Year In Review: Lars Osberg On How To Address Income Inequality
To cap off 2021, Huddle sat down with some of the most important figures in Atlantic Canada’s business community – folks representing everyone from tourism operators to energy producers to housing advocates.
We asked each to reflect on the challenges, successes, and surprises that most impacted their industries, and the lives of Atlantic Canadians, this year.
In the latest of several conversations we will publish before the new year, Huddle reporter Rachel Smith spoke with Lars Osberg, the McCulloch professor of economics at Dalhousie University. Osberg talks about navigating the pandemic economy and how minimum wage increases will play out in the next year.
How did the labour market fare in 2021?
In Canada, as a whole, there was a recovery of employment. Until this latest wave, the level of employment was back to the way it was in February 2020 before COVID-19 crashed not just Canada’s economy, but the world economy. That is in contrast to the US, where the level of employment still hasn’t gotten back to where it was before the pandemic. One of the things they talk about in the U.S. is labour shortages, but that’s partly because many people are quitting, what they call ‘the great resignation.’ People are quitting jobs and not going back into the labour force in the U.S. That creates a shortage of workers, which is good news for workers because that’s what motivates employers to raise wages and improve working conditions.
How did the government address labour force challenges in 2021?
[The pandemic] was a massive insecurity shock, a massive inequality shock— it came out of nowhere. It was something that three weeks before it happened, nobody was thinking about it. Then suddenly it arrived and it wasn’t any individual’s fault, but here it was.
You had to come up with new social programs to meet the crisis. We didn’t have a very good social safety net, the employment insurance system wasn’t adequate so you had to come up with major new social programs and do it in a matter of weeks. It was proof that you can do these things, you can have major social change quickly if you want to do it. That’s an important lesson that I think a lot of people took.
Another important lesson that a lot of people took is that the market couldn’t solve this problem — it absolutely required government action. You can’t just leave it to the corporations to try and solve this problem of the pandemic, you need [governments].
Those are really important lessons because for quite a long while people have been told the market is the answer to most everything and you can’t have a big change — it’s just not possible.
What did you find noteworthy in 2021?
In the economy as a whole, we had a massive increase in the government deficit and the sky did not fall in. Largely because the deficit was in fact financed by the Bank of Canada directly. People have been told for a long time that if the deficit increases, that’s terrible and the sky will fall but no it didn’t happen — so that was interesting to observe.
How will the $2 minimum wage hike in New Brunswick impact employees and businesses?
The increase to the minimum wage will be an important addition to the income, to the well-being, of a lot of households. Some of the people who work at the minimum wage are teenagers in affluent families, but a lot of working families depend on jobs with a minimum wage and earnings for their livelihood. This was a big improvement in the well-being of a significant fraction of the population.
As we go forward, in 2022 I think there’s going to be a lot of pressure to redesign Canada’s social safety net.
A whole bunch of people lost their jobs very suddenly and had big declines in their earnings. If you were in the restaurant industry, you’ve been up and down, back and forth over the last year and it’s still unclear where you’re going to end up. So you experienced this insecurity, and this loss of income, very personally, and you probably benefited from CERB for a while, so you saw the benefits of a social safety net.
There’s certainly a real awareness among some people that we need a better social safety net, but they’re also another bunch of people who have done quite well through the pandemic. You’ve seen a big increase in the stock market, or you’ve seen a big increase in house prices. If you own a house and if you own stock, you’re richer now than you used to be.
Now, a lot of Canadians don’t actually own stock. Significantly more people own their own homes, but a lot of people don’t. There’s going to be a conflict, a real difference of perspective as to what the lessons are going to be out of the pandemic.
Other feature interviews in this series:
- Monette Pasher On How Covid Forever Changed Atlantic Canada’s Airline Industry
- Kathryn Lockhart On A New Crop Of Founders Shaking Up Atlantic Canada’s Startup Ecosystem
- Fredericton Chamber CEO Krista Ross On Supporting Businesses Through Tough Times
- Mayor Mike Savage On Managing Growth In Halifax
- Kevin Russell Reflects On Challenges For Rental Property Owners