New Brunswick losing head offices and their associated economic activity

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Appeared in the New Brunswick Telegraph-Journal, May 13, 2024
New Brunswick losing head offices and their associated economic activity

Recent data released by Statistics Canada reveal a decline in the number of head offices and head office jobs in New Brunswick. Why should New Brunswickers care?

For starters, head office jobs pay well. According to one study, average salaries at head offices in Canada are double the national average salary. This is especially important in New Brunswick where median employment income trails substantially behind the Canadian average.

Head offices also produce other benefits including contributions to innovation, connections to export markets and local philanthropy. And head offices can generate spin-off economic activity and jobs in other businesses, which may be contracted to support the functions of a head office (such as consultants) or indirectly supported by spending by a head office or its employees (such as retail, food service, etc.).

The number of head offices in New Brunswick has declined from a peak of 63 in 2018 to 54 in 2022, the latest year of available data. Head office employment is down more than 300 jobs from a recent peak in 2014. Over the last 10 years, head offices in the province have declined by 1.8 per cent while head office employment is down 4.9 per cent. To be sure, New Brunswick’s experience aligns with a pan-Canadian trend—the number of head offices and head office employment has been declining in most provinces and for Canada as a whole.

But given the economic and employment benefits, making New Brunswick a more attractive destination for head office employment should be a top priority for the Higgs government. A good place to start is by improving private-sector conditions. One recent study found that New Brunswick ranked near the bottom of all provinces across several indicators of private-sector health including levels of business investment, the size of government, and number of startups. And according to the latest analysis, New Brunswick has some of the highest personal income tax rates in North America.

The competition for both talent and investment takes place on a global basis. These resources, and the head offices that house them, will often locate in the jurisdictions most hospitable for the private sector to flourish. Policymakers in Fredericton should do everything possible to improve the state of the private sector and reverse this concerning trend.

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