The unfairness of extending EI

In many parts of Canada, falling commodity prices means rising unemployment. To help, the federal government has begun selectively lengthening EI benefit periods — by a lot. Five more weeks in some cases; up to 25 weeks in others. But only in a few selected regions.

While supporting households in need may be a worthy goal, this plan falls short in many ways.

Most concerning of all is the lack of precise and open criteria to select qualifying regions. March’s federal budget listed 12 regions that would see benefit periods lengthened, based on vague criteria, and left it at that. This caused confusion and a political backlash. Alberta Premier Rachel Notley and Saskatchewan Premier Brad Wall were especially vocal about the exclusion of Edmonton and Southern Saskatchewan, which they said needed extra help, too.

It took an Access to Information request by Canadian Press reporter Jordan Press to reveal the precise criteria the federal Liberals had used as requirements: a region’s unemployment must rise two percentage points above a benchmark for three months straight and not later fall to within one per cent of that benchmark.

Based on this reporting, and on new data, it was clear three more regions qualified. Trapped by this reality and political pressure, the Liberals agreed to extend benefits in Edmonton, Southern Sas- katchewan, and B.C.’s Southern Interior.

But that’s it, they said. No more. Ever. And that’s a problem. Because, while the list is evidently now fixed, economic conditions certainly are not.

Thunder Bay and Yellowknife may meet the government’s criteria with new data released early next month. A month after that, it might be Regina’s turn. They’ve all crossed the magic two percentage-point threshold. The only remaining question is: will they stay there? If they do, why shouldn’t they also qualify?

It gets worse. The government’s method is not only unresponsive to new data; it is also flawed. ing by one month, and due to a random blip.

By contrast, the Northern Ontario region now qualifies for extended benefits, but it shouldn’t.

From early 2014 to today, unemployment there typically varied within a tight, flat band around 12 per cent. But in December 2014 and January 2015, its rate temporarily dipped almost to 10 per cent. Thus, the benchmark snapshot was taken at an unusually low rate, and so Northern Ontario now qualifies for extended benefits.

The lesson from these examples is simple: to base a region’s benchmark unemployment on a single data point during a narrow span of time is asking for trouble. After all, all in linking extended EI eligibility to regional unemployment rates. If tomorrow the Alberta government hires more public-sector workers, Edmonton’s unemployment rate will drop. But that doesn’t mean the labourmarket prospects for the city’ laid-off oilpatch workers is any better.

Of course, even recognizing these flaws, politicians might see some rationale in extending EI during times of economic stress. Fair enough. But the system already accommodates for that. Roughly speaking, for each point unemployment rises, EI benefits last for two more weeks (up to a maximum). This is based on data updated monthly, across the country. In a low-unemployment region (six per cent or lower), benefits are capped at 36 weeks. But if the rate goes up, benefits could last up to 45 weeks.

Calgary, for example, saw unemployment rise from five per cent in 2014 to over eight per cent recently. Even without special extensions, Calgary’s EI benefits last up to six weeks longer today than in 2014. Is that not enough? If not, why not?

Politics often trumps economics, and this is particularly true with EI policy. But we should at least use explicit criteria, regularly updated data, and robust procedures to select the regions. Discretion, randomness, or the appearance of either, has no place in Canada’s EI system.