie in 1975. He said he was making at least $100 per day and most times more.
That was a dime a time at 1,000 trees per day with a mattock and one side bag.
To make the equivalent of $100 in 1975, he'd have to make $550 in 2022.

By 1977 he was making $150 plus as a seasoned baller = $733 in today's dollars.

I do think wages have been increasing lately but not to that degree.

In 1975 you only had to work 8 weeks to get EI for the rest of the year.
So I guess those were the good old days....

[Scooter]

On a positive note, a few things are cheaper now than they were then. For example, a flight from Halifax to PG was $600 in 1990. The cumulative CPI for that period is around 2.4x to 2.5x (this year's inflation isn't finalized yet). So by comparison, a flight from Halifax to PG today SHOULD be around $1500, if all things were equal. But it's not. So that's one small consolation. And also there are a few things that are relatively less expensive, such as computers/electronics, etc.

But lest someone assume that I'm saying wages shouldn't be higher, I can also point out some items which are significantly higher in cost, even after inflation is factored in. For example, my university tuition as a full-time student in 1990-1991 was $1536. The same tuition at the same university today is $9,725, which is an increase of 6.3x. Beer that used to cost $8.80 a case in 1990 is now $28.95, an increase of 3.3x. Fuel that was 34.9 to 39.9 cents in 1990 is now $1.72/litre today, where I'm writing, an increase of 4.x times.

With the significant increases in the costs of food, fuel, vehicles, and housing over the past year, I hope that this year's viewing season reflects the new normal.

[jdtesluk]

I think the issue of wages not keeping pace with inflation is beyond question. This is a pattern that cuts across wide swaths of society. It only seems to be at the highest end of the SE ladder where people are getting more for working less.
For planting, there are certain challenges in unpacking the economics of the job and coming up with good measures of where it is, and perhaps where it should be.
>> Have planting wages declined against inflation MORE than other similar jobs?
>> Has the job changed in a manner that should impact the financial rewards? - In some ways planters work waaaay harder than in the past and at much higher rates of productivity, but in other ways the job is less impactful (less screefing). I tend to think today's planters push harder.
>> How exactly do we measure wages? Is it total payroll divided by number of employees? Total number of trees x some formula for tree price x number of workers. Getting reliable information on this is hard.

It is hard to measure, but I think everyone would agree that when it comes to assessing the progression of the job over the past 40+ years, it is clear that earning opportunities have declined. I tend to think there were certain periods in which the wages declined most significantly, and that this occurred unevenly across different parts of the industry....huge drop in the early-mid-80s as larger companies took form...big drop in late 90s as volume dropped...big drop on the coast in early 2000s as coastal volume withered - significant recovery around 2014-17 as minimum wage rose and the bottom end of earnings needed to rise. Fairly flat since then. In the earlier era (70s-90s) prices dropped on a more regional basis as steeper competition spread through hotspots like Prince George, and bastions of good times held out (i.e. the Kootenays). Over the past two decades, I think economic trends have been more generalized, and few regions have been spared the knife.

The big question is what now?, and how to not only articulate what planters should make (or need to make to bring them out to the block), but also how to drive an appropriate response among those that bid...and to some extent those that tender.

There is an industry market meeting September 22nd in Kamloops. THIS is very much what will be discussed. Scott Overland will be speaking there about responsibility in budgeting, and how to responsibly manage risk when bidding.
I will be addressing a number of issues there in regard to changes that need to inform bidding and pricing. Among these are increased costs for first aid (due to changes in regulation), enduring needs to ensure higher levels of camp services based on learning during COVID that some things should be done regardless of COVID (i.e. better hygiene), new costs associated with guaranteed sick days (for a small part of the industry), and of course ensuring that wages meet the needs and demands of the employees. Chief among these (in my opinion) is ensuring that critical staff (i.e. crew bosses, supervisors) are paid sufficiently to prevent them from being picked off by other recovering sectors en masse. It is hard to predict the future, but I think we will be seeing some steep competition on a recruiting level over the next few years to get the best prospects in the door....and planting either needs to be able to compete with those sectors that draw from the same recruit pool - or look at other pools of recruits. I tend to think that BOTH strategies are needed.

Yes, wages are CRITICAL in attracting and retaining, but they are not everything...there are other things that affect workers decision to come out or return.....camp services, benefits, quality of treatment and training....and all those things cost money too.

I welcome any input from this group about what else they see as impacting the costs of recruiting and retention.....what else do you think the industry needs to do to not just attract and retain...but to give people what they are worth?

To be clear, I chase this question with a lot of people in a lot of different places, but the people that participate in this forum often seem to have some good input.

[Cyper]

Concise as ever Jordan. You're asking for a lot from those who know how to treat their employees fairly and with respect and a caring that goes beyond the basics required to get the trees in the ground. One could say these are the trade secrets or competitive advantages of a number of smaller companies. There are companies that see the end result as the target and the grail. In that world, everything is done on a volume basis where production is everything. They see volume as the answer. I guess you could use the hackneyed comparison to Walmart.

I guess it comes down to respect and caring. If you see people as a means to an end then you're going to go for big volume and tight budgets. If management sees themselves as no greater or more valuable than workers then that attitude will permeate the whole and everyone will be better off for it. It's an intangible. If one feels respected and valued then one feels good about themselves and how they are being treated/respected. Any investment in creating or facilitating this atmosphere will pay great dividends.

I don't think the means to this end is complicated and I'm not going to make a list of how to treat people properly but those companies that have it figured out are doing very well. Their people are making more money every year as this is after all, a rising market (unless you're trying to grab more and more volume) and there are a few examples of companies that are in this expansionist phase. I think we know who they are. Once well respected, now not so much.

Our world today is governed by "big is better" and endless growth. This overarching idea is leading the world down a very dangerous path, one that every day becomes less and less sustainable. Our small picture mirrors this big picture. We can only hope to control our own little corner of industry. I fear that is a vain hope. There will always be those who only see their own individual desires as important exclusive of the big picture. We are a reflection of broader economic greed.

"Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius, and a lot of courage, to move in the opposite direction." - Albert Einstein

[jdtesluk]

Cyper. You home in on what is critical.

Yeah, no list of "how to respect people" should really be needed, but you hit on some key values there. I have seen some of the same things where larger operations are challenged to ensure that the values of respect and caring are maintained in their operations. However, I have also seen small companies mess the bed on this front, and big companies go the extra mile and take extensive measures to support their staff.

I don't think it is always small good large bad. However, when a larger company messes up or fails to uphold appropriate standards, it is a lot easier to carry on with business than it is for a small company. There is also greater potential for head management at larger companies to lose touch with the front lines, and for middle-staff to steer things off the track. These are structural problems regardless of the company.

I think larger companies will always need guidance on this matter, not necessarily to identify the values and goals, but more on how to actually deliver on them through their organization.

You speak of little corners of the industry. I look at those "little corners" as critically important - little but critical. They sometimes set the bar of others to live up to...standards of treatment and wage that workers then tend to expect elsewhere. They also provide important opportunities for many of the true professionals of the industry for whom this is a career, and not just a summer job. They establish strong links between community and contractor, where work may endure for decades with the same parties, instead of new waves of bidders each season. I very much believe that finding ways to support these places is critical to the overall health of the sector and for providing workers with viable paths where they can stay in the job for more than 6 years. Yes, that CAN happen in larger companies too, but I certainly see it more often in these so-called corners. I wonder if we should be looking at these more as the center of the industry rather than the corner.

[Pandion]

Given the public bids results, I'm not overly optimistic about rising wages. Combine that with the recent mill closures in the private sector and it looks grim for the next few years...