Address poverty to promote prosperity

There’s been a meeting of the minds this week among those who can make a difference in how COVID ravages Canada.

The finance minister, the head of the Bank of Canada, and the head of public health for the country all agree: Our ability to stifle the pandemic and to revive the economy depend a lot on our ability to protect and support low-income Canadians - especially women, especially people of colour. There’s a direct line.

But defining the problem only begins to solve it.

In their own distinct ways, each of the three have shown in an array of charts, graphs and pronouncements how the first wave of the pandemic struck hardest at the most vulnerable neighbourhoods, the most precarious workers and people of colour. But as recent history repeats itself in the second wave, their solutions aren’t effective enough yet.

Of the three movers-andshakers who struggled publicly with the conundrum standing between Canada and healthy prosperity, Canada’s Chief Public Health Officer Theresa Tam was probably the most blunt. Over the course of her presentations and reports this week, she has pointed repeatedly to evidence that COVID-19 is sickening and taking the lives of more people in crowded, low-income neighbourhoods. It’s killing a disproportionately high number of people of colour. Poverty, housing and race are determining the path of the virus.

So even as she patiently urges individuals to keep their social contacts to a minimum, wash your hands and stay home if you’re sick, she is also - in her calm, measured way that belies the urgency of the situation - telling policy-makers to provide more affordable housing and community support services that go directly to vulnerable people wherever they are.

Tiff Macklem, the top central banker, comes at it from a very different perspective, but comes to some of the same conclusions.

The Bank of Canada pulled back a bit this week on its support for financial markets, since parts of those markets are no longer in distress. But for an economic recovery to take hold, he said, consumers need to be spending a lot more. And that means the low-wage workers who have been hurt the most and the longest by closures need to reestablish their jobs.

He’s worried that the longer they stay unemployed, the harder it is to get back into the workforce and make up for lost ground. In other words, he is concerned about “scarring” — permanent and unproductive damage from the virus and its economic implications.

His solutions are limited, though. He has committed to keeping interest rates low for many years, if necessary, so that it’s almost free to borrow and invest. Helpful, but the bank relies on businesses and households to borrow that money and get the economy moving, in the hopes that some of that activity rubs off on low-wage workers. It’s indirect at best.

And that brings us to Chrystia Freeland, the finance minister, who is also deeply worried about how the economy will fare with permanent harm being done to women, young people and needy families and their ability to find good jobs, not just now but over the years.

“The more scarring, the harder and slower the recovery is,” she said in an interview with the Star this week.

She said she has lots of faith that the supports her government has put in place — enhanced employment insurance, the revamped wage subsidy, business loans and other programs — will bridge most companies and people to the other side of the pandemic. But she is seized with making sure there’s a recovery plan in place for those people who have been hit extra hard.

“We are definitely thinking very hard about ... getting people back to work. And a real tragedy of the way the coronavirus economic downturn has hit is that the people who are the most vulnerable have been hardest hit, while some people are actually OK,” she said.

“If you look at it economically, the economic difficulties are hitting most vulnerable low-wage workers the hardest. I do think our economic recovery plan ... needs to be particularly focused on ensuring that those people get back to work.”

Traditional stimulus that leans on construction projects won’t do much for the women who have been particularly affected by the recession, she added.

The challenge for government is to figure out how to confront the long-standing inequities in our society that have become so poignant during the pandemic and now stand in the way of a solid recovery, says Frances Donald, managing director and chief economist at Manulife.

As the second wave of the virus turns into a second wave of economic pain, the pressure on federal decision-makers is mounting, Donald says, because they need to deal with short-term victims of the recession while also setting the stage for an eventual climb back in way that brings everybody along.

Childcare — the funding of accessible, high-quality spaces — is a key response, Donald says, as is making sure retraining is widely available to all who need it.

We need all those solutions to spread faster than the virus if our economy and our health are to come out of this intact.

Heather Scoffield is the Ottawa bureau chief and economics columnist for the Toronto Star. Twitter: @hscoffield