Cross-border shopping promotes inequality
Twelve years ago, author Barbara Ehrenreich described what it’s like to be poor in America after taking low-wage jobs at a big-box retail outlet, a diner, a long-term-care home, and a housekeeping service.
She reported in her book Nickel and Dimed: On (Not) Getting By in America that working conditions, which sometimes included mandatory drug tests, were often so appalling that they undermined employees’ self-esteem.
Even more troubling was the lack of economic security for those earning $6 to $7 per hour. At one point, Ehrenreich took a second job in order to continue living in a trailer.
Since then, income inequality has gotten much worse in the United States, according to former U.S. secretary of labour Robert Reich, who spoke at SFU’s community summit on the economy in September.
“The 400 richest Americans have more wealth than the bottom half of the United States put together,” Reich told an audience at the Orpheum Theatre. “And anybody who thinks this has changed since the Great Recession ought to know this data as well: that is that 95 percent of the economic gains in the United States since the recession ended, since the so-called recovery began, 95 percent have gone to the top one percent.”
Hordes of Canadians will cross the border into the United States to shop on Black Friday (November 29), which kicks off the Christmas shopping season after the U.S. Thanksgiving holiday the day before.
Many of these Canadians will be supporting U.S.–based retail giants and shopping-mall owners whose relentless drive to reduce wages has contributed to this rising inequality, which is significantly worse south of the border.
Greater inequality has been linked to shorter life spans for both rich and poor, higher infant mortality, and worse health outcomes.
Here in B.C., the minimum wage is $10.25 per hour, which creates significant hardship in an expensive city such as Vancouver. In Washington state, the minimum wage is more than 10 percent lower at $9.19 per hour.
That’s positively luxurious in comparison to the $8.95 per hour minimum-wage workers are paid in Oregon, or the $7.25 per hour minimum in Idaho.
It’s hard for Canadian retailers to compete with low-wage U.S. counterparts, but at least they’re buffered by our public health-care system. The B.C. government charges $66.50 per person per month in medical-insurance premiums, with five levels of subsidies available for those with incomes below $30,000 per year. The Canadian system keeps more money in workers’ pockets than Obamacare.
A recently released U.S. government report examining 36 states shows that the average 27-year-old American with an income of $25,000 would pay $145 per month under Obamacare after receiving tax credits. Before tax credits, the average would be $214 per month across the 36 states.
Keep in mind that this covers only 70 percent of medical costs under the lowest “silver” plan. (Obamacare offers gold, silver, and bronze coverage.)
Lower Mainland consumers who cross the border in search of bargains don’t seem troubled that their actions contribute to job losses in Canada and exert downward pressure on wages in this country.
They probably recognize that the loss of tax revenues resulting from cross-border shopping undermines education and health-care funding, but that seems to be a small concern in comparison to saving $13 on a digital camera—even if they have to wait an hour in a border lineup and spend $11 on gas to get there.
Yet you can be sure that many of these same folks will be screaming for Canada and wearing red-and-white jerseys festooned with the maple leaf when the Canadian men’s hockey team takes the ice at the Winter Olympics in Sochi.
So who are these cross-border shoppers? In a 2011 poll by Abacus Data, six percent of Canadians earning $35,000 to $50,000 per year and five percent of those earning over $100,000 per year responded that they had crossed the border four or more times in the previous two months to shop. The percentages were far lower for the other income groups.
Four percent of those between 18 and 29 years old reported cross-border shopping four or more times over a two-month period, eclipsing the percentages for all other age groups.
Appealing to people’s patriotism won’t work. A 2012 Ipsos Reid study revealed that 72 percent of respondents felt no guilt about buying goods in the U.S.
“These numbers show that Canadian retailers cannot wrap themselves in the flag especially when some Canadians are willing to risk a run-in with customs for the sake of a deal,” Ipsos Reid senior vice-president Dave Pierzchala said in a company news release.
This year, Lower Mainland retailers have gotten smarter. Major malls—including Pacific Centre, Oakridge, and Richmond Centre—as well as various business-improvement associations, clothing companies such as dutil and Boys’ Co, and other merchants such as Ming Wo are holding their own Black Friday sales, with the emphasis on rock-bottom prices and door-crashing events.
Many have dispensed with the patriotic appeals. Instead, they’re going head-to-head with the Seattle Premium Outlets of the world by competing on price.
It’s probably the best strategy, given how pigheaded some consumers have become about what’s really in the best interest of themselves and their country. Go, Canada, go.
Comments
18 Comments
Sticky
Nov 27, 2013 at 9:45am
You raise a good point, Charlie. And I cannot disagree that keeping all my money in Canada is ultimately better for the country.
However, money follows the path of least resistance or, in this case, lowest cost. I bought two pairs of work shoes in the US for half of what they cost in Canada, and I make no apologies for it. It's hard to justify paying double for a product manufactured in China for the sake of supporting someone's expensive local lifestyle. And, as you pointed out, Canadian retailers are FINALLY waking up to this reality with more competitive pricing. In my case, I'd pay the difference if in fact it was only $15, or even up to 20% more...yes, I'm on board with supporting Canadian retailers, but only to a point.
If you want my hard earned money stop trying to ass rape me with unrealistic markups and profit margins because I'm not giving up the booty until you make it less painful.
WTF
Nov 27, 2013 at 10:44am
Good Article, I am a Straight & Charlie supporter / Fan boy
The caveats I point out as folllows...
1. Canadian Retailer? - Most major chains & big box stores selling the same Merchandise whether clothes, Electronics or Household items operate BOTH in Canada & the US,
- Walmart, Home Depot, Ikea, McDonalds, KFC, Coke, Pepsi, DYNY, BOSS, Calvin Klein, IBM, Dell, Bestbuy, GMC, Ford, Toyota (made in the US Trucks), Chrysler, Google, Facebook, M$roS0ft, etc etc,
Therefore shopping either here or there on these properties makes little difference.
2. The Jobs myth, - Do we want Minimum wage type jobs? The dangling of Minimum wage / low skilled Jobs in order to push laws that advantage Mufti-national Corporations over Canadians is something we need to change,
- Most of these same Multi-nationals operate Part-timers & Non-Union (higher paid workers with more benefits for similar work) as a large part of their workforce in Canada,
- This negates the MARGINALLY higher minimum wage advantage and pays lesser benefits if at all,
- These Corporations hire the minimum or less than the minimum number of workers required to run good customer service, understaffed & overworked,
- They DO NOT contribute to Job Growth but the exact Opposite,
- They INCREASE the Balance of Trade DEFICITS in Canada by sourcing lowest priced products from the Third World & Developing Countries like Communist China,
- The same Countries that are destroying the Environment for short term profit,
3. the Tax Revenue myth - These Global Corporations often get a lot of Corporate Welfare from both Provincial & Federal Governments,
- They also use Tax loopholes to pay little or Zero direct Tax here in Canada,
- The Tax burden has been shifted 100% to Canadian workers when there ought to be a balance with more share paid by Corporations NOT Less!
4. NAFTA - Why is it that Canadians can buy Cars, Electronics & other consumer goods cheaper in the US (no it's not because of the wage or Healthcare differences) it is primarily related to Duties & the added Taxation to the consumer by Government,
- NAFTA - was good for Corporations bad for Canadians against shifting the burden of Tax onto the Canadian worker / consumer while giving rights over Sovereignty of the Countries Resources to Corporations,
- The China Trade Deal is NAFTA on Steroids primarily for the Oil & Mining Sector over Canada's
WTF
Nov 27, 2013 at 10:49am
Summary...
Canadians are voting with their Dollars it's up to the Government of Canada to balance the Tax burden so as not to Gouge Canadians ad they will stay home and shop.
Preferably shopping from small Canadian Business instead of Big Box US based Corporations.
The Government can open up competition to Air Travel (Open Skies), Open the Cellular Market to ALL players, Open Competition to Cable & Telecom & every other sector to DRIVE prices down.
No more protecting the wealthy few Canadian Families who own Cable, Telecoms, Mining, Oil & Gas!
The Government of Canada if it followed Norway's model of retaining 85% + of the Countries Oil & Gas Revenues could solve all these problems plus provide Free Health Care & Education for Generations of Canadians.
With ZERO Deficits for Generations!
Not the Stupid situation we have now!
Alay Layton
Nov 27, 2013 at 12:12pm
I understand that the reason Canadian prices are higher than in the US is primarily the result of volume. With a population 10x that of Canada the US importers (of finished goods and raw materials) are ordering much larger quantities and as a result are getting a much better rate. It's no different than buying something bulk from Costco and saving a bit of money. Everybody wants to blame Canadian retailers for being greedy, or the government for imposing taxes and duty but the main reason for it is out of our control You are seeing Canadian businesses having to respond in creative ways, but their only other recourse is to go out of business. I don't cross border shop at all, but then unlike most people I'm not a major consumer. When I do need to buy something, I'd much rather pay a Canadian and have the money go back into our own system. Let Washington State support itself.
WTF
Nov 27, 2013 at 1:57pm
@Alan Layton...
Except under NAFTA both Canada and the US is supposed to be like one common market.
Canadians can buy Brand New Vehicles at up to 40% less than here in Canada for the same exact type and brand for example.
The Volume retailers are almost all US companies with Operating Stores / Subsidiaries in Canada.
They typically charge 20 to 40% more.
It's got nothing to do with Volume.
Furthermore those same US Retailers with Stores / Operations in Canada take 100% of the profit OUT of Canada every day / month! While paying close to zero direct Taxes because of loopholes.
We would be better off buying Canadian product from Canadian local small business, but not everything we need is available / made in Canada.
dengshot
Nov 27, 2013 at 2:31pm
@WTF I whole heartedly agree but you have to remember Harper is at the helm of our government so what needs to be done won't happen anytime soon. He loves his corporate buddies and his money too much to care about the rest of the population :o(
Alan Layton
Nov 27, 2013 at 2:40pm
WTF - the two interviews I saw on the volume issue were from people in the business. I think I'll take their word for it. It does make a lot of sense.
Ron
Nov 27, 2013 at 3:15pm
Efficiency has reduced the price of goods. No one can question that. The questions are how far that can go, and should there be any other considerations?
Here in the USA, for example, there are virtually no more small, privately-owned pharmacies. As a result of a shared monopoly among chains personal, service has disappeared, people are treated like cattle, and prescription prices have exploded upward.
They have us by the throat, and there is no sign anything is going to change.
kiskatinawkid
Nov 27, 2013 at 6:44pm
Sticky, a tid bit of info. There are lists of "preferred countries" manufacturers have when determining what goods sell for. Countries on that list get a better price. Canada is not on that list. So our retailers have to pay more.
So shop Stateside. It's your money after all. Oh, and when you break a leg or contract cancer, can you drag your ass to a hospital Stateside too? And when you swipe your credit cards you'll really feel there ass rape!
Here's an idea. It'll help local retailers, the provincial and federal budgets, etc.. If we can charge a bridge toll, overcharge for Ferries, tax the shit out of everything, why not a charge to cross the border?
Hey, it costs lots of money and not everyone uses it. Say $10 a car and $5 per occupant. It'll help pay for those programs Canadians hold dear and it's only fair.
Rational Canuck
Nov 27, 2013 at 8:01pm
The price differences between the US & higher Canadian prices for the same products / services are as follows;
"Multi-national brands, they have two different price lists … (one) for retailers in Canada, and (one) for retailers in the United States," says Diane Brisebois, president of the Retail Council of Canada. "And I can guarantee you that the price lists for retailers in Canada
[have] prices that are between 10 to 50 per cent higher than the prices in the United States."
In some cases, the final sale price is much more.
Retail Council of Canada head Diane Brisebois says manufacturers 'cannot justify' the high markups Canadian shoppers face.
Source..CBC Marketplace...
@Alan Layton to whom have you been speaking? The Retail Industry Trade Group does NOT talk about Volume but instead talks about Price Gouging by Multi-Nationals.
Perhaps you should stop having conversations with yourself :)