Submission to The Social Lens: A Social Work Action Blog by Jim Stanford, Economist and Director of the Centre for Future Work, with offices in Vancouver and Australia.
No economic or social crisis is ever experienced evenly, across all classes, communities and demographic groups. The pain is always concentrated in certain groups who are more likely to experience lost work or income, ill health or dislocation.
The COVID-19 pandemic and resulting recession, however, was brutally and unforgivingly unfair. Never before has the fallout from an economy-wide downturn been so concentrated on the backs of groups of people who could least afford it. In this way, the pandemic has magnified and polarized inequalities that were already obvious, long before COVID reached Canada.
The painfully disequalizing effects of the pandemic stem from several related economic, social and epidemiological factors. Some of the most important include:
- The industries that had to be immediately shut down when COVID hit (to limit contagion) and have endured the most stringent restrictions on business activity ever since, are dominated by low-wage, insecure jobs – like hospitality, retail and personal services. This was the first recession in Canada’s history to start in the services sector (most begin in resources, construction or manufacturing). Workers in these private service sectors already experienced lower wages, shorter hours and fewer benefits and protections. They were thus in the front lines, and especially vulnerable, when COVID arrived.
- On top of lower hours and pay, workers in these most affected industries were also disproportionately employed under various insecure arrangements such as part-time, temporary, labour hire, nominal contracting or gig roles. This meant, first of all, that they could be almost instantaneously disemployed when the pandemic struck – without notice or severance. Over 30% of workers on temporary contracts lost work in just the first three months of the pandemic (compared to 15% of workers overall). Similarly, 30% of part-time workers lost their jobs in three months, and 30% of those with less than one year of tenure with their employer.
- The low-wage service workers bearing such a concentrated share of pandemic job losses also were less likely to have any income protections to support them through the dislocation. For example, less than 10% of very low-income workers (earning under $20,000 per year) had access to any form of sick pay when the pandemic started, compared to two-thirds of workers earning over $60,000. Most of those workers were left to fend for themselves.
- Those low-wage, insecure jobs which suffered the biggest layoffs during the pandemic are not distributed ‘randomly’ across the whole workforce. To the contrary, they are filled disproportionately by young people, women and workers from racialized communities. That’s why the job losses in those communities (populated by those who, once again, had less to fall back on when the pandemic hit) were much worse than for more protected populations: young, female and racialized workers account for most of the workforces in the hardest-hit industries. As a result, job losses for women were significantly worse than for men. 34% of young workers (under 25) lost their jobs in just three months – three times worse than for prime-age workers. And newly-collected data on racialized workers from Statistics Canada confirms that racialized communities also suffered very disproportionate job losses.
- Another employment factor to consider is very uneven access to remote or work-from-home employment arrangements. The number of Canadians working from home tripled during the first months of the pandemic, to over 5 million (or one-third of all employment during the first lockdowns). Even now, two years into the crisis, working from home remains at historically elevated levels. Work-from-home has allowed some Canadians to both preserve their jobs and incomes, and avoid the risks of contagion associated with travelling to traditional places of work. However, working from home is largely concentrated among management, professional, technical and office-based occupations: people who perform most of their work on a computer, and can fulfil their duties away from their normal workplaces. Once again, these occupations in general are better paid, more secure and come with a stronger set of benefits and income protections. So ironically, the people earning higher and more secure incomes were more likely to keep their jobs right through the pandemic – further widening inequality.
- Compounding these unequal employment and economic effects is a parallel inequality in the health and epidemiological dimensions of the pandemic. Lower-income groups, racialized families, Indigenous communities, and other vulnerable populations were more susceptible to contracting COVID, for a range of documented reasons: so-called pre-existing conditions, more crowded living conditions at home, less access to public health information and supports, and other disequalizing factors.
- A final factor contributing to wider inequality after the pandemic has been the unprecedented and amoral escalation of wealth and incomes for the richest segments of society. After an initial downturn, stock market valuations soared to unprecedented heights, setting all-time records in Canada and other global stock exchanges even as millions died. The rise in asset values was accelerated by the ultra-loose monetary policies (including unconventional ‘quantitative easing’ tactics) pursued by the Bank of Canada and other central banks, trying to support lending, purchasing power and employment through the crisis. A side effect of these policies has been a growing concentration of wealth at the top end of society. This doesn’t mean those policies should not have been pursued (there’s no doubt job and income losses would have been much worse without them). But it does mean that government must implement countervailing policies – like higher taxes for those who profited so handsomely during the pandemic – to address and ameliorate the resulting inequality.
For all these reasons, the bitter reality is that the Canadians who were already underpaid and precarious before COVID-19 have been forced to shoulder the lion’s share of the consequences of the pandemic and associated economic disruptions. Some of that pain was offset (initially, at least) by an ambitious and effective government response to the pandemic. The CERB and associated income support programs made a dramatic difference: they were well-resourced, rolled out quickly, and featured relaxed qualifying rules which allowed most (but not all) who needed support to receive benefits.
Those federal programs were supplemented, in some provinces, by additional supports from provincial governments. In BC, the province temporarily increased welfare benefits by $300 per month, and undertook other limited measures to further ease the suffering of those most affected by the pandemic. Ironically, the federal and provincial measures actually achieved a reduction in poverty in Canada, amidst the worst economic and health crisis in our postwar history. This success confirms what was known before the pandemic: poverty is not inevitable, but reflects deliberate economic and fiscal choices made by governments.
Unfortunately, however, the success of those initial programs was squandered as governments were once again captured by conventional ideas about fiscal ‘responsibility’ and the need to restore a strong ‘incentive to work.’ The federal government cut back the CERB benefit starting in September 2020, and eliminated it entirely in September 2021. The BC government rolled back its welfare increase, replaced in April 2021 with a smaller (but permanent) $175 monthly enhancement.
With Omicron now raging through all parts of Canada, it is readily apparent that rolling back those supports was dangerously premature. They should have been kept in place, recognizing the uncertainty surrounding the course of the pandemic. Now, with a new round of layoffs and other dislocation arising from the Omicron wave, income supports should be restored to their previous levels and qualifying rules: $500 per week, available to anyone who has lost most of their income due to shutdowns, closures or reduced business.
More crucially, the need to deliver assistance and support to those most harmed by the pandemic must be a fundamental criteria guiding the design of Canada’s post-COVID economic, social and fiscal policies. It will take years for Canada’s economy to fully recover from this catastrophe. Merely re-opening businesses and lifting health restrictions will not cause the economy to magically ‘snap back’ to full potential – especially given the blows to consumer and business confidence caused by the pandemic, supply chain disruptions, and other continuing shocks. Instead, economic recovery must be led by sustained, powerful investments, particularly from government and the broader public sector, including:
- Major investments in physical infrastructure, including public works that will help to confront the looming climate disaster (such as more resilient transportation facilities, renewable energy capacity, and public and community buildings).
- Ongoing expansion of social infrastructure, including essential services that are best provided through public or non-profit delivery systems (such as long-term care for elders and early child education).
- Permanent repairs to the frayed social safety net for working-age Canadians, including a fundamental overhaul of the Employment Insurance system (which, before the pandemic, denied protection to most unemployed Canadians because of onerous qualifying rules).
In short, Canadian policy-makers must be committed to putting the needs of hard-hit groups – including young people, women, racialized and Indigenous communities, people with disabilities, and others – at the centre of the post-COVID reconstruction strategy. The disequalizing effects of this pandemic, if left unaddressed, will result in long-term polarization, lost participation, and enormous long-run social and fiscal costs. It is only fair that those who suffered most from this crisis receive generous and targeted supports to recuperate from it. If that happens, Canada can be a stronger, fairer place as we come out of this frightening and painful moment in our history.
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