Do Thunder Bay Councillors Deserve a Raise?

  

At the April 21^stcouncil meeting, Thunder Bay City Council voted itself a substantial set of pay increases that will take effect over time bringing the mayor’s salary as well as those of the councillors to $173,859 and $62,298 to align with current “market” medians of $139,618 and $50,689 over the next eight years.  What of course has caught a lot of attention is the annual increases of up to 9 percent annually that will approximately double councillor remuneration. Naturally the comments and the poll results on TBnewswatch.com overwhelmingly disapprove.

For the record, I think that members of city council do require the pay increases though the term “market median” is a bit disingenuous given that municipal service as a councillor is not a labour market in which councillors shop their wares across a geographic distribution of municipalities. While some might think that this type of community service should be completely selfless at low amounts of compensation, it remains that the compensation is necessary because although the community service is an honour and therefore does not require compensation, the salary is for all the other things that come with the position including constant scrutiny by the public and  the substantial amount of abuse it entails.  If you think about it, the current compensation of a municipal councillor in Thunder Bay is barely at the level of full-time minimum wage work (assuming five eight hour days a week at 50 weeks with two weeks’ vacation) which means it is unlikely to appeal to a broader range of talent. You do get what you pay for.

Still, what has been proposed is not without criticism.  In my view, it is not what was done, or the amount of the compensation per se, but how it was done.  Raising councillor salaries is not just a Thunder Bay thing.  Indeed, many of the “comparator” communities used to justify the increase are also raising or planning to raise their compensation next year including Barrie, Chatham-Kent, and Kingston. Also interesting is Cambridge which in its review of salaries concluded that the mayor was overpaid while councillors were underpaid. However, most interesting is the way Chatham-Kent is implementing its pay increases alongside a restructuring and shrinking of its municipal council from 17 to 14 councillors.  Thunder Bay considered but, in the end, did not reduce the number of councillors going with the status quo, but has gone ahead with pay increase anyway.  The pay increase would have been a lot more politically palatable if it had been accompanied by structural reform.

The other aspect was the choice of comparators.  In the past, when comparing things like property taxes, municipal expenditures, or debt levels across municipalities, some of the feedback received has involved criticism that what I am doing is comparing “apples” with “oranges” and that there are substantial differences and nuances across municipalities and how they function that require highlighting when presenting comparisons as every city is unique. It would appear, however that when it comes to salary comparisons resulting in a pay increase, there are no such qualms at the local municipal level.

The new plan sees council salaries pegged to the median pay of eight comparator municipalities: Barrie, Cambridge, Chatham-Kent, Greater Sudbury, Guelph, Kingston, Sault Ste. Marie, and the County of Simcoe.  These were chosen by a consulting company, and the same communities have been used by this company to do other salary comparisons for other municipalities.  In the case of Thunder Bay - a single-tier urban municipality - it is being compared to Chatham-Kent,  which is a single-tier semi-rural municipality, Greater Sudbury, which is a regional municipality, and the County of Simcoe – which is a rather odd fish in that it has a population of nearly 400,000 and includes Barrie and Orillia as separate single tier municipalities. Even more odd is its governance, no doubt an artefact of history,  with a council of 37 members including a warden rather than a mayor, deputy mayors and councillors.  It looks like a regional type municipality to me. Personally, I would have left these three out and included St. Catherines, Burlington, and perhaps Peterborough but I digress.

Using the comparators provided, it is useful to illustrate these comparators with Thunder Bay on several indicators though I am exercising my prerogative to not use Simcoe County because it seems to be a real outlier and replace it with Orillia which is in Simcoe County.  Incidentally, the mayor’s salary and councillor salary for Orillia are close to those for Simcoe County so it fits in just fine.  Figure 1 plots my comparators by population size, and they range from a high of 179,197 for Greater Sudbury to a low of 36,904 for Orillia. In terms of population, Thunder Bay (117,000) is below both the median and the average in this group of comparators.  Figure 2 plots the number of councillors (not including the mayor) and here Thunder Bay is not greatly at odds with everyone else being above average but at the median. 

 

 

Figure 3 plots the salaries of mayors, and these range from a high of $152,500 for Guelph to a low of $87,638 for Sault Ste. Marie with Thunder Bay below both the average and the median.  Finally, Figure 4 plots the councillor salaries which range from a high of $56,206 in Cambridge to a low of $28,193 in Sault Ste. Marie with an average of $43,317 and a median of $44,276.  Thunder Bay’s mayor is paid 19 percent below the average while its councillors are paid 23 percent below the average.  It turns out that relatively speaking, councillors in Thunder Bay are more underpaid than the mayor but not by much.

 

 

Having looked at these indicators, one cannot help but conclude that given the comparators, members of Thunder Bay City Council receive remuneration below the average for these comparators.  Given that these averages are moving targets since other municipalities are also raising their compensation, the increases suggested are also not unreasonable.  In the end, based on this year’s total tax levy of 250 million dollars, the salaries of the mayor and council comprise about $500,000 which is about one-fifth of one percent of the total tax levy.  Sure, it’s a bit more with additional benefits and stipends but even with the proposed increases, by 2033 the total will be about $1 million.  With growth, the council share of the tax levy is not going to change much.  This is not unreasonable.

 

What is also reasonable is given the choice of comparators, why not use them to do one more comparison.  If they are good enough to show that our municipal politicians are underpaid, then they are also good enough to compare tax burdens. Figure 5 plots the average property taxes paid for a detached bungalow for these same comparator municipalities.  The taxes paid range from a high of $4,811 for Guelph to a low of $3,707 for Sault Ste. Marie.  Thunder Bay comes in second at $4,615 which is above the average of $4,275 and the median of $4,298.  It is nice to know that we are above average in something.

Ontario Regions, The Trade War and Employment

  

In a recent post in which I dealt with how the trade war had impacted Canada in 2025, I covered several indicators including employment and noted that all in all Canada was not impacted in as dire a way as originally forecast when President Trump began to levy his tariffs. As discussed, Canada saw an employment increase of 134,000 jobs in 2025 notwithstanding that it also shed about 50,000 in manufacturing. This is a national number and the impact of the trade war like all things economic in the Canadian federation can be expected to vary regionally.  Indeed, as a recent report from RBC Economics showed, the average effective tariff rate on exports to the United States is under 4 percent but it is highest in Ontario and Quebec exceeding 6 percent while Newfoundland and Labrador, New Brunswick, Alberta, Saskatchewan and Prince Edward Island with fewer affected industries are at the other end with less than 1% rates.

Ontario is exported oriented towards the United States and manufacturing intensive especially focused on auto parts and production.  Yet, even within Ontario, manufacturing intensity and export orientation varies across the province so one would expect different parts of Ontario to have been hit differently with respect to employment losses.  Figure 1 uses monthly employment level by Ontario economic region to calculate each month’s job loss or gain in 2025 and then tally them up and used to generate percent growth for 2025.  For 2025, Ontario saw 71,500 jobs created which is down from 2024 at 127,600 calculated using the same methodology. Based on employment in December 2024, Ontario saw a 0.9 percent increase in employment in 2025. 

 

The results by economic region show that in 2025, only two of Ontario’s 11 economic regions saw a decline in total employment.  Kingston-Pembroke saw a drop of 3.8 percent in employment while Ottawa saw a 5 percent drop in 2025.  These two economic regions covering Eastern Ontario were likely hit disproportionately not so much by the trade war but by cuts to the federal civil service. The remainder of the province saw percent increases ranging from a high of 6 percent for Northwestern Ontario (6,200 jobs created) to a low of 0.6 percent for Kitchener-Waterloo-Barrie (5,000 jobs created).  The Hamilton-Niagara region saw 1.7 percent growth (13,800 jobs created) while Toronto saw 1.5 percent employment growth (nearly 60,000 jobs).  Given the concentration of steel and auto manufacturing in Hamilton-Niagara and Windsor-Sarnia, manufacturing jobs losses there were obviously counteracted by employment creation in other sectors.

Of course, the real question is whether this trend of employment growth will continue.  For the first quarter of 2026, Ontario has seen its employment decline by 1.6 percent - that is, nearly 130,000 jobs.  Of course, the first quarter often sees employment losses in the aftermath of holiday season spending so a more apt comparison would be to see what the first quarter of 2025 was like.  In 2025, the January to March period saw a 0.3 percent decline – about 21,000 jobs lost. The year is still young, but it appears the first quarter of 2026 has been a much more difficult period than either the first quarter of 2025 or even the first quarter of 2024 which saw employment decline by about 60,000 jobs (a 0.8 percent decline). If this is the case, 2026 may be the year the trade war comes home to fully roost in Ontario.

Applications Growing at Ontario Universities

  

Fall 2026 may see a bumper crop of undergraduates at most Ontario universities given the recent application statistics from the Ontario Universities’ Application Centre. As of April 8, 2026, there were 600,912 applications from Ontario Secondary School Students (OSSS) and 205,044 applications from All Other Applicants (AOA) (a mix of out of province, mature students and international applicants) for a total of 805,956 applications.  Applications from OSSS were up 2.2 percent from last year while AOAs were up 9.1 percent suggesting that some measure of recovery is underway in terms of international students applications.  Of course, these are the number of applications, and one can apply to multiple universities.  If one looks simply at the number of applications, total applicants in the 2025 cycle totalled 159,310 whereas for 2026 the individuals total 168,919 for an increase of 6 percent. The growth in individuals applying is even more pronounced when it comes to AOAs which have grown 12.4 percent as opposed to 2.3 percent for OSSS.

Figure 1 plots the ranked percentage change in undergraduate applications by Ontario Secondary School Students by institution. The largest increases (not shown here due to scaling issues) were for Université de l’Ontario Français (166.7 percent) and Université de Hearst (11.1 percent).  However, there were only a total of 20 applications to Hearst and 88 to l’Ontario Francais. Notwithstanding these two, the fastest growing OSSS applications were for Nipissing (9.9 percent), Western-Huron (8.5 percent), Guelph (8.2 percent) and Lakehead (6.3 percent).  There were also declines in applications with the largest being OCAD (-9.9 percent), Western-Kings (-9.7 percent), Algoma (-8.2 percent) and Waterloo (-3.5 percent).  It should be noted that application increases and declines do not necessarily automatically translate into enrolment changes as with each applicant making three or four applications, what matters is the conversion rate of applications into bums in seats.  As well, even with a decline of 1 percent, a university like U of T should have no problem filling up its ffirst-year entry slots given it has received over 68,000 applications and first year intake is about 17,000 students.

 

Figure 2 plots the ranked percentage change for the All-Other Applicants category and here the largest increases are Hearst, Algoma, Toronto and Carleton, while declines only affected Nipissing (-3.8 percent) and Western King’s (-17.5 percent). Finally, Figure 3 plots the percentage changes in total university undergraduate application statistics. While L’Ontario Francais and Hearst are at the top here, their extremely low application totals effectively move us to the next top performer which is Guelph at 8.6 percent followed by Western-Huron (8.1 percent), Queen’s (7.7 percent), Carleton (7.5 percent) and then Nipissing and Lakehead at 7.5 percent and 7.3 percent respectively.  Declines mark Trent, Windsor, Waterloo, OCAD and Western-Kings.  

 

As noted, while the number of application statistics are important, the conversion to bums in seats is more important and the chief indicator there is whether the application is a first, second or third choice and those statistics do not appear to have been posted yet.   However, what is important is that the growth in applications this year has been quite good despite the challenges.  The total number of applicants is up 6 percent even though the provincial government announced the end of the tuition freeze and a reorientation of the Ontario Student Assistance Program towards loans as opposed to grants. However, the Ontario economy has slowed considerably, and post-secondary attendance tends to rise during tougher economic times.  The ultimate test is not the number of applications, but what actual enrolment will be come September. Still, it looks a lot better than one might have expected.

How is That Trade War Going?

  

It is now well over a year since President Trump took office for the second time and began his tariff war on both Canada and the world.  Indeed, on his first day in office, Trump said that he expected “to put 25 percent tariffs on Canada and Mexico starting on Feb. 1, while declining to immediately flesh out plans for taxing Chinese imports.”  On February 1^st, 2025, Trump signed an executive order to impose tariffs on imports from Mexico, Canada and China with a 10 percent on all imports from China and 25 percent on imports from Mexico and Canada starting Feb. 4, 2025 justified by declaring a national emergency over undocumented immigration and drug trafficking.  Indeed, President Trump soon decreed that all the world should be taxed via tariffs with some unlikely targets.

Steel and aluminum tariffs were hiked on February 10^th and by March both Canada and Mexico retaliated with tariff measures of their own.  In the aftermath, there have been retreats and some moderation of tariffs with Canadian steel, autos and lumber remaining hit rather hard but overall the impacts on the Canadian economy have not been as dire as expected largely because 90 percent of Canadian trade with the United States remained tariff free under CUSMA. Indeed, some of the estimates of Canada’s economy shrinking were as high as 5.6 percent which did not come to pass in 2025.

So, one year down the road, how is the trade war affecting Canada and the United States?  This can be done via a comparison of some basic indicators with the indicators using data from both Statistics Canada and FRED. The obvious place to start is a look at how Canada’s merchandise trade has fared. Figure 1 plots the percentage change in Canadian merchandise trade with the United States and the World between 2024 and 2025.  With nearly three quarters of Canadian export trade occurring with the United States going into the trade war, it is not surprising that total Canadian merchandise exports are down but only by about one tenth of one percent. Meanwhile our total merchandise imports are up by 2.8 percent in 2025.  However, our exports to the United States are down 5.1 percent while our imports from the United States are also down 4.1 percent. What is more interesting is what has happened to the remainder of our trade – exports to the rest of the world are up 15.8 percent while imports are up 9.6 percent.  This suggests that 2025 did indeed see a measure of trade diversification away from the United States and towards the rest of the World.

 

However, there is still a way to go in terms of shifting trade away from the United States as Figures 2 and 3 illustrate.  Figure 2 looks at the distribution of Canadian merchandise exports while Figure 3 plots the distribution of merchandise imports.  The share of Canadian goods going to the United States has indeed declined going from nearly 80 percent in early 2025 to 69 percent by February of 2026.  Meanwhile, the share going to the rest of the World rose from 22 percent in January 2025 to nearly 32 percent by February 2026.  It remains to be seen if this performance merely reflects the picking of low hanging fruit and will level off or the trend will continue.  Meanwhile, the performance of imports was somewhat more abrupt.  Whereas prior to the trade war, there was an approximately 50/50 split between imports from the United States and the rest of the world, there was a sudden shift by March of 2025 with the US share dropping to 46 percent by February 2026 and the rest of the World climbing up to 54 percent. However, the gap after this sudden shift has remained relatively constant.

 

 

The Trump tariffs were sold to the American public as necessary to create jobs and particularly retain manufacturing jobs. Figure 4 looks at the percent change in total employment and manufacturing employment between January 2025 and January 2026.  During this period, Canada saw an increase in employment of 134,300 jobs – an increase in employment of 0.6 percent - though it shed 50,500 manufacturing jobs for a decrease in that sector of 2.6 percent.  Meanwhile, the United States saw an increase in total employment of 324,000 jobs or 0.2 percent and a 0.7 percent decline in manufacturing employment totalling 91,000 jobs.  For an economy ten times the size of the United States, one would have expected its total employment increase all things given to be about ten times that of Canada, but it is barely three-fold.  Moreover, its manufacturing sector has shed nearly twice the total number of jobs that Canada did though its percentage decline is substantially less.

 

When one looks at the unemployment rate between the two countries as shown in Figure 5, the traditional gap between US and Canadian unemployment rates continues but the Canadian unemployment rate essentially trended flat in 2025 starting at 6.7 percent in January 2025 and was still at 6.7 percent in February of 2026. Meanwhile over the same period, the Us unemployment rate rose from 4 percent to 4.3 percent.  Both countries have seen their unemployment rates decline from highs in mid 2025.

 

How about economic growth as measured by real GDP?  Well, the most interesting result displayed here in Figure 6 is that Canada saw its real GDP rise in 2025 rather than decline sharply as many had forecast displaying an unforeseen resilience.  Nevertheless, in 2025, Canada’s quarterly real GDP growth averaged 0.8 percent while that of the United States averaged 2 percent. Still, 0.8 percent growth is much better than a 5.6 percent decline. And as for the United States, it grew more slowly in 2025 than it did in either 2023 or 2024.

 

The reasons for Canada’s economy remaining as resilient are fourfold.  First, there has been a plethora of deficit spending at the provincial and federal government levels as well as efforts to prioritize government spending on Canadian producers. Second, 90 percent of Canadian trade with the United States remains tariff free under CUSMA and this will likely continue even after the deal is reviewed and re-negotiated given the United States is more dependent on trade with Canada and Mexico than the current federal administration is willing to publicly admit. Third, Canadian firms and business exporters are busily looking for new customers outside the United States while they are also looking for other import clients.  Fourth, Canadians themselves have responded by either shopping Canadian or looking for imported goods from elsewhere in their daily purchases and by making more of an effort to either spend their travel dollars domestically or anywhere but the United States.

The travel data is quite intriguing and presented in Figure 7 and 8. When monthly vehicles entering Canada are examined, Canadian vehicles re-entering Canada from the United States have shown a noticeable declining trend while Americans entering Canada are trending flat. Yet, in 2024, 8.4 million American crossed into Canada whereas in 2025 the total was 8.1 million for a decline of 3.7 percent.  As for Canadians, they continue to visit the United States at a much higher rate than Americans visit Canada – as they always have – but in 2024 there were 19.3 million vehicle re-entries and in 2025 there were 16.3 million – a decline of about 15.6 percent.  Needless to say, the impact on American border communities from the decline in Canadian shoppers and travellers has had a multi-billion dollar negative effect.

 

 

Figure 8 looks at air travel and here the numbers also show a shift in Canadian travel both by Canadians as well as the rest of the world with respect to Canada.  In 2025, Canadians returning to Canada by air from the United States was down nearly 14 percent while Canadians returning by air to Canada from the rest of the World was up nearly 17 percent.  Meanwhile, Americans entering Canada by air in 2025 was up nearly 6 percent while entry by non-Americans was up nearly 10 percent.  Between more Canadians staying home and more American and other international visitors coming to Canada, the Canadian tourism and hospitality industry has had a banner year with benefits to the economy and employment.

So, where does this leave us?  After one year of the Canada-US trade dispute, the sky has not fallen but there are noticeable effects.  Both countries are worse off in that their economic and employment growth could be better.  More to the point, President's Trump's claims that he is making America great again are falling somewhat short.  And while Canada has taken some steps to diversify its trade and business activities away from the United States, it stands that Canada is still heavily reliant on the US economy.  Still, it is remarkable that the share of Canadian merchandise exports going to the United States has fallen below 70 percent which  is the lowest it has been in twenty years. While our exports to the United States are down, so are our imports from them, and given that for many American states their largest trade partner is Canada, this is undoubtedly a contributor to their slower employment and GDP growth. 

What will 2026 bring?  Good question.  CUSMA will likely be retained in some form even if it involves separate bilateral pacts between Canada and Mexico with the United States as the current administration is hinting. However, the efforts at Canadian diversification away from the United States will continue given the increasingly erratic state of world economic and political affairs though the rate of diversification will be slow and incremental.  The United States will remain Canada’s largest trade partner but with our export share with the Americans falling below 70 percent and imports below 50 percent in just one year, it is apparent that Canada can generate new economic opportunities that do not involve the United States.  However, the pace is slow and a good economic trading relationship with the United States remains important. Completely reversing fifty years of economic integration is not going to happen overnight nor should it given the traditional links between two countries that share the North American continent. Still, going forward, things will  be different and new patterns of travel and consumption once established will persist to some extent.

Port Activity Will Help Stabilize Thunder Bay's Economy in 2026

  

Despite the snow on the ground, spring has arrived at the Port of Thunder Bay and that means two things.  First, the arrival of the first vessel with the  MV Kathy McKeil passing the breakwall at on March 26.  Second, there is the annual Opening of Navigation Luncheon which will take place this year on April 8^th at the Italian Cultural Centre in Thunder Bay. These annual events always remind us of the importance of the Port of Thunder Bay, not only in the past when the twin ports of Port Arthur and Fort William were the largest grain port in the world but at present given the revitalization of the port’s activity since 2000 and especially over the last decade.  As of 2024, the Port provided approximately 1,000 direct jobs and an annual economic impact of $370 million.

It bears looking at some of the recent trends in the main cargo that passes through the port. Figure 1 presents a plot of total tonnage through the port since 2000 along with a LOWESS smooth to isolate the trends and there has been a pronounced upward trend since 2010 with an average annual growth rate in total tonnage of 1.3 percent annually since 2000 and 3.3 percent since 2010.  In 2025, total tonnage through the Port of Thunder Bay was 10.8 million tonnes. 

 

Of course, the main commodity remains grain accounting in 2025 for 84 percent of total tonnage shipped. Figure 2 presents grain tonnage through the port since 2000 and again with the trend shows an increase after 2010 with a plateauing from about 2016 to 2020 and then another surge bringing total grain tonnage shipped in 2025 to almost 9 million tonnes. From 2000 to 2025, grain tonnage shipped has grown at an annual rate of 1.9 percent but since 2010 the growth rate averaged 4.1 percent annually. Figures 3 and 4 repeat the plots for potash and dry bulk. Since 2000, potash shipments in tonnes have grown at an annual rate of 9.6 percent but since 2010 the growth rate has been 20 percent. Meanwhile, dry bulk since 2000 grew at an annual rate of 7.1 percent with the period since 2010 seeing annual growth of 5.7 percent.  

 

 

With the renewed emphasis on east-west trade within Canada along with the disruption in world markets and shipping as a result the ongoing wars in the crucial cross-roads of the Middle East, one expects the demand for Canadian resource products as well as shipments through Thunder Bay to increase in 2026.  This will be a boon to the Thunder Bay economy and a counterweight to the forecasts of tepid growth in 2026 from Signal49 research.The Port of Thunder Bay remains an important component of local and regional economic activity.