Job gains since the late 1980s in Canada have now been wiped out, latest CERB data suggests

The COVID-19 pandemic has effectively wiped out job gains made in the Canadian economy since October 1986, if the number of Canada Emergency Response Benefit (CERB) claims is used as a proxy for the unemployment rate, according to an analysis of Statistics Canada data by the Canadian Centre for Policy Alternatives (CCPA). 

Publicly available data from Service Canada and the Canada Revenue Agency show more than 7.1 million unique applicants have filed for the $2,000 monthly benefit since applications opened on April 6.

If an assumption is made that everyone receiving CERB is currently unemployed, that means the number of employed has dramatically plunged to a 34-year low of 12.1 million, given that there were roughly 19.2 million employed prior to the pandemic-induced economic shutdown that began in the third week of March.

The last time there were so few people employed was in October 1986.

A cyclist rides past graffiti stating “People Over Profit No Jobs = No Rent in Toronto during the Covid 19 pandemic. More than 7.1 million Canadian residents have applied for the $2,000 monthly Canada Employment Response Benefit since April 6.

Peter J Thompson/National Post

The complicating factor, however, is that CERB benefits were expanded in mid-April to include the underemployed and those earning less than $1,000 in a four-week period. Such workers are not traditionally included when calculating the unemployment rate.

It is, therefore, plausible that the number of CERB applications — despite being an indicator of how many Canadians are in dire financial straits due to the pandemic — will always be higher than the actual rate of unemployment. 

But CCPA senior economist David Macdonald, who crunched the numbers, said that those who are underemployed have probably not yet had a huge impact on CERB applications, because the program’s expansion did not take place until April 15.

The government said that it has paid $22.4 billion in CERB benefits as of Thursday. The program has a budget of $24 billion, which is supposed to last for 16 weeks.

Job creation in Canada had been steadily climbing since the late 1980s, with slight dips between 1990 and 1994 and again during the 2008-09 recession. But even in the depths of the financial crisis, the number of employed Canadians only declined by roughly 425,000 Statistics Canada data showed.

Canada’s official unemployment rate now stands at 7.8 per cent, an increase of 2.2 per cent since February, but that figure was calculated after just the first two weeks of the pandemic, before anyone was even able to apply for CERB.

“We are going to see a very large reduction in employment in the next round of labour data in May,” said Parisa Mahboubi, an economist at the C.D. Howe Institute. “One thing to also keep in mind is that earlier on in this crisis, we saw mass layoffs in the private sector, but we are now starting to see layoffs in the public sector as well which has not been reflected in the data.” 

South of the border, at least 26 million Americans, or 15 per cent of the workforce, have applied for unemployment benefits in the past five weeks, erasing all job gains made since the 2008-09 recession.

U.S. Department of Labor data showed that approximately 22 million jobs had been created since 2010, before the country’s economy came to an abrupt halt in March.

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