FROLITICKS

Satirical commentary on Canadian and American current political issues

Aug 22

Both Canada and the U.S. have something in common: Dismal Economic Outlooks

by bcurry

When I was studying economic theory in college, one phrase kept leaping out at me: “Economics is the dismal science.”  This was partly due to the fact that I could never really be convinced that the discipline of economics was anything but a science.  Instead, I preferred to think of the reality of economics being continuously influenced by political policies and institutional structures, including those in the international sphere.  Control over the world’s economies is much more institutionalized than ever before.  The current economic situation in North America really highlights this perspective, especially given the reaction of bodies such as the U.S. Federal Reserve Board and the Bank of Canada in dealing with the post-pandemic world.

In Canada, one is coping with the highest levels of inflation since 1995.  The U.S. is seeing the highest levels of inflation since the early 1980s.  On top of which, we’re getting economic data that is fluctuating quite rapidly, so it’s very hard to get a precise read on where the economy is at any point in time.  The additional fear now is that both these monetary bodies are increasing the prime rates in order to tackle this hyperinflation at a time when the economy is attempting to get back on its feet after the disastrous pandemic period — thus the concerns about a potential recession in both countries and around the world.

Now, you don’t have to be an economist to know that something’s wrong.  Filling up your gas tank, buying a home and purchasing groceries just got incredibly more expensive!  Governments blame much of the distress on post-pandemic supply chain problems and global fuel-food shortages due to the Russia-Ukraine war.  On top of which, there are suddenly skilled labour shortages in most countries, leading to increasing wage levels and low unemployment rates.  The current situation has particularly been led by Boomers, many of whom have chosen to retire.  An April paper by economists at the Federal Reserve Bank of Richmond found that “the pandemic has permanently reduced participation in the economy.”  Due to the lack of and high cost of child care for example, many women are financially unable to return to the labour market.  In order to fill many jobs, countries are having again to look to immigration policies as a possible solution.

Recent blow-out jobs reports may have quieted claims that the U.S. is in a recession, but it did not end the mystery about the state of the economy or resolve questions about where it is headed.  Should a recession evolve in the U.S., past experience would suggest that Canada is not far behind.  Similarly, both federal governments are under the gun to do something about inflation — a major political issue.  However, as most analysts state, the current economic situation is something completely new and unprecedented in light of post-pandemic elements and the current global situation with respect to supply chains, especially in Europe.

Higher interest rates as a result of Federal Reserve Board and the Bank of Canada benchmark interest rate increases to control the hyperinflation will have an immediate impact on lowering economic growth.  Consumers feeling the hit will most likely have to cut back on expenditures, including the purchases of homes due to the subsequent rise in mortgage rates.  Whether or not we are on the brink of a major recession is still up in the air.  There is no sector of the economy that hasn’t been affected during this so-called recovery period. 

However, how about longer-term predictions?  As the famous British economist, John Maynard Keynes, once said: “In the long-run, we are all dead.”  He further noted that aggregate demand does not necessarily equal the productive capacity of the economy.  Instead, it is influenced by a host of factors —sometimes behaving erratically — affecting production, employment and inflation.  As of today, this definitely appears to be the case.  All any of us can do is hope to survive during the foreseen continuing turmoil within the markets and the economy in general.  In the spirit of economics as a ‘dismal science’, most economists for are not overly optimistic about improved short-term growth. 

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May 5

Impact of Robotics on the Workplace Increased With the Pandemic and Won’t Stop Any Time Soon

by bcurry

For some time now, I’ve been following the use of robotics when it comes to various forms of employment.  Obviously, we have seen the emerging use of robotics in manufacturing and assembly operations, such as in the automotive industry.  However, now we are increasingly seeing the use of robotics in the health care sector, the retail sector as depicted by Amazon’s newest warehouses, the construction industry, and even in the restaurant sector.  The pandemic resulted in even more robotics use as a means to better ensure the health and safety of workers from contact with other workers, patients and air-born viruses in workplace environments.  Experts see organizations adopting robotics increasingly to perform otherwise unsafe or stressful workplace tasks, such as caring for patients in a hospital who are in quarantine or isolation.  They also argue that the use of robotics is not about replacing employees who would traditionally be performing certain tasks, but rather providing an overall enrichment of safety in these environments.  For example, according to the U.S. Centers for Disease Control and Prevention (CDC), over the past two years, more than 1 million American healthcare workers were infected with COVID-19 and more than 4,000 of them died.

Now, enter the emergence of artificial intelligence (AI) and its application to the field of robotics and automation.  AI will allow various forms of user-friendly robotics, including for example advanced remote-controlled humanoid nursing robots in the health care sector.  AI will enable the robot to learn repeated tasks.  Once a robot has repeatedly performed a task, such as removing a blanket from the patient’s bed or retrieving specimens, it will be able to do these tasks without being given step-by-step instructions.  Advances in robotics and AI will see other uses in not only so-called blue collar work, but also in various forms of white collar work.  In the past two years, automation and AI tools have become sophisticated enough to influence professionals and white collar work.  Administrative assistants, radiologists, financial advisers — and now lawyers — have all become the targets of such software.  McKinsey & Company, a global management consulting firm, estimated back in 2017 that 35 percent of all professional tasks can be automated these days.  JP Morgan has already marshalled an army of developers to build software that can do in seconds what it took lawyers 360,000 hours to do previously.

The fact of the matter is that future workforces will work hand in hand together with robots and processes using artificial intelligence.  The implications for workers are varied and enormous.  The current and next generations of workers will have to fully educated, trained and comfortable with this new reality.  As in the past, along with new technologies comes a demand for new skills and knowledge.  There is no sector that is immune to advances made in robotics and AI, some obviously more than others.  As we are already seeing shortages of skilled workers in certain sectors, there will be greater pressure placed on organizations to compensate through the use of automated processes.  Also, whether by design or accident, many of the countries with the most rapidly aging populations already have the most robots.  According to the International Federation of Robotics in 2016, the nations with the highest density of industrial robots included South Korea, Japan and Germany.  At that time, the U.S. ranked eighth among the countries.  With their ageing populations, the use of industrial robots will no doubt increase in both Canada and the U.S. if they are to effectively compete on the global scene.

The pandemic has increased our awareness of our vulnerabilities when it comes to maintaining productivity and private and public services.  One can certainly expect that most sectors will be examining the future ways to avoid the negative impacts of pandemics and climate change on their workforces.  One means to dealing with the changing labour force demographics will be to investigate potential other uses of robotics and AI.  It’s happening now, and there is no stopping the changes that will come about.  Emerging demands will require fresh, dynamic solutions.

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Mar 4

Comparison of Workers’ Wages and Benefits Between the U.S. and Canada

by bcurry

In recent months there has been a lot of discussion about the impact of the pandemic on the labour market in both the U.S. and Canada.  Much of the discussion has now evolved around the issue of hyperinflation in both countries and the resulting worker demands for increased wages.  In addition, there has been a shift in the labour market itself whereby many workers who worked in certain sectors, in particular retail, tourism, services and restaurants, were laid off due to COVID-19 for months on end.  Now that the economies are supposedly reopening in both countries, some of these workers have decided not to return to those sectors, but to seek other more reliable and better paying employment.  Indeed, according to recent stats, there have been record levels of workers switching jobs, a trend that picked up markedly in the second half of 2021.

However, there are still signs that wage raises are stopping fall short of compensating for all of the higher prices.  In some private sectors, unions are now taking advantage of the inequalities and have moved to organize disgruntled workers, offering better wages and benefits.  An example of this is the American United Auto Workers (UAW) that is looking to organize Tesla workers.  Several Starbucks workers have been seeking to organize unions in Buffalo, Boston, Chicago, Seattle, Knoxville, Tallahassee, Florida and the Denver area.  The International Association of Machinists and Aerospace Workers promoted a two-year-long push to unionize thirty Amazon facilities in the U.S.  Generally, such attempts have been unsuccessful.  In Canada, where unionization is easier in the private sector under industrial relations laws, certain unions have been more successful in organizing workers in facilities run by union-resistant companies such as Wal-Mart and Starbucks.

Among the major differences between the two countries is the fact that Canada has a universal health system in place and more labour standards laws offering such benefits as paid sick leave, maternity and adoption leave, paid vacation leave and higher minimum wages.  Canada’s federal unemployment insurance program is national in scope, unlike in the U.S. where states have a lot more leeway to differentiate in their qualifying requirements, amounts and duration of unemployment benefits.  Moreover, the Canadian safety net for the unemployed has been strengthened in recent years, playing an important part in allowing unemployed workers to do lengthier job search, provide additional economic security and keep their job protection guaranteed under the law.

On top of everything, workers are looking at the huge profits made by certain companies during the pandemic, such as Amazon, Wal-Mart, Loblaws Canada, etc., etc.  Many believe, and rightly so, that they have not received their fair share of the record profits in the form of increased wages and benefits.  Instead, they see companies buying back billions of dollars in stock from investors and increasing the dividend rates given to investors by large amounts.  With companies declaring the end of the worst of the pandemic, previous increases in the form of risk pay are also quickly disappearing — this despite the fact that many of the pandemic risks still remain.

Moreover, the pandemic has had a significant impact on the labour markets of both countries.  Employers in both countries are being forced to compete for scarce labour due to the shift in the bargaining capabilities of workers, especially in light of today’s hyperinflation.  Indeed, wage increases are just one of many sweeteners that hungry firms are offering.  Also on the rise are perks like a four-day workweek — offered by some eleven percent of companies surveyed recently by the Payscale data firm —  as well as remote work, flexible schedules, free college tuition and other attractive benefits.

All in all, current hyperinflation will continue to cut into workers’ pay cheques.  The coming months will be difficult ones for both employers and workers.  Both Canada and the U.S. have similar labour markets, suggesting that significant adjustments will have to be made in each country.

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Jan 22

It’s Hard to be Optimistic About the Rest of 2022 — Here’s Why

by bcurry

Well, the New Year began much as the old year ended.  Across the board there are numerous reasons for North Americans not to be overly optimistic about the rest of the year.  Several key factors are leading us to this conclusion.

  • The Omicron variant of COVID-19 has created a fourth or fifth wave, depending on who you are talking to.  Although Omicron appears to have possibly peaked, it has once again severely strained our health care systems.  In addition, the unvaccinated continue to represent the largest number of hospitalizations, especially when it comes to patients in our ICUs.  Our health care providers continue to be under a great deal of strain, especially after two years of treating COVID patients.  There is now a tremendous backlog of elective surgeries and treatments.  In addition, although CDC studies show the effectiveness of booster vaccine shots in preventing severe COVID cases, far fewer adults have gotten booster shots to date.  When will we move from a pandemic to an endemic?
  • In most jurisdictions, kids are back for in-person learning in schools.  However, there are still a large number of children under the age of twelve who have not received their first dose of a COVID vaccine.  With the Omicron variant being twice as contagious as the Delta variant, many parents are concerned about the safety of schools and the potential effect of the disease on their children.  Indeed, statistics have shown that more children are being hospitalized due to Omicron.  Questions have been raised about whether in-person learning can continue in the near future.
  • Even with the economy starting to reopen, a number of economic issues have arisen.  Among these is the forecast of continuing hyperinflation over the coming months.  There continue to be supply chain problems, shortages of skilled labour and increasing fuel, food and housing prices.  With the current annual inflation rate running at around six percent, Canadians have not seen such a high inflation rate since 1991.  A survey of consumer expectations showed Canadian households also expect inflation to stay above 3 percent over the next couple of years, above the two percent average considered normally acceptable.  Central banks have little choice but to raise interest rates this year which will have a major effect on government and personal debt payments down the road.
  • Internationally, both the U.S. and Canada, as members of the North Atlantic Treaty Organization (NATO), will have to deal with on-going Russian threats suggesting a possible military incursion into eastern Ukraine.  Although the Ukraine is not a member of NATO, the allied countries strongly believe that there needs to be an immediate and firm reaction to any Russian incursion.  As a warning to Russian President Vladimir Putin, NATO countries are arming and training the Ukraine military and defence forces in preparation for such an event.
  • China’s economy is slowing, a worrying sign for the world.  China’s National Bureau of Statistics indicates that economic output from October through December of 2021 was only 4% higher than during the same period a year earlier.  This is a far cry from previous annual growth rates ranging between 6 and 9 percent in recent years.  The Omicron variant of the coronavirus is now starting to spread in China, leading to more restrictions around the country and raising fears of renewed disruption of supply chains.  Being a major supplier to the North American markets, any continuing slowdown in China’s economy will have a severe impact on U.S. and Canadian businesses and consumers.
  • COVID-19 government relief programs for the unemployed and businesses affected by government-imposed lockdowns and public health measures are being phased out.  This could result in many hardships for lower income individuals and small to medium-sized businesses.  The resulting loss of income due to the pandemic will have an impact on government revenues in the near future.  Many government support programs may have to be reviewed for termination or reduction under expected future austerity measures.

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Jan 14

Trade Squabbles Between U.S. and Canada Will Always Exist

by bcurry

When Canada, the U.S. and Mexico signed the U.S.-Mexico-Canada Agreement, known as USMCA, which came into force on July 1, 2020, no one really believed that any trade squabbles between the three countries would disappear overnight.  However, as a major trading nation, Canada has every desire to keep such squabbles to a minimum.  After all, the U.S. is Canada’s biggest trading partner with over 75 percent of Canada’s merchandise exports going to the U.S.  The U.S. and Canada enjoy the world’s most lucrative and enduring trade relationship, with almost $1.6 billion in goods crossing the border each day.  Goods and services trade between the two countries totalled almost $675 billion during 2017, according to the Office of the U.S. Trade Representative.

Despite our close economic relationship, disputes occurred under the former North American Free Trade Agreement (NAFTA) and continue to surface under the USMCA.  For example, the Canada–United States softwood lumber dispute is one of the most significant and enduring trade disputes in modern history.  The dispute has had its biggest effect on British Columbia, the major Canadian exporter of softwood lumber to the U.S.  In turn, it has increased the cost of softwood lumber in the U.S., influencing daily costs in housing construction.  More recently, the U.S. won a key ruling by the USMCA dispute-settlement panel that could allow more American dairy brands to break into the Canadian retail market, much to the chagrin of highly dairy provinces such as Quebec.  The next dispute on the horizon has Canada joining Mexico in formally disputing how the U.S. interprets rules governing the origin of vehicle parts under the USMCA agreement between the countries.  Ever since the auto pact under NAFTA, the three countries have established highly integrative parts and assembly capabilities when it comes to the manufacture of vehicles.  Now with the increased manufacturing of electric vehicles, the Biden administration has proposed that e-vehicles should be primarily assembled in the U.S., using American parts, in order to avoid any kind of tariffs at the American border.

In addition, all three countries are tied together in the energy sector on a truly continental basis.  Both Canada and Mexico have substantial oil and gas sectors, and help supply the thirsty U.S. markets.  None is so dependent as to ignore the other contributors.  Canada for some time now has been trying to increase the flow of Alberta oil via pipelines, such as the now defunct Keystone XL pipeline.  The Keystone XL pipeline project aimed to carry oil from the tar sands of Canada into the U.S. and has been a political football for years.  Led by pressure from American and Canadian environmentalists, both countries will continue to have issues surrounding the extraction and transport of fossil fuels, in particular via pipelines between the two countries.

However, trade wars simply are not effective.  Tariffs result in less capital spending and higher costs.  Any economics student knows that that is a recipe for net job losses across an economy, not net job additions.  For example, trade wars involving the introduction of tariffs result in more paperwork, less efficiency and higher costs as affected companies try to ‘game’ the system and attempt to get around the tariffs in any way possible.  The negative effects were clearly shown when Donald Trump introduced steel tariffs on Canadian steel.  A Canadian committee was quickly set up to make sure that other countries did not ‘dump’ steel into Canada in reaction to the U.S. steel tariffs.  Few new jobs were created in the U.S. steel industry, where the real issue is the problem of competition from modern and more efficient steel production overseas.  Again, Canada’s steel and aluminum industries are fairly integrated with American users and manufacturers, so that tariffs simply lead to market disruptions and increased end costs.

For decades now, people have talked about the need for freer trade between our two countries.  Indeed, most business people would prefer to let the marketplace determine the value of trade, including cost effectiveness and competitive advantages.  Unfortunately, it appears that administrations in both countries prefer to have dispute resolution processes settle their ongoing trade squabbles, often resulting in long, disruptive and costly legal battles.

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Nov 13

Hyperinflation Could be the Death Knell of Current Federal Administrations

by bcurry

According to just released U.S. Labor Department data, the consumer price index (CPI) increased 6.2 percent from October 2020.  The CPI in Canada was not far behind, rising almost 4.5 percent on a year-over-year basis in September, the fastest pace since February 2003.  In general, monetary authorities like to keep the annual inflation rate at somewhere between 2 to 3 percent.  What one is seeing now could certainly be described as ‘hyperinflation’, which causes all kinds of major issues for governments.  Experts also predict that this current belt of inflation is not going to go away any time soon because of a number of underlying factors, many attributed to economic consequences related to the pandemic.

You don’t have to be an economist or a political scientist to figure out the daily concerns caused by the current inflation rates throughout both economies.  The average American or Canadian sees these concerns on a daily basis when they purchase a house or pay rent, go shopping for food, put gas in their vehicles, buy new vehicles, pay their electricity and heating bills, etc., etc. 

While wage rates have been climbing in recent months, higher consumer prices are eroding peoples’ buying power.  In the U.S., inflation-adjusted average hourly earnings fell 1.2 percent in October from a year earlier.  The longer high inflation continues, the more pressure will be put on Federal Reserve and Bank of Canada officials to end near-zero interest rates sooner than expected.  With the increase in interest rates, people with mortgages and outstanding debt will be faced with the greater cost of borrowing and additional debt-related issues.

One must remember that when George H.W. Bush was president, one of the major reasons that he was unable to win a second term in 1992 was because of the early 1990s economic recession during his administration.  Some suggest that he forgot about the most important political maxim that: “It’s all about the economy stupid!”  The impacts of the recession also included the resignation of then Canadian Prime Minister Brian Mulroney.  Administrations cannot ignore a situation of hyperinflation for very long.  Both President Biden and Prime Minister Trudeau are caught in between a hard place and a rock.  With the end to financial assistance related to the pandemic and the economy’s lockdown, people are going to suffer.  Tough choices are going to have to be made, whether to put nutritional food on the table or cut back on medications and basic entertainment. 

Yes, the economy does appear to be opening up.  However, new COVID cases are on the rise once again in certain regions in North America.  Indeed, in these regions one has what is being referred to as “a pandemic of the unvaccinated.”  Consequently, should governments choose to renew or introduce new financial assistance measures, this will only exacerbate the current economic situation by further increasing the ratio of government debt to revenues.  If interest rates increase as expected in light of inflation, the future interest on government debt will also increase accordingly.  Under these extraordinary circumstances, governments can only do so much.  If the current frustrating situation continues, we would most likely see a change in federal administrations in future elections, as was the case in the early 1990s.

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Jun 21

Cities Will Definitely Not Be the Same After the Pandemic Is Over

by bcurry

A recent New York Times headline read: “New York Faces Lasting Economic Toll Even as Pandemic Passes.”  This should come as no big surprise given the nature of New York city’s industrial make-up, a good deal of which depends on foreign and domestic tourism.  Indeed, the article notes that the city had an 11.8 percent decline in jobs from February 2020 to April 2021, almost three times the loss on the national level.  Boarded-up storefronts and for-lease signs dot many of its neighborhoods.  Many of the businesses that depend on office and other workers who work in the core have yet to experience any substantive turnaround, especially in the retail, hospitality and performing arts sectors.  Of concern to the services sector is that several large corporations like Google and Facebook, as major commercial tenants, will not require the same amount of office space with a good percent of their staff continuing to work remotely full time or two or three days a week.  With fewer people commuting daily to downtown businesses, there will also be a substantive need to examine current public transportation policies.

While the example of New York is certainly considered to be an extreme situation, there is little doubt that all urban centers in North America will have to adjust economically and socially in the near future.  The impact of the pandemic will leave a substantial mark on every aspect of urban life for sometime to come.  The most evident immediate impact can be seen in the housing market.  Working remotely from home is only one of several factors influencing the rising costs of housing, especially single detached homes.  The average sale price for a home in Canada for example has surged 38 percent to $688,208 over the past year amid a pandemic-driven housing boom, according to data from the Canadian Real Estate Association.  Technology has allowed more people to work from ‘rurban’ communities than ever before, eliminating much of the need to commute to and from urban workplaces.  Employers are having to adjust their working arrangements to accommodate employees, who in many cases have essential skills in short supply.

Even Ottawa, where I live, is experiencing many of the economic and social consequences of the pandemic, despite being primarily a government town and having less of an economic impact that most cities.  However, as in the case of New York, Ottawa has seen dozens of small businesses, which before the pandemic employed about much of the city’s work force, haven’t survived.  Tourism, a major part of the National Capital Region, is way down, affecting hotels, tour operations, restaurants and bars.  The closure of the American border over the past year to non-essential traffic and major restrictions on international air travel has had a major impact on tourism.  Sports and entertainment venues, including Ottawa’s large festival industry, have been non-existent since the beginning of the pandemic.  Like many urban communities, the city is counting on the vaccination of seventy or more percent of its population to eventually encourage locals to return to recreational and indoor activities across the region.  However, much like projections for New York, most observers predict that it’s going to be a long, slow recovery.  Indeed, one can further predict that the eventual outcome will be quite different from pre-pandemic conditions in North American cities.

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Jun 8

Why the Shortage of Labour Will Be a Likely Issue in the Short-term for Certain Sectors

by bcurry

I was surprised somewhat to read that more than 4 million Americans are going to be cut off from federal provided jobless benefits in the next few weeks.  Apparently, 25 states, all led by Republicans, decided to halt some or all emergency benefits months ahead of schedule.  It appears that some business owners and managers have argued that the assistance income, which enabled people to pay rent and buy groceries when much of the economy was shut down, is now dissuading them from applying for jobs.  Many of the businesses affected are in the service and hospitality sectors.  However, the current reluctance or unavailability of workers to return to work can easily be explained by a number of evident factors.

Firstly, since March of 2020, lockdowns imposed by states and cities greatly affected restaurants, bars, clubs, etc. which are comprised often of low-paying employment.  During the past year, many former employees chose to look for other employment, especially attracted by higher wages and benefits offered by bigger employers, like Amazon and Wal-Mart, who continued to rake in the money as a result of on-line purchases and increased customer needs during the lockdowns.  Entry-level workers in service, hospitality and recreational sectors typically earned about $10 to $12 an hour.  These days, as noted by many small-business owners, anyone paying that rate risks losing workers to employers like Amazon where starting pay is $15 an hour.  On top of which, inflationary trends are on the increase.

Secondly, in the short-term with the quick opening of many businesses, it can be expected that employers will face a sudden increased demand for experienced workers.  This will probably force some businesses to offer higher wages in order to attract workers, which some have shown a reluctance to do so because of economic uncertainties.  Higher wages however have already benefited students who are looking for summer employment, especially in the recreational and tourism sectors.

Thirdly, the pandemic is anything but over.  In the U.S., an average of 15,000 new cases and more than 400 related deaths are being reported daily across the country.  Barely 40 percent of the population has been fully vaccinated.  Among those Americans receiving assistance, there are those who have underlying health conditions or have members of their families who are vulnerable to COVID-19.  Needless-to-say, these workers are reluctant to return to work under the current circumstances, especially where masks and physical distancing aren’t required at work.

Finally, women have been especially affected by the lost of employment in these sectors during the past year.  The biggest issue for those with families is the lack of affordable and safe child and elder care.  This was a pre-pandemic and will remain a major post-pandemic problem.

It’s unfortunate that Republicans have chosen to push their argument that pandemic jobless relief is hindering the U.S. recovery.  The crazy thing is that the balk of income and unemployment assistance is being paid for by the Feds.  Let’s face reality, there will be normal delays associated with reopening a mammoth economy.  It’s simply too soon to pressure individuals facing several obvious hurdles to obtain work at this time.  In their hurry to remove health-related restrictions and in the face of potential new variants, states and cities are risking the possibility of incurring a fourth wave of COVID-19 cases and hospitalizations — this time primarily among younger people who appear hesitant to get vaccinated.  Will there be a consequent need for future lockdowns?  Let’s hope not!  Only time will tell.  In the meantime, these unfortunate people continue to need our help.

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May 28

What’s a Billion Dollars? President Biden’s Proposed $6 Trillion Budget for 2022 Fiscal Year

by bcurry

During the Second World War, Canada’s newly appointed Minister of Munitions and Supply, the Honourable C.D. Howe, had allegedly said “What’s a million?” in response to his war spending estimates in 1945 (which totalled $1.365 billion).  This was in response to opposition queries about cutting a million dollars from that budget.  Howe responded that a million dollars from the War Appropriations Bill would not be a very important matter, which of course in those days represented a lot of money.  Howe eventually went on in 1944 to become Minister of Reconstruction in the post-war government’s successful overhaul of the Canadian economy. 

Now one has President Biden’s apparent proposal for a $6 trillion budget for the 2022 fiscal year.  Wow, this is a lot of money!  The budget proposal would call for the most sustained spending in more than a half-century, which forecasts deficits at more than $1 trillion for at least the next decade.  As in the case of WWII funding, the President sees the proposed expenditures as necessary to turn the economy around after the pandemic is over.  Most of the planned new funding would go to building up America’s infrastructure: everything from roads, bridges, public transit systems, passenger and freight rail, airports, water infrastructure, broadband infrastructure, etc., etc.  Already, in addition to the American Jobs Plan, the President has put forward a $1.8 trillion American Families Plan, a massive package that would invest in education, childcare and paid family leave.  To pay for all this, the President plans to increase taxes on the wealthy and to raise the current corporate tax rate.

Of course, the Republicans have raised their objections, especially to any increases in personal or corporate tax rates.  A group of Senate Republicans apparently have announced a $928 billion counteroffer on infrastructure.  After all, what’s a few billion dollars less?  Needless-to-say, many Democrats dismissed the Republican counteroffers as being too small.  Sounds familiar.  Another group of Republicans reportedly has suggested using unspent funds from previous coronavirus relief plans to pay for the infrastructure bill.

As in the case of the American and Canadian extensive efforts and massive spending for their economies to fund the war and recover from WWII, it would make sense that similar efforts are required of governments to do the same in order to recover from the damages incurred as a result of the global pandemic.  One way is for a massive investment in the much needed upgrading of our infrastructures, many of which have suffered from past neglect.  Yes, a billion or more dollars is a lot of money, but not when you’re talking about trillions.

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May 9

Reopening of Businesses Brings With It a Shortage of Workers

by bcurry

As immunization of populations against COVID-19 accelerates in the U.S., Canada and the European Union, the lessening of restrictions will allow more and more businesses to reopen, particularly in the leisure and hospitality sectors.  However, in the U.S. and Canada, federal governments had introduced additional unemployment benefits and stimulus checks to provide financial assistance to people who lost their jobs during the pandemic.  Many of the pandemic-related programs are expected to continue to the end of this summer.  However, as more businesses reopen, there will be a demand for workers to return.  The apparent data currently indicates that many workers are reluctant to return to former employment at this time for a number of very valid reasons.  Employers say it is increasingly difficult to attract job seekers to an industry whose future is more or less tied to whims of the coronavirus and the uncertainty of vaccination campaigns. 

The fact of the matter is that there continue to be pockets of COVID outbreaks in both the U.S. and Canada, regardless of increased immunization within the population.  The chances of front-line workers being exposed to the coronavirus remain high with the arrival of more contagious variants.  A good deal of uncertainty still exists.  With the unemployment benefits in place, one cannot blame many workers for being cautious about returning to employment, especially that which involves low-paying jobs.  In addition, women in particular are affected by the lack of affordable and safe daycare for their children.  Remember that in many jurisdictions, schools remain closed and on-line learning, where available, continues to offer a safer option.

Several American states, more so than Canadian provinces, have moved quickly to open up their economies.  However, despite everything, the pandemic is definitely not over.  Indeed, the so-called ‘third wave’ has been worst in terms of hospitalizations, especially among younger Americans and Canadians.  Case loads are still far too high, threatening to overload health care systems.  For this reason, some governments are reluctant to move too quickly in reopening businesses deemed non-essential.  Here in Canada, until a certain proportion of the population is fully immunized, governments actually prefer that many non-essential workers remain at home.  However, in the U.S., some Republican governors have started slashing jobless benefits in their states, hoping that the loss of generous federal aid might force more people to try to return to work.  Other states now require residents to prove they are seeking jobs to continue collecting benefits.

This past week, it was reported that just 266,000 jobs were added in the U.S. which was a disappointment since expectations were high for a hiring surge in April.  It was anticipated that potentially a million Americans would have returned to work.  Regardless of the impact of unemployment benefits on employment hesitancy, the fact is that many front-line workers continue to be concerned about the pandemic in their industries.  For obvious reasons, people don’t want to be bringing home the virus to their families.  Also, A Pew Research Center survey earlier this year found that 66 percent of the unemployed had “seriously considered” changing their field of work, a far greater percentage than during the Great Recession.  People are now more aware of the potential dangers of such outbreaks, and would be more inclined to seek other less hazardous employment.  As reported for example, grocery stores in the U.S. shed over 49,000 workers in April and nursing care facilities lost nearly 20,000 workers.  The same considerations can be found among Canadian workers in these and other sectors.  In addition, more affluent Americans and Canadians are retiring early because their retirement portfolios have surged in the past year and the pandemic may have taught them that life is too short.

In conclusion, what the pandemic has done is force many of the affected unemployed to reassess their future.  Employers will have to also reassess their employment benefits, working conditions and levels of compensation in order to attract and recruit workers.  As a consequence of the pandemic, the eventual result will most likely represent a major change in the operation of labour markets in most industrialized countries, including those in the so-called ‘gig economy’.

Canada Coronavirus COVID-19 Economy Economy US

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