How to help workers and the economy during the COVID-19 crisis

This op-ed was co-authored by Armine Yalnizyan and Dr. Jennifer Robson from Carleton University and originally published in the Toronto Star, on Friday, March 13, 2020.

It’s crystal clear we have to act fast to “flatten the curve,” the public health experts’ term used to describe the importance of reducing the pace of infection with COVID-19 to avoid overwhelming health systems. It’s also becoming clear that flattening the curve of the health crisis will reduce the associated economic crisis. What “act fast” steps can we take?

Governments have shut down schools, organizations have cancelled big gatherings, travel is being sharply cut back. Now the toughest, most critical step is to prevent contagion through the workplace. This disruptive phase of flattening the curve will cost businesses and workers alike. Telework will be the new normal for those who can stay home for a bit.

But millions of workers in stores, restaurants and Uber/taxi drivers don’t have that luxury, nor do people providing care for the young, the sick and the elderly. We have to make sure every sick worker can afford to stay at home. The federal government has already acted quickly to improve sickness benefits in Employment Insurance. This is a good but far-too-modest start.

Millions of low-income workers in Canada can’t afford to lose any hours of work. Among modest-income self-employed workers, almost no-one will be able to claim EI benefits. More than 1 in 10 of Canada’s 19 million workers are independent contractors without paid help. Among Canada’s 16 million employees, 12 per cent have temporary jobs, a share that rises to almost 1 in 3 for workers under 25. While they don’t get as ill, young workers needing to replace lost hours are more likely to spread COVID-19. Millions of people also provide low-wage work in child, elder and health care fields, making them prime carriers of contagion.

The federal government can do five things, unilaterally and immediately, so Canadians can reduce work-related contagion as quickly as possible, wherever they live and whatever kind of work they do.

1. Improve EI: One in 10 workers making less than $15 per hour pays into Employment Insurance but won’t have enough hours to qualify for sickness benefits. The act permits the government to lower that hourly threshold qualification temporarily. Increasing the income replacement rate from 55 per cent of insurable earnings to 80 per cent for lower-waged earners (like we had in the 1940s) would also reduce people’s desperation to pick up extra hours of paid work. To support those not currently EI eligible, the federal government could fund a temporary unemployment assistance program, as sketched by an April 2019 Public Policy Forum report. A flat weekly benefit to those who don’t have enough work or a forgivable “jobseekers loans” with repayment tied to income reported to the tax system would revitalize the feds support for the hard-to-serve unemployed, a role it played by funding extended regional jobless benefits until 1991.

2. Expand Paid Sick Leave: The tax system could aid small and medium employers with cash flow to provide or expand paid days of leave for the rest of 2020. Subject to a reasonable maximum, the additional payroll costs associated with new paid leave days could be made deductible from 2020 corporate income taxes.

3. Limit deepening debt: A single cheque via GST credits, Guaranteed Income Supplement or Canada Workers’ Benefit may not be enough to live on for two weeks, but would ease the financial stress of upfront out-of-pocket costs triggered by self-isolation. One-time supplemental payments of these income-tested federal credits could help households least likely to have emergency savings or access to affordable credit.

4. Secure housing: The Canada Mortgage and Housing Corporation could immediately provide a pool of capital to existing or new rent banks across the country so that those who can’t make the rent because of falling incomes or illness don’t lose their housing too. The federal government could also broker a deal with banks and major lenders to extend the mortgage default period and/or defer mortgage payments over the next six months, as Italy has done.

5. Prepare our social infrastructure for post-crash demand: People turning to key community services like food banks and child care after this period may find non-profit services have been hobbled by the triple whammy of losing fees for service and donation revenues even as demand rises. These agencies can’t weather the storm like small businesses because they are less able to access lines of credit. Capital for low-interest lending could be handed to the Business Development Bank of Canada, or funded through the Social Innovation Social Finance sector.

As the public health and economic crises become more clearly intertwined, all federal parties should collaborate not just to suspend Parliament, but to support a package that works for all Canadians, especially those who need it most.