Economic Impact of COVID-19 on Canada's Vulnerable Populations




A new report from the Conference Board of Canada predicts that the COVID-19 pandemic will impact the country’s economy for years to come. In the coming years, Canada, and many other countries, will need to deal with the economic fallout of COVID-19, which will likely leave individuals, households, governments and businesses deeper in debt than they were prior to the crisis.


While more data and more certainty about COVID-19 and the unprecedented global effort to contain it are needed to quantify the toll this will take on Canada’s economy, the economic impact is being felt from coast to coast to coast in real time and will have its most immediate effects on the most vulnerable of Canadians.


Dr. Kelly Ernst is the Centre for Newcomers Vice President of Vulnerable Populations. Here he breaks down the economic impact of the COVID-19 pandemic on Canada into three categories - no to low impact, medium impact and the most highly vulnerable -and offers his thoughts on what we can all do to help.


Kelly Ernst, Ph.D. k.ernst@centrefornewcomers.ca March 28, 2020 The cases of COVID-19 worldwide pandemic are now into the hundreds of thousands, deaths are in the tens of thousands1. In Canada, the cases are in the thousands of people2. It’s growing each day and not going to get better anytime soon. The effects have already been profound. Millions around the world are in isolation or ordered not to leave their homes in hopes to help stop the spread of the virus. Economies have largely stopped and the financial markets have plummeted in an unprecedented way, not seen since the great depression. Governments have declared states of emergency, including provincial governments here in Canada3. However, there has been no uniform response across the country. It is a patchwork of responses, with local provinces and municipalities all helping in different ways. Civil society in Canada has few national and provincial organizing bodies, compounding the patchwork of support for those feeling the impact of COVID-19 the most. Assistance in one part of the country cannot be said to be also occurring in another part, and certainly not at the same times or levels. The Federal government has initiated the Canada’s COVID-19 Economic Response Plan4, which will help to equalize supports for people, but it does not reach all people in Canada. Regardless of the variability, consider the follow scenarios of who will and will not be most economically impacted by COVID-19 in Canada. No to Low Economic Impact There is a group of people in Canada that will not feel any impacts except perhaps discomfort in watching the value of their assets reduce. These include people with large savings or investments and regardless of market fluctuations can weather the storm well. It also includes those in households where no jobs are lost, and income continues to flow as it did prior to the crisis. Some of these households may even see a slight increase in incomes through additional benefits from Canada’s COVID-19 Economic Response Plan. For this group life goes on largely unchanged. Medium Economic Impact As we go down the list of various groups impacted, many households will see one or more incomes eliminated or reduced. This might be offset by some of the benefits of the employment insurance program. In these scenarios rent, mortgage, and other bill payments may be missed. Some will be moved to become highly impacted by the COVID-19 emergency, but certainly not most. Their impacts may be offset to some degree by the Canada’s COVID-19 Economic Response Plan. These benefits are: Emergency Care Benefit. An Emergency Care Benefit providing up to $2,000 per month, for up to 4 months provide to: “workers who must stop working due to COVID-19 and do not have access to paid leave or other income support. workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.

working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures. workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work. wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.”5 GST Credit. Another benefit will occur by early May 2020 through the Goods and Services Tax credit (GSTC). If eligible, the maximum annual GSTC payment will double the amounts for the 2019-20 benefit year, boosting income on average around $400 for single individuals and close to $600 for couples.6 Canada Child Benefit. If a family has children, then the maximum annual Canada Child Benefit (CCB) payment amounts will increase by $300 per child. Wage Subsidies. The federal government has also announced “a 75 per cent wage subsidy for qualifying businesses, for up to 3 months, retroactive to March 15, 2020. This will help businesses to keep and return workers to the payroll.”7 Banks have suggested mortgage payment deferral programs are on their way and these will be assessed on a case by case basis. For this group there is a likelihood of opportunity lost and long delayed, but they will likely get through the COVID-19 crisis and be at a far more precarious state on the other side, but they will get through the other side. High Impact – Highly Vulnerable All these benefits sound good on the surface. But if a person has few assets, is single, has no children, does not qualify for employment insurance, and/or does not yet have enough accumulated Canadian work experience, then the benefits may not substantially reach them, if at all. The qualifying criteria passed in the House of Commons is clear. “Eligibility 6 (1) A worker is eligible for an income support payment if (a) the worker, whether employed or self-employed, ceases working for reasons related to COVID-19 for at least 14 consecutive days within the four- week period in respect of which they apply for the payment; and (b) they do not receive, in respect of the consecutive days on which they have ceased working, (i) subject to the regulations, income from employment or self- employment, (ii) benefits, as defined in subsection 2(1) of the Employment Insurance Act, (iii) allowances, money or other benefits paid to the worker under a provincial plan because of pregnancy or in respect of the care by the worker of one or more of their new-born children or one or more children placed with them for the purpose of adoption, or (iv) any other income that is prescribed by regulation. Exclusion

(2) An employed worker does not cease work for the purpose of paragraph (1)(a) if they quit their employment voluntarily.”8

Some may assume provincial programs may assist those that do not fit the above criteria. But provinces, such as Alberta, are also tying benefits to work, For example, “You are not eligible for this program if you: were not working immediately before you were advised to self-isolate”9 For others if the crisis is extended, then they will move to become highly impacted by their personal economic reality. Many people with disabilities or elderly with few resources are also at risk of being profoundly impacted by the crisis. So, for those new immigrants to Canada and who had been starting out but were not yet able to find employment, have not worked long-enough, or have no work history in Canada, then benefits will not apply to them. Other factors will compound problems. For example, if people have arrived in 2020, they will not have filed taxes and will not yet have an account with CRA. Given benefits will be flowed through CRA deposited, then anyone without a CRA account will not benefit from these potential sources of support. These groups are particularly at risk for a large economic impact because they have no work history. In these cases, income support could be a source of income in various provinces – if they qualify. Often, they do not until various documents can be secured, such as work permit. This can take weeks or months in some scenarios. With government workers perhaps ill or not working in their normal offices, plus volumes of work increasing due to COVID related applications, the processing of such documents could possibly increase or simply not occur. Even with work permits and all the necessary qualifications to work, opportunities have vanished. For new Canadians, and low-income persons, minimum wage paying jobs are often the first to go - restaurants, bars, retail, and labourer type jobs across Canada are simply gone. What opportunity may have existed has vanished and now with hundreds of thousands more people looking for work, the competition to get any job will be immense. For people in this category, they will feel the impacts the most. Rent payments, utilities, and even food purchases are going to be very difficult. Mortgage payment deferrals will impact few in this category as most will simply not have mortgages. Provincial rent deferral programs do not mean that rent can never be paid. Eventually, it must be paid and for those that cannot then homelessness will be a very real risk if not immediately, then in the near future. Buying food, medicine and other necessities will also be difficult. The longer lockdowns continue, and the economy is in shambles, the spectre of people going hungry is a very real possibility.

Compounding factors In addition to possibly being ill with COVID-19 or having other members of a household in this scenario, there are other considerations. First, the most obvious – what if income earners in the household die? For some families, in addition to the obvious incredible grief, this will be devastating and have potentially long-term impacts. People in these households will be highly vulnerable. Other factors are less obvious. Social and mental health deepens economic impacts. The stress of the crisis, of potentially not having employment, of not being able to pay bills piles up. Now add prolonged isolation should this emergency continue for a long-term - still more stress, anxiety, and possible mental health impacts. The result could be that many people turn to alcohol and/or drug abuse, increased rates of domestic violence, and increased need for mental health supports. These are not just social impacts, but for families this compounds economic impacts - it makes already bad situations worse, deepens economic difficulties and lengthens the period of the effects. In many cases it will push people to into personally economic bleak scenarios. Eventually, it produces increased homelessness and risks adding long-term economic strains on people and the economy. The personal economic impact could be with people for years to come, well after the virus has subsided.

Crime and security. Over the long term, for those most affected economic impacts move people to become desperate. Research is clear that crime increases in communities with widening disparity and greater precariousness. Add in closed shops and restaurants to the mix. Desperate people may start to see closed and unoccupied shops as opportunities to relieve desperate lives - take from what seems in available for the grabbing. If not a real impact, then society may start to see this as a perceived impact. The anticipation of such effects has already been seen. For example, gun sales have soared since the start of the crisis. Economic insecurity breeds other types of security issues - these too simply deepen economic impacts further of those experiencing loss of their business opportunities, increased security costs, and contributing to a downward economic cycle at a community level. It breeds pockets of poverty at an individual level accumulating into community poverty. Food insecurity. Before getting into a shelter or feeling other impacts, people need to eat, pay rent, cloth themselves, pay utilities, and so on. Little discussed is food insecurity. The most vulnerable will start to have a difficult time finding funds to feed themselves. This will be especially true for populations that are missed in the government programs solely focused on “workers.” For people and families that are on the cusp of being unable to pay for rent and food, one missed income payment may mean people go hungry. Some civil society organizations have already experienced a huge increase in people coming forward seeking help getting access to food.10 Governments suggest that these impacts might be mitigated through other funds dedicated to the crisis. Funds will be directed toward Indigenous communities, money to help shelters if they should see their numbers rise and need to put people into hotels or other short-term scenarios. Additional funds will be set aside for women’s shelters. All good but these miss some important elements. What to do about it I paint a picture of dire things to come. Unfortunately, I am not alone in predicting dire impacts, especially if this COVID emergency continues for a long-term. Walk the talk. First the obvious, mitigating the effects means not spreading the virus. Do what the world is currently suggesting - stop the spread. People talk about lowering the COVID rate curve, but also shortening the period the virus is spreading will help immensely. Regardless, predictions by many experts suggest we will all need to be expected to do more. But the quicker society can get back to contributing economically, the greater we will mitigate the immediate and long-term impacts for the most vulnerable. Food and necessities. For the very vulnerable, food is high on their list. Buying gift cards, creating food hamper donations, obtaining access to food banks, and initiating community kitchens are not something governments can always create. It takes communities to create these opportunities to mitigate the crisis. My experience assisting vulnerable people, suggests that gift cards are gold. They provide the food that is needed, the independence to purchase needed items, allows for cultural accommodations for food purchases, and avoids stigmatizing people from having to visit food banks. Add in other types of gifts – clothing for children, winter clothing, bedding, and so on. It all also helps with income. Instead of worrying about paying for food and necessities, people are supported to pay for their rent – further mitigating possible homelessness. Group support - sponsorship. No, we are not supposed to be gathering in groups. But what we can do is group together using electronic means. For example, a church, mosque, temple, community centre, extended family, prayer group, volunteer club, group of friends, or some other group can still band together. Commit to sponsoring a vulnerable person, family, a street, even a community. This approach will require civil society to create a support lines and registries for sponsorship. Make sure that someone in high need is financially supported through the crisis, together no one has to fall through the cracks. Income first - universal basic income. If governments are to have a deep mitigating impact, rather than implementing a patchwork of benefits for people in various scenarios that are likely to miss people, then a universal basic income could be implemented, even for a short-term. Research on its effects are clear11 – it highly reduces food insecurity, precarious housing scenarios, reduces health costs, encourages people to pursue education, reduces domestic violence, allows for self- employment to grow, and more. The critics’ fear that it demotivates people to work. However, this critique should be set aside, as we are now in a period where work for thousands is simply not available, and likely for extended periods. COVID employment opportunities. Some businesses will actually benefit from COVID-19, they may even require greater employment. These are few. However, identifying where these businesses are and matching them to highly vulnerable people will have long-term economic benefits. It will help to mitigate effects of those people in the most vulnerable scenarios and bridge them through this period. Governments can help in this economic downturn. But this time, they cannot do everything. Like almost a century ago, people are going to missed. In the 1930’s it took communities coming together to get the entire society through the crisis. This time is not different – it will take governments, you, and your neighbours to see us through the other side.

1 https://www.who.int/emergencies/diseases/novel-coronavirus-2019

2 https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection.html?topic=tilelink

3 For example, https://www.alberta.ca/coronavirus-info-for-albertans.aspx

4 https://www.can4ada.ca/en/department-finance/economic-response-plan.html

5 https://www.canada.ca/en/department-finance/economic-response-plan/covid19-individuals.html#unable_work_new_canada_emergency_response_benefit

6 https://www.canada.ca/en/department-finance/economic-response-plan/covid19- individuals.html#increased_goods_services_tax_credit

7 https://www.canada.ca/en/department-finance/economic-response-plan/covid19- businesses.html#wage_subsidies

8 https://www.parl.ca/DocumentViewer/en/43-1/bill/C-13/royal-assent

9 https://www.alberta.ca/emergency-isolation-support.aspx

10 For example, by the end of the week on March 27th, the Centre for Newcomers saw a huge number of requests for Food Bank application help and grocery food cards.

11 https://www.basicincomecanada.org/academic_and_in_depth_reading



Dr. Kelly Ernst is an experienced consultant with a demonstrated history of working in the non-profit organization management industry; skilled in nonprofit organizations, policy analysis, social services, human rights, program evaluation, and organizational development.

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