B.C. Needs to Create Covid-Fighting Jobs
Forget cash transfers, we need to create jobs that will Crush The Curve and help displaced British Columbians get back on their feet.
B.C.’s unemployment rate has fallen to 8% facing since it’s high of least 13% in May 2020 following province-wide lockdown measures. Some of the hardest hit sectors include entertainment, air travel, and hospitality. BC stats estimates that there are at least 215,000 unemployed British Columbians. These numbers can only be expected to get worse if B.C. enters another lock down like we had earlier this year. The Provincial government will likely continue to inject fiscal stimulus in an effort to reduce the economic impacts of another lock down. In this article, we’ll explore why creating Covid fighting jobs might be a better alternative than direct cash transfers and income supports.
BC is in a great position from a fiscal perspective. We’ve got the lowest net deficit of all the provinces and an outstanding AAA credit rating. That means the government can (and should) borrow lots of money to finance the fight against covid! We need to borrow money today to get our province in a position to earn money tomorrow. With this objective in mind, whats the most effective use of this borrowed money?
Income supports are useful, but just giving people money probably isn’t the best use of provincial funds, this is something that the federal government is already doing through programs like CRB anyways. Income supports without a real effort to get to zero cases might be an expensive recipe: an endless cycle of going into lockdowns, paying people to do nothing until the case count is low, and then emerging from the lockdown and waiting for the case count to rise until another lockdown is needed. Each new cycle needs to be supported by additional stimulus.
We face an interesting challenge. On the one hand, we must take extreme measures to fight the spread of the virus — on the other hand, many workers will be displaced by these measures and we want to ensure that they incur as little disruption as possible. The answer: Create Covid Fighting Jobs
Stimulus spending should focus on the creation of Covid fighting jobs. These are jobs that provide relief to workers who have been displaced by lockdown and social distancing measures, AND actively fight the creation of new Covid cases in BC. It’s a double whammy! Any direct employment creation measures should be focused on reducing the spread of Covid-19 or increasing the capacity of our healthcare system. Some mixture of these 2 types of expenses is necessary, but spending on prevention is likely more cost effective. Consider that the cost of spread is nonlinear: each new person infected has the potential to infect more than 1 other person. Therefore, the benefit of preventing one case is necessarily higher than the cost of preventing it. Our ability to increase the capacity of the healthcare system is roughly linear, as are the benefits. 1 new respirator or hospital bed will allow us to service one more person who requires treatment. A dollar spent on preventing 1 new case (even, and especially, at lower numbers) has a much higher return than a dollar spent on enhancing healthcare systems due to the nonlinear nature of the human cost of contagions. Therefore, it is advisable that any Provincially sanctioned job creation effort be biased in favour of achieving community level containment and new case prevention. Why wait to bale the boat when you could plug the hole?
