Economy

Op-Ed: As coronavirus cripples the US economy, lawmakers must fix another looming problem – CNBC

Published

5 years ago

March 20, 2020

Pedestrians cross Powell Street, usually full with cars and cable cars, in San Francisco, California, U.S., on Tuesday, March 17, 2020.

David Paul Morris | Bloomberg | Getty Images

For the first time in over a century, a global coronavirus pandemic has turned the country’s focus to the dangerously fragile health of the American people and triggered an all-hands-on-deck response.

At the same time as our nation’s health care providers are fighting on the frontlines of coronavirus and working around-the-clock to care for patients, our policymakers are coming together to bolster our citizens against another silent enemy. A silent enemy that is threatening the people who assure we have supplies on our shelves and food on our tables – and the strength of our country as a whole and its position in the global marketplace.

That is why our nation’s leaders are working at breakneck speed to deliver economic stability in a very unstable time. And while uncertainty has left many of those who are at a working age fearful for the viability of their current employment, there is another group of Americans who find themselves in increasingly perilous circumstances and in need of relief – the millions of retirees and workers whose multiemployer pension plans are running out of money.

If the objective of Washington’s “stimulus” effort is to bolster our economy in the face of COVID-19 and reduce crippling anxiety in our communities about what the future holds, then addressing the pension crisis ought to be part of the response.

That is because we are now two months into the decade in which billions of retirement dollars are on track to disappear from the economy and millions of hardworking families’ wallets. If Washington continues to turn a blind eye to the multiemployer pension plan crisis, dozens of pension plans and the government agency that supports them will run out of money. Voters around the country agree: we can’t afford to wait any longer to save the retirement futures of more than 10 million American truck drivers, construction workers, bakers and musicians.

Voters around the country agree: we can’t afford to wait any longer to save the retirement futures of more than 10 million American truck drivers, construction workers, bakers and musicians.

The Central States Pension Fund, one of the largest multiemployer pension plans, is expected to go insolvent in just five years. Not only would this directly harm hundreds of thousands of workers and retirees, with compounding effects on the children, spouses, and parents they support, it would also result in a crippling domino effect on the U.S. economy. Economists estimate the failure of Central States will result in more than a $5 billion GDP shortfall, a loss of more than $1 billion in federal tax revenue, and 55,000 fewer jobs.

Then there’s the individual toll this lack of action is already taking on families across the country. Take Doug, a retired mechanic living in New York, who worked hard to give his family a good life and to earn the secure retirement he was promised through the Road Carriers 707 Pension Fund, which is now insolvent.

As a result, Doug – along with thousands of other New Yorkers – suffered a 70 percent cut to his retirement benefits, and now he takes home just a few hundred dollars each month. Sadly, there is still a real possibility Doug could face additional cuts. Doug’s story is not unique – this is only the tip of the iceberg, and the damage will be irreversible by 2025.

During the last fiscal year alone, six multiemployer plans were terminated, and eight others requested financial assistance from the Pension Benefit Guaranty Corporation (PBGC), the federal backstop for plans that can no longer cover promised benefits. For a time, the PBGC was able to step in and help pay retirees’ benefits when plans like these were in trouble.

But now, the PBGC is also projected to become insolvent in five years, making their “guaranty” not much better than a band-aid solution. When the PBGC runs out of money, retirees’ benefits will be cut by an average of more than 94 percent.

The “wait and see approach” is not – and never was – conscionable. A real solution to this problem is needed now and must include retiree support and securing the PBGC. Finding common ground on this issue is not impossible. Congress even reached a bipartisan agreement late last year on the miners’ pension fund.

However, the miners’ fund is only one of the 125 multiemployer pension plans that are on the verge of collapse, and we know most voters hope Washington will buckle down to finish what was started. In fact, a poll issued by the Retirement Security Coalition shows three in four voters are concerned about being financially secure in their retirement years, and the same number agree we can no longer ignore the crisis.

That is why most voters support a comprehensive “shared solution” approach that fixes this problem.

Addressing the multiemployer pension funding crisis will help to bring confidence to an economy that has been rattled by the invisible enemy of COVID-19 and help to put America in rebound mode.

As part of a broader crisis response effort, it will help to renew confidence in our public and private sectors and mitigate the economic effects of the coronavirus threat. It’s the right thing to do, and it’s the right time to do it.

John Boehner, an Ohio Republican, served as a U.S. representative (1991-2015) and House speaker (2011-15). Joe Crowley, a New York Democrat, served as a U.S. representative (1999-2019) and House Democratic Caucus Chairman (2017-2019).

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

Published

2 days ago

November 8, 2024

Anne Joseph

OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

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Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

Published

3 days ago

November 6, 2024

Anne Joseph

The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

4 days ago

November 6, 2024

Anne Joseph

As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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