Economic policy-making has, over the past hundred years or more, stripped out caring from our understanding of what makes the economy tick. Caring – for children, for elders, for the planet – sounds to many like a distraction from the main attraction, especially during the pandemic, when what we need are jobs and robust economic growth.
But as the COVID-19 pandemic brought the global economy to a grinding halt, locking down working parents and idling activity in many sectors, it became clear that if we don’t put caring back into the economy, we can’t achieve economic recovery. The pandemic has revealed economic fault lines that must be addressed. We can’t “get back to normal”; we need to create a better normal. And we certainly won’t be able to build back better without making the caring economy a critical component of federal recovery plans.
He-cessions and she-coveries
In past recessions, downturns would most deeply affect goods-producing industries, which have historically been dominated by men. Canadian economist Armine Yalnizyan named these “he-cessions” that were then followed by “she-coveries” as women increased their participation in paid work to support household incomes. This kind of “within-family insurance” meant women provided the stopgap in hard times.
The 2020 economic crisis has taken a different path. It’s become clear that the traditional “family insurance” model doesn’t work in a pandemic recession. Service sectors such as retail, personal services, childcare and hospitality were among the hardest hit – sectors staffed predominantly by women. In Canada, 56% of women workers are concentrated in these occupations, compared to 17% of men. This “she-cession” has meant that in March 2020, 63% of job losses fell to women, and as the economy reopens, women’s jobs are coming back at less than half the rate of men’s.
Those job losses have been exacerbated by closed schools and shuttered daycare centres. Because of gendered norms about who is responsible for children, many women have had to switch from full-time to part-time work or leave jobs entirely to care for or home-school children of all ages.
In August, UN chief António Guterres cautioned that the pandemic may undo three decades of progress toward gender equality in economic opportunity. “Without a [concerted] response,” he noted, “we risk losing a generation or more of gains.”
Writing caring out of the economy
Feminist economists have for years pointed out that production (in the market economy for goods and services) and reproduction (in starting and maintaining families) are intimately intertwined. Unpaid work caring for children, elders and households enables the economic activities that get counted by measurements such as gross domestic product (GDP). However, in traditional economic thought and practice, women’s work at home was seen as altruistic and having no “value” since it was not sold on the market the way male activities were. Though if we were to value women’s unpaid work at home, it would be something like US$10.8 trillion globally each year.
Separating care work done by women from the image of the economy has been so effective that today in implicit association tests – meant to measure our preconscious cognitive biases – more than 75% of people (of all genders) associate women with family and men with careers.
Even in Canada, which professes a commitment to gender equality, women still perform nearly two times more unpaid work for households than men. That gender gap has been exacerbated by the pandemic. Though many men took on more care work during the initial lockdowns, we are learning that – as the economy reopens – their contributions are returning to pre-COVID levels, but women’s remain elevated. (And, by the way, this analysis excludes non-binary and transgender people: another problematic aspect of traditional economic models is to reinforce the gender binary in our society.)
At the same time, women are putting their bodies on the line to make sure we get the food, medicine and care we need. Women – especially women of colour – make up the majority of workers in the nursing and personal-care sectors that have been essential for meeting the COVID-19 health crisis, as well as the majority of staff in grocery stores and other businesses deemed essential.
Further, a wave of bankruptcies has hit the childcare industry, with many daycare centres unable to weather the lockdowns or recoup the extra costs of social distancing, cleaning and disinfecting. Surviving centres will have reduced spots. These closures will have two impacts on women’s employment: since daycare centres employ predominantly women, there will be fewer jobs, and since there will be fewer spaces for children, more women will need to leave work to care for their own families. In the U.S., Bureau of Labor Statistics data show that in September alone, 865,000 women dropped out of the workforce – four times the number of men.
There will be no “she-covery” from this recession. Instead, building back will require aggressive investments in the care economy.
Investing in care pays dividends
Often in recessions, government spending has focused on major infrastructure projects to get the economy going again. After the Great Depression, Franklin D. Roosevelt’s New Deal saw the construction of dams, power stations, roads, bridges and power lines. The extraordinary success of that program has imprinted in our minds that investing in physical infrastructure is the way out. But in 2020, we need a different kind of infrastructure investment: investment in social infrastructure, primarily in the care economy.
In September’s throne speech, the Trudeau government said it recognized the urgency of the challenge, noting that “Canada cannot succeed if half of the population is held back.” The government pledged to make “a significant, long-term, sustained investment to create a Canada-wide early-learning and childcare system.” No specifics were shared, but if a federal investment is to be meaningful, it must bring public spending on childcare up to at least 1% of GDP, which is still below levels that countries like Sweden or France invest but substantially more than is invested today. It should also come with affordable prices for parents and a living wage and benefits for the workers.
One of the arguments against investing in childcare and eldercare is that it’s too expensive. But this frames the costs as an expense from today’s budget rather than an investment in tomorrow’s prosperity. The U.K. Women’s Budget Group recently analyzed the returns that come from investing 1% of GDP in childcare versus in construction (construction jobs being those typically targeted in infrastructure investing for economic recovery). They found that the childcare investment would create 2.7 times as many jobs as a similar investment in construction, more than a third of which would be in industries outside of childcare. That’s because the investment leads to direct employment in the sector as well as indirect employment in sectors that support childcare centres, including construction, in addition to jobs generated in the local economy as a result of employed workers buying more goods and services.
Of note is that the number of jobs created for men is almost the same whether you invest in childcare or construction, but the number of jobs created for women is almost four times higher in the childcare scenario (assuming the mix of women and men in the sectors doesn’t change).
Of course, investing in childcare is not just about creating jobs in the short-term but also about providing safe environments for effective early-childhood learning. All the evidence suggests that higher-quality learning in preschool leads to better learning throughout the school years, reduced needs for special education, fewer high school dropouts and juvenile arrests, and higher wealth and lower need for welfare assistance in adulthood.
All to say, spending on childcare is an investment in infrastructure, not a short-term expense: infrastructure because the benefits extend beyond direct uses to support the broader community and an investment because it creates benefits that extend well into the future, improving productivity and preventing greater need.
On top of that, research suggests that government investment in childcare pays for itself quickly. In Canada, the province of Quebec implemented a low-fee childcare program accessible to all residents. The investment led to a 1.8% increase in total employment (by creating jobs and also by freeing up women to work in paid employment). For every $100 spent by the government, the province experienced returns of $104 and the federal government, $143.
A caring economy is a green economy
Devaluing caring has also had devastating effects on the environment. Caring for our planet, much as caring for our children and elders, has been framed as an expense that we can’t afford when financial returns are at stake. Since caring has been relegated to the women’s realm, it makes sense that there is a gender gap in environmental views, with women being more concerned about climate change and other forms of environmental degradation.
It’s also true that climate change has a disproportionate impact on women around the world. Like COVID-19, climate change exacerbates existing social and economic inequalities. Climate shocks such as water shortages, heat waves and other extreme weather have increased the prevalence of gender-based violence. As families become more economically insecure, girls are also more likely to be pulled from school or forced to marry early. These impacts are taking place in the global South as well as in many marginalized communities in developing countries.
But many of the proposed green recovery plans still put construction work (such as installing solar panels or wind turbines) at the forefront. These initiatives are most assuredly needed, but it’s important to keep in mind that jobs in eldercare or childcare centres are some of the greenest out there. Care economy jobs – be they in healthcare, childcare, teaching or social services – are inherently low-carbon.
Just as with care work at home, caring for the planet has been framed as in conflict with “real” economic value as measured by our GDP. Ultimately, creating a caring economy redirects our attention, instead, to the value that comes from assuring equal opportunities for people of all genders, drinking clean water, providing good jobs with livable wages, avoiding devastating wildfires, investing in our children’s development, breathing clean air and saving our homes from flooding.
What is now clear is that a thriving economic recovery can be achieved only with a caring economy at its core.
Sarah Kaplan is distinguished professor and director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School of Management. She is the author of The 360º Corporation: From Stakeholder Trade-offs to Transformation.
How to pay for the caring economy
By CK STAFF
In 2017, the International Monetary Fund estimated that Canada’s labour force could grow by more than half a million – boosting GDP by 4% in the medium-term – if women matched men in workforce participation, and much of that participation gap could be reduced through better childcare options.
A national childcare program built on lessons from Quebec would require additional federal investment of $80 billion over the next 10 years, representing 0.35% of GDP (assuming 50-50 cost-sharing with provinces and territories) annually. The cost would be offset by economic growth (2.4% higher in the medium-term) created by reducing the gender gap in workforce participation. Federal revenues would increase by 0.36% of GDP (using the 15% federal revenue ratio to GDP), if we base figures on an IMF study extrapolating from the Quebec experience.
Securing dignified eldercare as an element of universal healthcare almost certainly requires a national long-term-care insurance program, with a strong community-based and homecare component, according to the National Institute on Ageing. Setting this up will likely require federal contributions in the order of an additional quarter of 1% of GDP, assuming a matching contribution from provinces and territories. This kind of money would help bring the provinces to the table to hammer out a long-term-care insurance program that could fit within the CPP/CDPQ structures. Together, this would raise Canada’s spending on publicly funded long-term care from 1.3% of GDP to 1.8%, in line with our OECD peers, which would improve and extend eldercare while taking some of the load off the 35% of Canadians who balance paid work with unpaid caregiving.
The federal contribution would be offset by higher levels of GDP (1% in the medium-term) and a reduction in health transfers based on cost savings (0.12% of GDP) resulting from hospital beds being freed up through increased long-term-care spaces and in-home-care support services, which tend to be 80% more cost-effective.
If we dovetail investments in the caring economy with an annual 1% of GDP federal investment into clean-growth areas that align with Canada’s assets, this country could have a thriving economic recovery that readies us for a resilient low-carbon future. This could be financed by low-cost, long-dated sovereign bonds (issued now and put into earmarked accounts to lock in low interest rates), similar to what the EU is doing to pay for its economic recovery plans. Corporate Knights economists estimate this green-recovery investment would raise Canada’s 2030 GDP levels between 5 and 10%. At the mid-range, doing so would increase federal tax revenues by 1.1% of GDP, enabling us to manage our sovereign debt loads and sustain a clean and caring economy over the coming decades. Investing in a caring and green recovery will expand, mobilize and redeploy Canada’s productive capacity, enabling us to pay off the sovereign debt and sustain a clean and caring economy over the coming decades.
Building Back Better with a Clean and Caring Economy (2021–2030 annualized) Program Federal Government Cost (% GDP) GDP Boost % Federal Government Revenue Boost %/GDP (5) Fiscally Sustainable Childcare 0.35% 2.4% 0.36% ✓ Eldercare 0.25% 1% 0.15% ✓ Hospital Beds -0.12%* – Clean Economy 1.0% 7% 1.1% ✓
Sources: Corporate Knights estimate based on Building Back Better Synthesis Report, Canadian Institute for Health Information, Caregiving and Care Receiving by Statistics Canada, Conference Board, Finance Canada, IMF, National Institute on Ageing, RBC Economics, Scotiabank Economics
*Reduction in hospital beds used by elders who are better served in nursing homes or home care will enable trimming of future health transfers.
Canadian regulator lifts banks’ capital buffer to record, priming for post-pandemic world
Canada‘s financial regulator raised the amount of capital the country’s biggest lenders must hold to guard against risks to a record 2.5% of risk-weighted assets, from 1% currently, in a surprise move that could pave the way for them to resume dividend increases and share buybacks.
The new measures, which take effect on Oct. 31, is a sign that the economic and market disruptions stemming from the coronavirus pandemic have abated and banks’ capital levels have been resilient, the Office of the Superintendent of Financial Institutions (OSFI) said in a statement.
But the regulator acknowledged that key vulnerabilities, including household and corporate debt levels, as well as asset imbalances caused by steep increase in home prices over the past year, remain.
In a sign of concern about the housing market, OSFI and the Canadian government raised the benchmark to determine the minimum qualifying rate for mortgages, starting June 1.
The increase in the Domestic Stability Buffer (DSB) to the highest possible level raises the Common Equity Tier 1 (CET1) capital – the core bank capital measure – to 10.5% of risk-weighted assets; a 4.5% base level, a “capital conservation buffer” of 2.5%, and a 1% surcharge for systemically important banks, plus the DSB.
The change “gives OSFI more leeway to loosen a restriction down the road, namely the freeze on buybacks and dividend increases,” National Bank Financial Analyst Gabriel Dechaine said.
OSFI felt it was “useful for the banks to understand what our minimal capital expectations are and to give them time to adjust to that… ahead of any lifting of the temporary capital distribution restrictions,” Assistant Superintendent Jamey Hubbs said on a media call.
Even with the higher requirement, Canada‘s six biggest banks would have excess capital of about C$51 billion, dropping from C$82 billion as of April 30, according to Reuters calculations.
That was driven in part by a moratorium on dividend increases and share buybacks imposed by OSFI in March 2020, although a pandemic-driven surge in loan losses has so far failed to materialize.
The Canadian banks index slipped 0.25% in morning trading in Toronto, while the Toronto stock benchmark fell 0.1%.
The increase is the first since the last one announced in December 2019, which did not come into effect as planned in April 2020, as OSFI made an out-of-schedule change https://www.reuters.com/article/canada-mortgages-regulation-idUSL1N2B636J that dropped the rate to 1% in March. It has maintained that level at its twice yearly reviews.
Prior to that, OSFI had raised the required level by 25 basis points at every twice yearly review since it was introduced at 1.5% in June 2018.
($1 = 1.2326 Canadian dollars)
(Reporting By Nichola Saminather; Editing by Marguerita Choy and Jonathan Oatis)
Canada Economic Indicators
The economic indicators used to gauge the performance of an economy and its outlook are the same across most nations. What differs is the relative importance of certain indicators to a specific economy at various points in time (for instance, housing indicators are closely watched when the housing market is booming or slumping), and the bodies or organizations compiling and disseminating these indicators in each nation.
Here are the 12 key economic indicators for Canada, the world’s 10th-largest economy:1
Statistics Canada, a national agency, publishes growth statistics on the Canadian economy on monthly and quarterly bases. The report shows the real gross domestic product (GDP) for the overall economy and broken down by industry. It is an accurate monthly/quarterly status report on the Canadian economy and each industry within it.2
Employment Change and Unemployment
Key data on the Canadian employment market, such as the net change in employment, the unemployment rate, and participation rate, is contained in the monthly Labour Force Survey, released by Statistics Canada. The report contains a wealth of information about the Canadian job market, categorized by the demographic, class of worker (private sector employee, public sector employee, self-employed), industry, and province.3
Consumer Price Index
Statistics Canada releases a monthly report on the consumer price index (CPI) that measures inflation at the consumer level. The index is constructed by comparing changes over time in a fixed basket of goods and services purchased by consumers. The report shows the change in CPI monthly and over the past 12 months, on an overall and core (excluding food and energy prices) basis.4
International Merchandise Trade
This monthly report from Statistics Canada shows the nation’s imports and exports, as well as the net merchandise trade surplus or deficit. The report also compares the most current data with that for the preceding month. Exports and imports are shown by product category, and also for Canada’s top ten trading partners.5
Teranet – National Bank House Price Index
This composite index of house prices across Canada was developed by Teranet and the National Bank of Canada and represents average home prices in Canada’s six largest metropolitan areas. A monthly report shows the change in the index monthly and over the past 12 months, as well as monthly and 12-month changes in Canada’s six and 11 largest metropolitan areas.6
RBC Manufacturing Purchasing Managers’ Index – PMI
Released on the first business day of each month, this indicator of trends in the Canadian manufacturing sector was launched in June 2011 by Royal Bank of Canada, in association with Markit and the Purchasing Management Association of Canada. RBC PMI readings above 50 signal expansion as compared to the previous month, while readings below 50 signal contraction. The monthly survey also tracks other information pertinent to the manufacturing sector, such as changes in output, new orders, employment, inventories, prices, and supplier delivery times.7
The Conference Board’s Consumer Confidence Index
The Conference Board of Canada’s Index of Consumer Confidence measures consumers’ levels of optimism in the state of the economy. It is a crucial indicator of near-term sales for consumer product companies in Canada, as well as an indicator of the outlook for the broad economy since consumer demand comprises such a significant part of it. The index is constructed on the basis of responses to four questions by a random sampling of Canadian households. Survey participants are asked how they view their households’ current and expected financial positions, their short-term employment outlook, and whether now is a good time to make a major purchase.8
Ivey Purchasing Managers Index – PMI
An index prepared by the Ivey Business School at Western University, the Ivey PMI measures the monthly variation in economic activity, as indicated by a panel of purchasing managers across Canada. It is based on responses by these purchasing managers to a single question: “Were your purchases last month in dollars higher, the same, or lower than in the previous month?” An index reading below 50 shows a decrease; a reading above 50 shows an increase. Panel members indicate changes in their organization’s activity over five broad categories: purchases, employment, inventories, supplier deliveries, and prices.9
Canada Mortgage and Housing Corporation (CMHC) issues a monthly report on the sixth working day of every month, showing the previous month’s new residential construction activity. The data is presented by region, province, census metropolitan area, and dwelling type (single-detached or multiple-unit). The indicator is an important gauge of the state of the Canadian housing market.10
This key indicator of housing activity is compiled by the Canadian Real Estate Association (CREA) and is based on the number of home sales processed through the MLS (Multiple Listing Service) Systems of real estate boards and associations in Canada. The monthly report from the CREA shows the change in home sales across Canada, as well as for major markets, from month to month. The report also includes other important housing-related information, such as the change (as a percentage) in newly listed homes, the national sales-to-new listings ratio, months of housing inventory, the change in the MLS Home Price Index, and the national average price for homes sold within the month.11
Statistics Canada releases a monthly report on retail sales activity across Canada, with changes shown on month-over-month and year-over-year bases. The headline number shows the percentage change in national retail sales on a dollar basis; the percentage change in volume terms is also shown. The retail sales figures are shown by industry and for each province or territory, and provide insights into Canadian consumer spending.12
The building permits survey conducted monthly by Statistics Canada collects data on the value of permits issued by Canadian municipalities for residential and non-residential buildings, as well as the number of residential dwellings authorized. Since building permit issuance is one of the very first steps in the process of construction, the aggregate building permits data are very useful as a leading indicator for assessing the state of the construction industry.13
The Bottom Line
The 12 economic indicators briefly described above show the health of key aspects of Canada’s economy: consumer spending, housing, manufacturing, employment, inflation, external trade, and economic growth. Taken together, they provide a comprehensive picture of the state of the Canadian economy.
Canada adds jobs for fourth straight month in May
Canada added 101,600 jobs in May, the fourth consecutive month of gains, led by hiring in the education and health services sector as well as in professional and business services, a report from payroll services provider ADP showed on Thursday.
The April data was revised to show 101,300 jobs were gained, rather than an increase of 351,300. The report, which is derived from ADP’s payrolls data, measures the change in total nonfarm payroll employment each month on a seasonally-adjusted basis.
(Reporting by Fergal Smith; Editing by Alex Richardson)