For years, it has been a common refrain. Any new initiative the federal government announced always came back to a single point: “It’s for the middle class and those hoping to join it.”
That signature phrase seems to have been missing in action for months now. And that’s a big relief, because government support and socio-economic policy should be first and foremost about those whom the pandemic economy is hitting the hardest: low-wage earners and the unemployed.
Tuesday’s eight-week extension of the Canada Emergency Response Benefit — known as the CERB and so central to surviving the pandemic — is a case in point.
The $2,000-a-month payments for those without work was certainly a blunt but effective instrument when it was rushed out in March to cushion the blow for those who lost work due to the pandemic.
But until Tuesday, it looked like the CERB was about to expire for millions of people who are still a long way from full employment. Even though we’re in a different stage of the pandemic, the economic hangover of the lockdown remains, and will likely only fade after months of recovery.
“I’m not going to sugar-coat it — we still have a long journey ahead,” Prime Minister Justin Trudeau said Tuesday in announcing the extension.
No routine mention of the middle class, though — which would have been his instinct during the last election campaign or at any time during the past five years. Improving the standard of living for the middle class has been the singular economic objective of the Trudeau Liberals, but the pandemic has — appropriately — put that branding on hold.
There’s no doubt that people from all corners of society are taking a hit to their standard of living — even those whose incomes are well above the amorphous middle class and have kept their jobs, but have suffered losses in the stock market. But the economic brunt of the pandemic has been felt by people who are paid by the hour, usually at low wages, often part time, often in precarious work.
The latest jobs report from Statistics Canada showed a small portion of low-wage work has returned, but not nearly at the same pace as higher-wage work. And so the CERB is providing an essential cushion while we get things sorted out — even though it’s far from perfect.
As we know, the Liberals have faced growing criticism from the Conservatives and some employers for allowing CERB to deter workers from going back to work. But for CERB to be a deterrent at $2,000 a month, an employer would be paying rock-bottom wages — something they have the power to change.
“Some lower-wage employers are probably going to be upset about the CERB extension and may say they will have a hard time recruiting workers back to work. I say maybe they could raise wages and do more to ensure worker safety,” says Carleton University’s Jennifer Robson, an associate professor of political management.
And eventually, buoying the lower end of the economy will help the middle with its recovery. Stephen Brown, senior Canadian economist at Capital Economics, says the CERB has so far sufficiently made up for lost household income during the pandemic, and will pave the way for the road back. Between March and May, the government has spent about $43.5 billion on CERB benefits, surpassing Brown’s estimate of $38 billion in losses in household income during the same period.
He figures people thrown out of work by COVID-19 had been making on average about $611 a week in pre-pandemic days — about half of what those who kept their jobs are making. And since low-income workers were disproportionately put out of work by the pandemic and also tend to spend their household income more quickly than high-income households, that federal money will go a long way toward nursing the economy back to health for everyone, Brown argues.
For sure, the CERB extension is a temporary solution that buys the federal government some time at best. Officials are well aware that the Employment Insurance system is full of holes and has been shown to be inadequate, not just in this pandemic but for the future workforce that is likely to include more temporary work than the system is built for.
If the government’s experts are able to repair EI’s weaknesses and blend that system with pandemic income supports to nurse a full recovery, they’ll be providing a crucial backstop for the middle class for years to come. But for now, the focus on emergency help for the pandemic’s most vulnerable victims is a necessary priority.
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