The pandemic has revealed that the Caring Economy – healthcare, eldercare and childcare — is the vital underpinning to the Essential Economy. The COVID-19 recovery must prioritize social infrastructure. It is as critical to the basic functioning of our lives as roads and bridges.
On Thursday June 4, 2020, I presented this opening statement to the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities on the Government’s Response to the COVID-19 Pandemic. Watch it here.
Yesterday the Bank of Canada told us that the worst could soon be over for the economy, though the pace of rebound is far from certain.
For Canadian workers, recovery can’t come soon enough. Last month’s Labour Force Survey (LFS), Statistics Canada said “In April, more than one-third (36.7%) of the potential labour force did not work, or work less than half their usual hours.” Tomorrow’s update is likely to show more of a he-covery than a she-covery, that is more men returning to work than women. That is deeply problematic, for households and for the potential of the economy. That is because household spending accounted for over 56% of GDP before the pandemic hit. It’s been a growing driver of GDP for some time. Household purchasing power propels the Canadian economy, and women’s incomes are critical to maintaining household purchasing power.
It is unclear how many workers deemed “non-essential” during the shutdown – the majority of whom were women – will find their way back to being re-hired. But, without question, a limiting factor for women’s return to work is childcare. Simply put – there will be no recovery without a she-covery; no she-covery without child care.
The acceleration of “shovel-ready” infrastructure will help speed recovery, to be sure; but it is mathematically impossible for growth in primarily male-dominated jobs to offset the numbers of jobs lost by women. Furthermore, repairing critical physical infrastructure will do nothing to prevent loss of critical social infrastructure, which is what we are poised to do.
User fees for childcare represent the second biggest cost for young families, second only to housing expenditures. Many families who lost incomes forfeited their spots in childcare facilities because of the high cost for simply holding them.
Childcare costs will undoubtedly rise, too, because of new requirements for physical distancing, dramatically increasing staff- child ratios, and adding new fixed costs for PPE, cleaning, and even more space. We do not know what share of our ecosystem of childcare (operated in Canada through public, private not-for-profit and private for-profit providers) will shutter in the wake of the pandemic. In the U.S., it is estimated that 50% of ecosystem of childcare is at risk (4.5 million spaces), requiring $9.6 billion a month just to preserve the spaces they have. The fewer the spaces, the less theability for women to return to work, even if they have a job.
The irony is that subsidized child care literally pays for itself. A study by noted Quebec economist Pierre Fortin showed “in 2008 each $100 of daycare subsidy paid out by the Quebec government generated a return of $104 for itself and a windfall of $43 for the federal government.”
Childcare can play a three-fold role in recovery.Beyond simply facilitating women’s return to work – and, indeed, being a source of employment – the decision to ensure childcare is affordable high-quality early learning, accessible to all families will maximize the future of the next generation of Canadian children, lowering public spending and increasing revenues for governments and society. We may choose to act, or not; but we will reap what we sow.
U.S. data shows a return on investment between $4 and $8.75 on each dollar invested in high-quality early learning, particularly in neighbourhoods where children are more at risk of entering school not learning ready. And the impact does not end with pre-schoolers. Canadian data from ESDC shows spending on Pathways to Education resulted in a net benefit of over $2,000 for governments (lower expenditures, higher revenues) per student in the program, and almost $5,500 for individual participants. We would literally be leaving money on the table by not using this opportunity to improve our social infrastructure.
By rolling out accelerated initiatives in our biggest cities first, which have the biggest concentrations of children and the highest concentrations of poverty, we could maximize our potential and our future, individually and across society. Getting everyone learning ready and learning-supported as they age is a 21st century requirement because of population aging. As a shrinking working-age cohort is asked to support growing numbers those too old, too young and too sick to work, we can ill afford to discount the skills development of anyone. This means the supply of high-quality early- learning childcare should not be left to market forces to decide, but rather integrated with the education system because it is a public good that is under-supplied at present.
I believe that, given the circumstances, this requires a national approach and a federal role. I recognize this is a controversial position. Why a federal role in childcare, which falls constitutionally into provincial jurisdiction?
Because childcare will be more costly to operate safely in the post-pandemic world (higher staff ratios, more PPE and time on cleaning; better staff). Because provinces and cities are cash strapped. Because the federal government provides funding for health care and post-secondary education as well. And because, even if we don’t raise taxes to pay for it immediately due to post-pandemic pressures, debt by the federal government is the least risky and lowest cost of any debt held by all other economic agents in society: households, businesses and sub-national governments.
I would be remiss not to mention the number of recent immigrants and migrant workers who have been made sicker, and even died, because of the pandemic and inadequate provisions for safe re-opening. We need better protections, especially 10 paid sick days, a worthy initiative that should have been in place before the pandemic, but its absence certainly cannot be excused now.
Every jurisdiction should be clamouring to lead this parade – voters are workers, not businesses – but the federal government could and should lead by example, ensuring what it is asking of provincial jurisdictions is the standard in its own jurisdiction. Furthermore, the cautionary tale from use of on-demand and temporary labour in long term care facilities and delivery services should give us all pause.
The rise of the gig economy is looming on the horizon as employers and consumers look for cheaper, faster on-demand labour; and workers have fewer paths back to old jobs. I urge the federal government to collect better data and monitor this phenomenon, which will affect everything from income support and skills development programs, to public revenue and debt.
In closing: the pandemic has revealed that the Caring Economy – healthcare, eldercare and childcare — is the vital underpinning to the Essential Economy. Social infrastructure is as critical to the basic functioning of our lives as roads and bridges. As our LTCs have shown, twinning care and profit as operational objectives raises systemic risks. We need nation-wide protocols for the safe re-opening of childcare. This will indeed require skill-testing federal- provincial-territorial cooperation; but we all know common goals are easier to find when money is made available by “someone else”. That “someone else” is all Canadians, together, through our taxes. Without such shared undertaking, fewer women will return to work, and recovery will be further off for everyone, households, businesses and governments alike. Let’s not do this to ourselves.
Thank you for your time and consideration.