The rising expense of local government services is increasingly capturing the attention of pundits and policy makers alike. The rising cost of policing and fire services in particular and their effects on local budgets and ratepayers, has drawn the attention of Canadian municipal leaders. What is also interesting is the overall growth in local government employment in general over the last decade at rates much greater than the growth in total employment.
Figure 1 presents total provincial local general government employment as reported by Statistics Canada and available for the period 2001 to 2012. Over this period, local general government employment (employment in local business enterprises such as a hydro or phone utility is excluded) for Canada’s provinces rose from 456,035 to 584,999 – an increase of 28 percent. Over the same period, total employment in Canada’s provinces only grew 17 percent. There does seem to be the start of a decline in local government employment in 2012.
Figure 2 presents the growth rates in both local government and total employment by province over the same period and ranks them by growth in local government employment. During this period, local government employment grew the most in Ontario at 36.5 percent – nearly three times the rate of growth of the provinces total employment. Next came Alberta at about 31 percent but slightly below its total employment growth rate of 33.5 percent. Newfoundland & Labrador and British Columbia came next at 28 and 26.4 percent respectively with their growth in total employment at 18.2 and 17.8 percent. Saskatchewan, Nova Scotia, and Manitoba display lower local government employment growth but it still exceeds their total employment growth.
Quebec, New Brunswick and Prince Edward Island are exceptions. In Quebec, local government employment grew 14.9 percent while total employment grew 16.4 percent. In New Brunswick, local government employment grew 4.1 percent while total employment grew 7 percent. Meanwhile, Prince Edward Island saw its local government employment shrink by 15.6 percent while total employment rose 16.4 percent.
Local government employment in Canada has grown at a much faster rate than total employment which when combined with rising salaries in this sector further fuels the rising cost of local government. The question is whether this growing employment reflects external forces such as downloading from the provinces or whether municipalities are engaging in local expansionary fiscal policies to stimulate their civic economies. Have municipalities all become Keynesians now?