Ontario's Surprisingly Restrained Public Sector Employment Growth

Could this one actually be a good news story?

1996 saw a welcome victory for government transparency when Ontario’s then-Progressive Conservative premier Mike Harris mandated the annual disclosure of all public sector employees earning more than $100,000. Since 1996, that list has grown from just 4,500 names to more than 300,000. But then, $100,000 won’t buy you what it once did - especially if you have to live in Toronto.

The significance of this point came to me while reading a blog post by Lakehead University economist, Professor Livio Di Matteo. Di Matteo noted the explosion of high-salaried workers in Ontario’s public service, but also wondered whether, given the impact of inflation, $100,000 was still a meaningful threshold.

I couldn’t resist running the numbers myself. What I discovered at least appears to suggest that former (Liberal) premier Wynne and current (PC) premier Ford have shown the greatest restraint when it comes to expanding the civil service payroll.

Using the Bank of Canada’s inflation calculator, I identified the inflation-adjusted value of $100,000 1996 dollars for the years marking the ends of the subsequent provincial administrations (and the latest data from the Ford administration). I then counted the number of individuals in the civil service from each of those years whose salaries were above those inflation-adjusted thresholds.

In case you’re unsure, Premiers Harris, Eves, and Ford were/are Progressive Conservatives and McGuinty and Wynne were Liberals.

Here's the visualization:

So while Dalton McGuinty more than doubled the number of top earners, his successor (Kathleen Wynne) added a relatively modest 12% to that total over her five years in office. And while Ford did double the actual number of $100,000+ employees through his first five years, there was a less than 2% increase of those earning more than the adjusted threshold ($175,386).

To provide some more context, between 2018 and 2023, Ontario’s population grew by around 12% (from 14.2 to 15.4 million). So one might wonder why the $100,000+ class of the civil service had to double in size through those years, but at least high-end earner growth was restrained.

As a taxpayer I think this is great news. Though I can understand how a civil servant might see it differently.

The thing is that no one ever (credibly) accused Doug Ford of losing sleep worrying about the “conservative” part of his party’s Progressive Conservative name. His 2023 budget expenditures were $204.7 billion - around 8% higher than even the inflation-adjusted total from his own first budget in 2019. Since labor costs are presumably a significant portion of all government spending, why did Ford’s high-end employment grow so modestly?

For comparison, employment-related expenses accounted for around 45% of the City of Toronto’s $15 billion 2023 budget.

Breaking Ontario’s public sector employment numbers down by sector won’t tell us much about the big picture, but they are interesting in and of themselves:

Between 2018 and 2023, the major increases in public sector employees earning more than $100,000 came in school boards (from 15% of all $100k+ earners in 2018 to 27% in 2023) and hospitals and boards of health (from 12% to 20%). Healthcare growth is probably mostly due COVID-associated changes. But I’d have to guess that the near doubling of highly-paid school board employees is union-driven.

The big losers were colleges and universities (falling from 17% down to 12%), municipalities and services (29% to 22%), and provincial ministries (11% to 8%).

As Professor Di Matteo observes, it’s probably time to update the salary reporting threshold from its 1996 level. But it would also be nice to better understand exactly what public sector employment trends say about how the role of government in Canada is changing.