Why mandatory training doesn’t raise wage levels

At a very quick glance, this seems like a rational conclusion. A
trained guard is a more valuable commodity than an untrained guard.
Trained guards will expect their employers to pay them more, their
employers will in turn expect their clients to pay more for these new
and improved guards, and the clients will in turn have no choice but to
pay the new higher market rates. Heck, clients will probably be happy
to pay more, now that they are getting a higher quality product in
return for their investment.

Sadly, this isn’t the way it has happened in provinces which
have introduced mandatory training in the past (B.C. in 1996,
Saskatchewan in 2000, Manitoba in 2007), nor is there any sound reason
to think that it will happen in any of the jurisdictions that have
mandatory training on the way (Ontario in 2010, Alberta in 2011, both
Quebec and Nova Scotia sometime within the next few years).

Wage levels in the contract security services industry are set by the
market forces of supply and demand. You hardly ever meet an owner or
manager of a contract security services business who doesn’t want to
pay his or her personnel more than they are getting right now. But they
are all constrained by two irresistible forces — the desire to make at
least some profit from what they are doing and the need to compete for
contracts in a highly competitive market.

The wage levels of contract guards are set by the end-users who
contract for guard services. There are clients out there who will pay a
company $30/hour in order to get $20/hour guards because they think
that a $20/hour guard is worth the difference in price compared to a
$14/hour guard. But there aren’t enough of these clients out there yet
to keep very many guard companies afloat using this business model.
Most guard companies bidding on most contracts have to bid fairly close
to the rest of the pack in order to have a chance.

It’s true that if everybody who bid on a contract ”“ all the guard
companies out there — all just kicked their quoted rates up by $5 an
hour, clients would have to pay more. But that isn’t going to happen.

Some think that guard companies will have to raise their pay rates
because mandatory training will dry up the supply of cheap labour and
they will have to pay more just to attract qualified new hires. But
this is unlikely to happen, either. Mandatory training consists of a
40-hour course that it is going to cost a prospective licensee no more
than about $500 to take. (And which can be obtained from any one of a
hundred private training schools in strip malls, all of whom are
competing with each other by advertising lower and lower tuition
levels. )

A minimum wage earner in Ontario will soon gross more than $800 on his first paycheque (based on two-week pay period when the minimum wage rises to $10.25/hr Mar. 31, 2010). The experience in provinces which have introduced
mandatory training in past has been that the cheap labour supply hasn’t
dried up, because people find different ways to get hold of the $500 for training.
And this is because the unemployed person who is getting no paycheque
and will find the $500 somewhere if he knows that he is going to make
more than that much back during his first month on the job.

Wage levels for contract security guards should go up. And perhaps they
will, over time. But they are not going to go up because the government
says that guards have to take a 40-hour course before they can get
licensed. They will go up as more and more clients decide to act on the
belief that when it comes to security services, you get what you pay
for.