While an all-party committee on poverty is reviewing what a basic income guarantee could look like on P.E.I., a suggestion by a Charlottetown social justice group is going one step further with a job guarantee program.
A member of the MacKillop Centre for Social Justice pitched members of P.E.I.’s special committee on poverty on the idea that a job guarantee program would do more than a basic income guarantee to combat the root causes of poverty.
Pavlina Tcherneva is an associate professor of economics at Bard College in New York, who recently published a book titled, The Case for a Job Guarantee.
She says a job guarantee program is essentially an employment safety net — a federal employment program administered locally that provides basic job opportunities, with wages and benefits, to those seeking a job — that would be more beneficial than basic income.
Pavlina Tcherneva is an economist and associate professor, as well as the author of The Case for a Job Guarantee. (Pavlina Tcherneva/Twitter)
“In my view, the job guarantee is better, but it certainly coexists with some basic income for people who cannot work for one reason or another — but income alone doesn’t create the job opportunities that are already missing,” she said.
“We really need a transitional program, we need some sort of guarantee that folks that are searching for work can find it. And while basic income may be temporary assistance, folks who receive basic income report that they still need work, they are looking for work and they just cannot find it. So the job guarantee is that mechanism.”
People who are out of work, for whatever reason, have a “terrible time” finding employment, Tcherneva said — and have a harder time finding work than someone already employed.
The economy goes through these cycles, ups and downs, and usually the collateral damage are people.— Pavlina Tcherneva, economist
“In fact, firms do not like to hire the unemployed, and then they slip into long-term unemployment, and they suffer enormous social and economic costs. So by comparison, the job guarantee will provide first employment opportunity, also the on-the-job training, as well as all of the other support services that unemployment offices provide,” she said.
“By comparison with being faced by mass unemployment, having a job is actually really better from the point of view of the employer, but also the program itself will help with placement.”
‘Automatic stabilizer’
A federally-funded job program also serves to stabilize the economy, Tcherneva argued, ensuring people are able to continue to earn money and, therefore, spend money.
“As we are acutely aware, the economy goes through these cycles, ups and downs, and usually the collateral damage are people — they lose their jobs,” she said.
We have found occasions in our historical past where we know the government can guarantee employment.— Pavlina Tcherneva, economist
“It’s that very expenditure that will provide the stimulus to the economy to kick-start private sector activity and employment. As that recovers, then people transition back into private sector jobs, and the public role shrinks, so it is an automatic stabilizer.”
Tcherneva said there is often opposition to a job guarantee program, which she believes stems from an ideological bias, but some of the scrutiny that kind of proposal would face may be minimized, given the economic realities created by the COVID-19 pandemic.
“I think also there is this tacit assumption that somehow unemployment is unavoidable and that perhaps unemployment is even necessary to stabilize the economy … I think that we really need to question these very deeply,” she said.
“We have found occasions in our historical past where we know the government can guarantee employment. Unfortunately, that has happened during wartime — but we certainly can do this for civilian purposes. I think it’s just the shift of perspective and just realizing that the costs are there and we just can spend our resources in much more fruitful ways.”
Meanwhile, P.E.I.’s special committee on poverty has asked for a five-month extension until November to decide whether to recommend a basic income guarantee for the province.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
