Canadians got raise from COVID aid: Statcan

LIBERALS OVERSHOT

OTTAWA • Canadians experienced “extraordinary changes in their economic well-being” during the pandemic as they gained thousands of dollars more from COVID-19 support payments than they lost in wages, according to new data from

Statistics Canada.

During one three-month period last year, young and middle-aged households generally gained around $3,000 more through support measures, particularly the Canada Emergency Response Benefit (CERB), than they lost in earnings. At the same time, middle-income earners in the second-lowest quintile earned additional income at roughly $2,500.

In that second quarter, COVID-19 benefits outpaced earnings losses across all five income classes studied by Statistics Canada, equalling out to an average additional income of about $2,000 over the quarter.

The new data underscore claims that the Liberal government overshot in its efforts to cushion workers against widespread lockdowns, particularly as disposable income among the lowest-income earners increased 36 per cent.

“These changes were driven by unprecedented increases in transfers to households, as the value of government COVID-19 support measures exceeded losses in wages and salaries and self-employment income.

“As the pandemic unfolded in Canada, households experienced extraordinary changes in their economic well-being.”

The report prompted questions over whether Prime Minister Justin Trudeau had been overly generous with CERB and other programs, and should have instead tapered those benefits after businesses began reopening their doors. The Liberals have sought to frame their comparably generous programs as a positive for the economy, saying in their recent fiscal update that record-high savings due to lockdowns and transfer payments would act as “pre-loaded stimulus” once restrictions are lifted.

“It underscores in a rough sense what the federal government did, which was to go big and go quick and overshoot, basically,” said Rebekah Young, economist at Scotiabank.

The largest proportion of COVID-19 support programs have flowed to middle- and upper-income earners, according to Statistics Canada. But it also said on Monday that the “impact” of those measures was greatest on lower-income and younger households, representing 16 per cent of disposable income for low-income earners compared with four per cent for the highest-income earners.

Young, like other economists, says Ottawa needed to aid unemployed Canadians during economic restrictions, as other countries did. But Canada now needs to shift its focus toward targeted relief spending.

Economists have been calling on Ottawa to scale its benefit programs, most notably CERB, for months, warning that it could be acting as a disincentive for people to return to work.

The Liberals last week scrapped the CERB and replaced it with the Canada Recovery Benefit (CRB), which they planned to trim down to $1,600 per month, compared with $2,000 for CERB. They later went back on those plans after facing pressure from the NDP, and left the CRB at $2,000 per month.

The Statistics Canada data also underscored the high level of savings that households have accumulated during the pandemic, particularly among middle-income earners in the second quarter of 2020.

“While all households increased their net saving in the second quarter, the improvement did not carry through to the third quarter for the lowest-income households,” Statcan said.