Recovery depends on childcare strategy to get women back to work

Sept. 11 marks six months since the World Health Organization declared a global pandemic of COVID-19. We’re using this milestone to take stock of the policy response so far and consider next steps as Canada continues to move from reaction to rebuilding. As part of this, First Policy Response is speaking to several policy experts to gather their thoughts on the key policy developments of these past six months, and what they think our next priorities should be.  

This interview with Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers, is part of a series of interview transcripts that will continue to run this week. You can read the full series here. This transcript has been edited.

 

First Policy Response: Over the last six months, you’ve become known for coining the phrase “she-cession.” For people who haven’t been following as closely, can you summarize what that means and what makes it so different?

Armine Yalnizyan: Well, for most of human history, whenever we’ve had an economic downturn, it’s been men who have lost most of the jobs. And throughout the 20th century, particularly the second half of the 20th century, it’s often been men working in goods-producing sectors like construction, manufacturing, mining, forestry who lost their jobs. So men have lost more jobs in the goods-producing sectors first in a recession – and those jobs have been higher paying than a lot of other jobs. And then historically in Canada, what has happened is that women have picked up the lesser-paying jobs, often in service-sector work, in the wake of that job loss by men, because it stabilizes household income. And those women never went back to work once their men got another job. That’s historically been the pattern. So to stabilize household income, women have increased their employment rate, and the biggest source of growth in employment in the wake of every economic downturn has been in lower-paid service-sector jobs.

That pattern was completely turned on its head because of COVID-19 because we shut down non-essential activities – and most of those are in the service sector, in travel, in tourism and bars and restaurants, in some forms of retail and in personal services, but also specifically in childcare and schools – to be able to contain the contagion. We found most of the people who lost their jobs were women, and most of the people who lost their jobs were low-paid workers. And the path to recovery is not through he-covery, but that’s what’s happening first. More women lost jobs than men in the first month post-COVID, then the men caught up to the women, but the people who got back to work fastest were men. And the path to recovery for women, the she-covery, is blocked by the limiting factor of safe reopening of schools – which is unknown right now, we’re just in the process of doing that – and availability of safe childcare. And we have lost a good deal of capacity in childcare. And that is a real issue, because 40 per cent of household incomes for families with kids come from women [according to Jennifer Robson of Carleton University].

So if women aren’t going back to work, and if households with children are the biggest chunk of spenders in the economy – and they are – and if household spending is the biggest driver of GDP, then we have a macroeconomic problem on our doorstep that has, as yet, not been dealt with by public policy. We continue to stand by while childcare capacity craters, essentially, because of loss of revenues and user fees, because it’s primarily a market-driven [service] rather than a public good [delivered through an education system], . . . and higher costs because of smaller class sizes, more need for [a higher] adults-per-child ratio, and more cleaning and physical space. All of these things lead to higher costs, but at a time when there’s lower revenues, so more and more childcare spaces are being withdrawn from the capacity in a community. And that is a limiting factor on women being able to accept whatever paid work is out there.

And also, if schools turn out to not be safe, then more women who are currently working from home will be unable to juggle what they’ve been juggling for the last six months – which is childcare, homeschooling and paid work. For those who can afford to make that tradeoff, more women will just throw in the towel on paid work. Or their bosses will throw in the towel for them, saying, “You can’t do all of these things and still deliver on your job.” So we are looking at a more protracted and deeper recession than would have been necessary should we have been paying attention to the social infrastructure that is required for a growing share of the workforce – which is women, who made up half the employed workforce before we went into COVID – making sure that they can get back to work and that path isn’t blocked.

 

FPR: The most recent job numbers from Statistics Canada showed that there has been a return to employment over the last few months. Has that held for women as well as for men?

Yes. And in fact, this last month we did see a growth in numbers of women working. But more men have recovered their jobs than women earlier in the rebound, and it looks like this is as good as it gets. What we saw in the numbers that we just received Sept. 4 was with reference to what happened in the middle of August. There’s about a two-week delay from the time the Labour Force Survey is done to when the report is printed. And so we won’t know probably till either the beginning of October or maybe even the beginning of November if the school situation is sufficiently safe and childcare sufficiently available for women to continue their path to recovery, which has been slower than men’s. Or if, in fact, the recovery for women either stalls out or reverses course, because schools turn out not to be safe and childcare turns out not to be available.

So we might have to wait until the beginning of November to find out whether or not the she-covery has stalled out or has reversed course. But the pattern that we expect will be exactly that, because there has been no public policy response to the major choke points that are in the system for she-covery.

 

“Women will have to make up 50 per cent of the employed labour force, and somebody needs to be taking care of our children.”

 

FPR: And those choke points are?

Safe school reopening, with [currently] unclear protocols should kids get sick at school, or their teachers get sick; unclear protocols on who or how much to shut down for how long, which will have implications for women who are working from home or going back to work. You know, somebody’s got to be with the kids.

And the other choke point is a loss . . . in childcare capacity, which was always under-supplied throughout Canada, particularly outside of Quebec, in terms of regulated, high-quality early learning and childcare. So it isn’t just getting mommy back to work, but also making sure that we are investing in this next generation of children. Because child poverty rates are such that, if we don’t make sure we make every child learning-ready when they enter school and learning-supported when they are in school, [too many kids] are not going to be able to perform as well, economically and as citizens, as others who are not poor. We’re looking at an escalation of child poverty because of COVID. Add to that a chronic under-investment in these children’s abilities to learn. Yet we’re going to be relying on this generation of children more than ever, [the most] in half a century or more, and for decades to come, because of population aging. The working-age cohort [will be shrinking relative to the whole population], but we’re doing nothing about it. It’s like we’re eyes wide shut walking into an economic disaster. You know, we’re the 10^th-largest economy in the world with a fraction of the population of the other big players. There is nothing guaranteed that we maintain our quality of life unless we start paying attention to the issues that are right in front of us. These are predictable issues, not [things] like COVID, but the predictable issues, like the effects of demographics and population aging on our ability to even sustain our quality of life, much less improve it. I don’t know why we’re doing this.

 

FPR: Has there been anything that you’ve seen so far from either level of government to try and address those issues around childcare?

Oh, they make noises. The feds say, “We gave the provinces money,” but the money was not tied to any conditions, and the provinces say, “Well, we gave the school boards money to hire more people,” but it’s insufficient amounts of money. So yeah, there is, of course, an acknowledgement that something needs to be done, and there is additional money, but there is no strategy. Money without a plan is not a strategy. It’s just money. It gets used by the provinces any which way they want. And the provinces, by and large, have an antipathy to expanding access to childcare or reducing class size. I do not know why, in the middle of a pandemic, that is the case. Some provinces have been way better than others, but the most populous ones, the ones with the largest labour markets and the highest rates of COVID cases – and I’m speaking of Ontario, Quebec, B.C. and Alberta. In that list of provinces, B.C. is probably the most active in trying to continue to contain the contagion. The other three provinces seem to me to be throwing caution to the winds and just crossing fingers that everything will work out by reopening basically with no additional caretaking and cleaning, no additional protocols on class-size reduction or clear protocols on what happens when kids get sick. It’s just this kind of mishmash of in-class and online learning, and nobody really knows what’s happening on any given day. It just seems like we wasted the summer, and potentially we wasted the sacrifices made in the spring from the closedown, because we’re right back into the fall and rising rates of flu combining with rising rates of COVID, because of being indoors together more, [and pandemic fatigue]. We don’t actually have a strategy on how to deal with any of it. And that to me is incomprehensible. It’s policy [and leadership] incompetence of the highest order.

 

FPR: What would you like to see instead?

I’d like to see a clear acknowledgement that women made up, and will in future have to make up, 50 per cent of the employed labour force, and that somebody still needs to be taking care of our children. It’s not going to [exclusively] be the nuclear family most of the time. And so we need a strategy that helps people do what decision-makers say they want them to do, which is to spur economic recovery, but do so safely so that we’re not right back into another lockdown. We could be using this period to invest in a future that is just right behind COVID, to ensure that every child gets the best possible early-learning start to their lives and is supported to the greatest extent throughout their lives [so that we maximize our potential]. That means smaller class size. It means before- and after-school activities and learning supports. It means making sure a childcare space is not just a warehousing space so that mommy can go back to work. It means that childcare becomes an investment in early learning to make sure that every child is learning-ready when they enter school. We know that the highest fertility rates in Canada – which have been plummeting over the last few decades – are among Indigenous populations and immigrant populations, and that both these populations tend to have lower income, [are more likely to live in overcrowded housing] and have very low access to basic services like affordable housing, like good schools, like green spaces, like community activities. It’s just a disaster in the making if we don’t act. So I want to see the people who are in charge show understanding of how this moment intersects with the next moment, and be willing to use smaller class sizes and better care to [deal with the current necessities as well as] build for the future. I don’t want it just to be, how do we get through the COVID so we can go back to “normal,” that is pre-COVID. That wasn’t good enough [for too many people last year, and it certainly isn’t good enough] for the future. So let’s get going. What are we waiting for?

 

“It’s easier to put money in people’s pockets than to rebuild.”

 

FPR: Outside of this, how would you assess the government’s response and policy interventions so far?

The federal government did all the heavy lifting thus far in the crisis [when it comes to the economics of the situation]. Of course, hospital workers and frontline workers did the real heavy lifting [of the pandemic’s health impact]. But when it comes to measures to keep the economy humming with the least disruption possible, it was the federal government that stepped in with income supports. That was [absolutely essential] for that phase of the pandemic, in order to contain the contagion. We’re not through that phase yet, but we do have to start preparing for post-contagion recovery and rebuilding. And that’s trickier. It’s easier to put money in people’s pockets than to rebuild. It’s trickier for two reasons: We don’t know how much of the economy that got blitzkrieged by COVID – that is all the non-essential businesses – we don’t know what share of those businesses will ultimately ever come back. And of course, the longer the pandemic goes on, or the longer our attempts to control contagion go on, either through public policy or through individual households wanting to shield themselves and their loved ones from possible contagion, demand will be down for these non-essential businesses. And so more businesses will fail.

A key difficulty is that one essential business is childcare, and the longer this goes on – because it is delivered primarily through the market, not primarily through the public education system – it’s unclear what share of those childcare centres will shutter. In the United States, back in April, they were talking about 50 per cent of their regulated spaces, a stunning 4 1/2 million spaces, were at risk of shuttering, and to maintain that capacity would cost them $9.6 billion dollars a month. In Canada, we don’t have any idea how big the ecosystem of regulated childcare is across the country. We don’t even have the baseline, let alone what we’re at risk of losing, let alone how much it would cost to preserve capacity, because of our patchwork fiscal system, where the provinces are in control, but the provinces have dropped the ball on childcare, and the federal government has money, but it doesn’t have the information, and the provinces aren’t sharing the information because, you know, jurisdiction. Well, we have a real issue here about how to proceed.

So one of the reasons is, we don’t know what it is we’re going to have to rebuild because we’re not through the pandemic yet; but the other is, how do we rebuild? How much should we spend through public coffers, on what? That’s going to be a live political debate: How much should the government be spending? How much bigger should the federal debt get? For what? And how should we manage fiscal federalism, where the federal government is best for borrowing money, but will the provinces do these things? Particularly when there is the absence of a national strategy [and absence of broad-based buy-in] on some of the key things that need to be done.

So I don’t know where we’re going to go from here. But what we do know is that, going into the pandemic, Canada’s household debt level was at a record high, one of the highest in the world, and that more businesses will be wiped out or in heavily leveraged and indebted positions because of COVID-19 than at any time we’ve seen in decades. So somebody’s gotta hold the debt here – it’s either going to be households and businesses or it’s going to be some level of government, and of the three levels of government, the feds are best placed to hold the debt because it’s the cheapest debt in the entire ecosystem of debt. So if people want to minimize debt, that’s the route we should go.

But then we do have the fight on, “OK, you’re going to borrow money. What for? And what is your plan for spending that money? Will that money just hold the line through more income support, or will it be designed to help spur growth in the medium- and long-term? And how do you know whether your spending is going to do that? So show us the money. Literally, show us why you think spending on X rather than Y has got a higher rate of return on our money.” ’Cause when we talk about the federal government borrowing money or spending money, it’s our money and it’s our debt. So guaranteed, that’s why it’s going to be a live political debate – there is no consensus. It’ll be a really interesting time to be alive.

 

FPR: Where do you think the priority should be?

I think I’ve been absolutely clear [that we should use] this opportunity to, first of all, minimize the risk of deeper and longer-than-necessary recession by making sure childcare capacity does not get further eroded and schools are safe when they are reopened. And both of those things will require tons more resources. And that’s just to hold the line. But then, looking ahead, we are going to need to expand access to childcare and expand our supports for school-aged children to make sure that they are all ready, to have all hands on deck as population aging becomes the dominant economic depressant in the system. We’re going to shift from COVID-19 to retirements as the primary suppressor of growth. We’ve been in an environment for the last half century or more, maybe 70 years, where GDP growth is the holy grail – the only thing everybody wants is more. Well, population aging and demand suppression because of COVID-19 are the twin scourges of GDP growth. So we are going to have to be very focused on maximizing potential in what will be a slow-growth era, no matter what we do, both in the immediate and in the medium term and definitely for decades to come, because of population aging.

I know I keep saying “population aging” and some people are annoyed by this broken-record story, but it’s the broken-record story of the next few decades . . . because there’s going to be more people exiting the labour market than entering. The robots are not going to eat all of the jobs any time soon. I know it’s hard to imagine this right now, but we are looking at labour shortages, not too many unemployed people, not very long from now. If you remember before COVID-19, we were looking at 45-year lows in recorded unemployment rates – or maybe longer. The data series starts in 1976, but you have to go back to the 1960s to see the same unemployment levels. And today we’ve got more people working per household than we did then. So, we are already in the beginning stages of the labour market tightening because of demographics, and COVID-19 kind of poured accelerant on that process. More people pulled out of the labor market because they felt unsafe, or because they lost a job and figured there’s no point in looking for something. So more retirements happened earlier. Fewer people were coming into the labour market anyway. Now more young people have been blocked getting back in. So we’re minimizing the unemployed numbers because of that dynamic. But in a year or two years, we’re going to be looking at very tight labour markets across the country – not just in smaller communities and rural communities, but in big urban centres, too, where the majority of Canadians now live.

We’ll be dealing with big issues in upskilling our own people. And that’s a historic opportunity to bring pockets of marginalized people into the economic mainstream. It’s a fantastic opportunity, but it costs money to do it. The cheaper route in the immediate term is bringing in newcomers with the skillsets that businesses say they need, that they say that they can’t find from Canadians, but that has longer-term consequences both politically and economically. It has longer-term consequences, partly because we now bring in more temporary foreign workers than we bring in permanent economic immigrants. That suppresses wage and benefit growth because of the churn in those jobs, and that has a ripple effect into the working lives of people who are born in Canada. There’s some really big and difficult tradeoffs ahead.

Then how we deal with climate chaos, which is on our doorsteps as we speak. There are record fires in California, and an early snowfall in Colorado and the corridor going north, and we are seeing huge floods in parts of the world. Climate chaos is real. And we are going to need to learn how to live within our carbon budget. Pivoting from oil and gas to some other form of energy – and hopefully maintaining our status as a superpower in energy, not just oil and gas – is going to be a challenge, but also an opportunity.

So those are the three buckets: Reducing inequalities [by maximizing the potential of more Canadians], or failing to do so and watching inequalities rise. Bringing in more immigration to offset labour shortages, but in a way that doesn’t exacerbate inequality. Dealing with climate challenges. Getting through COVID-19 won’t be easy, but the post-pandemic period is going to require some pretty nifty footwork, too, on the part of both the federal government and the provinces. They’re going to have to work together better than they have been thus far. And I don’t know whether we can hold hope for that or not.

 

“We’re past the low-hanging fruit. The easy part is now over.”

 

FPR: So far, what do you think the most significant policy intervention has been in response to COVID?

Definitely the most significant policy intervention has been income support. CERB [Canada Emergency Response Benefit] was a real miracle. And Canada was quite unique in not relying only on wage subsidies to employers, but actually putting money in the pockets of people, [especially those who would have to scramble for work if they lost hours], to ensure that people would stay at home in order to contain the contagion. So, full marks there. It was a bit weaker on its treatment of students, but overall the income support part, and pouring money into the system, ensured people didn’t have to leave home because they didn’t have enough money, offset a wave of tenant evictions and offset a wave of foreclosures by businesses. That has been wildly successful.

But again, we’re past the low-hanging fruit. The easy part is now over. As we resume normality, what’s going to happen to people who have fallen behind in their rents or mortgages, [and smaller businesses struggling to keep up with their leases]? Or what’s going to happen to people who have work, but fewer hours than previously? What’s going to happen to the women who have been working thus far, but their employers say their productivity is down because they’ve been working from home and taking care of kids as well? How many young families will [see a drop in] their level of household income, and how will that affect purchasing power, and consequently ripple through the entire economy from the point of view of less demand for everything? That dynamic is not unique to Canada. Neither is the fact that export-led growth, which we have relied on for the last 40 years, [isn’t likely the ox that will pull our cart, either].

So yeah, the good part has been income supports. The difficult part will be assessing the future utility of previous strategies for growth, which have been either credit-driven with low interest rates and leverage against assets like houses, . . . or export-driven growth. Can we make that pivot to consumer-driven growth? Because that requires wages and household incomes to go up. But for a growing cohort of older people [with lower and fixed incomes], there’s a real resistance to wages going up or anything driving up inflation.

One of the ways you put more money in people’s pockets is by offsetting the costs of the basics. Like more housing subsidies, more childcare subsidies, more transit subsidies, more access to pharmacare, dental care, vision care. There’s a hundred ways of putting more money in people’s pockets, but you’re going to have to choose one of those two routes – income supports or service supports – if you want a consumer-led recovery. The more traditional pathway to export-led recovery or credit-led recovery is much darker. And an investment-led recovery is not in the cards until there’s a consumer-led recovery. [It’s all about demand.]

So, we’ve got some real challenges for governments to actually shift their thinking, which has been in place for decades – easily since the 1980s, in some cases since the 1960s, the late 1960s. So, good luck to us all.

 

FPR: We’ve got a throne speech coming up in a couple of weeks. What do you think needs to be in it?

I’d love to see the throne speech pivot from just income supports and talk about a jobs strategy, and a strategy for how we improve the quality of life for the next generation of workers. Because we’re doing a lot for the boomers, and we have since they were babies; but that generation of workers on whom the entire country’s quality of life rests is going to need more help. And right now I haven’t heard anything other than putting money in their pocket. That isn’t the solution; though, more money in your pocket for the times when you have to step away from the paid labour market is part of the solution. [But, ironically, a lot of people have to be working, making decent earnings, for there to be enough revenues to provide better income supports.] So I want to hear a jobs and a future-led strategy that acknowledges how reliant we are on not only our essential workers that work through COVID, but the people who are going to be essential for our quality of life for decades to come, and really invest in good jobs and all the things you need to do to make sure every job is a good job, and all the supports that help people so that they’re not tied to their employer to get those supports.