If you had 100 billion dollars – maybe that would be enough to deal with income inequality once and for all?
Finance Minister Chrystia Freeland actually does have $100 billion – that’s the maximum amount the federal government has earmarked to foster an economic recovery in Canada once we emerge from the pandemic – and it will be at the heart of her federal budget when we see it in a few weeks’ time.
About 800 individuals and organizations felt strongly enough about that $100 billion to come forward and spell out their visions to the House of Commons Finance Committee, leading to a whopping 145 recommendations for the minister to incorporate into her budget-making exercise.
But few of those disparate ideas deal head on with the prickly economic problem that is glaring at us in every batch of new data: a growing disparity between low-income and high-income Canadians.
After years of aggressive policy on taxation and redistribution finally managing to hold the line on the worrisome gap between rich and poor, the pandemic has thrashed all hopes of making progress.
Richer Canadians have held on to their jobs, worked from home, built up their savings because there’s nothing to spend it on these days.
Lower-income Canadians, on the other hand, lost their jobs or working hours in the first wave, again in the second wave, and now face the possibility of a three-peat if new variants have their way.
“Some of the jobs that have been lost during the pandemic will not return. And the workers who have already borne the brunt of the pandemic may be especially affected,” Bank of Canada governor Tiff Macklem warned on Tuesday.
Even as high-income earners are in good shape to take on the post-pandemic economy, “many low-wage jobs have a high potential of being automated. And some jobs that are disproportionally held by women and youth, such as retail salesperson and cashier, are also the kinds of jobs where the pandemic has accelerated structural change,” he said.
To compound the disparity problem, the pandemic has shown us that our social safety net is not up to the task. Yes, the federal government has entrenched and enriched a range of supports for seniors and families with children. The Canada Child Benefit and the Guaranteed Income Supplement have been, and will continue to be, effective tools to bolster incomes of young families and the elderly.
But when push came to shove last March, and hundreds of thousands of people turned to Employment Insurance to get them through their job crisis, the system was so obviously inadequate that the government had to quickly invent the Canada Emergency Response Benefit (CERB).
The CERB has come to an end now, replaced by a modified, and now temporarily extended EI system that is an expensive hodgepodge of measures meant to help us muddle through. Another $12-billion extension came last week as fears of a third wave mounted.
But as Macklem’s analysis shows, the pandemic’s undermining of the job market will have a permanent effect that outlasts the lockdowns and restrictions.
It’s up to Freeland and her $100 billion to design some answers for that problem, and a good place to start is with the income support system for people either out of work, precariously on the edge, or at the low-income end of the spectrum.
The pandemic has exposed EI’s flaws, and there’s a small army of government experts designing ways to modernize the system, make sure it is flexible enough to cover the self-employed and gig work, and acts as a true insurance program for people who pay into it, says income support expert John Stapleton. It’s time to see these solutions in the light of the day.
The pandemic has also underlined the need for extra help for low-income workers, especially those who don’t get the Canada Child Benefit. That’s where the Canada Workers Benefit (CWB) could come into play – a top-up to entice people teetering on the edge of the workforce to plunge in and take a job.
The CWB has some faults, but they can be fixed and the program improved and enriched so it provides meaningful support for those workers – mainly working-age, single people in precarious or low-paid jobs – who don’t usually qualify for federal benefits, says Garima Talwar Kapoor, director of policy and research at Maytree Foundation.
“The pandemic is doubling down on inequities,” says Talwar Kapoor. “We really do need the feds to play a role if they’re serious about reducing inequities.”
Indeed, political fortunes and the economic health of post-pandemic Canada depend on it.
Heather Scoffield is a National Affairs writer.