{"id":350,"date":"2020-04-03T14:46:03","date_gmt":"2020-04-03T14:46:03","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/2020\/04\/03\/government-policies-to-offset-covid-19-shock-on-low-wage-workforce\/"},"modified":"2025-03-26T03:38:06","modified_gmt":"2025-03-26T03:38:06","slug":"government-policies-to-offset-covid-19-shock-on-low-wage-workforce","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/canadian-analysis\/featured-analysis\/insights\/government-policies-to-offset-covid-19-shock-on-low-wage-workforce\/","title":{"rendered":"Government Policies to Offset COVID-19 Shock on Low-wage Workforce"},"content":{"rendered":"

About a fifth of our projected sharp decline in Q2 GDP is coming from the retail, accommodation and food services sectors (see Canada’s Economy Enters Uncharted Waters<\/i><\/a> )that employ 1.2 million full-time, low-wage workers. Already we are seeing evidence of these workers being hit: a recent examination of job posting data by Indeed showed a 30% to 40% decline in Food Preparation & Services and Hospitality & Tourism job ads compared to last March. And a recent survey from the C.D. Howe Institute suggests lower income households are getting hit the hardest, with nearly 50% of households making below $50,000 a year losing hours or wages.<\/p>\n

These workers tend to be younger and have lower levels of education that limit their ability to find other sources of income even during good times, as we discussed in our recent report COVID-19’s Threat to Canada’s Vulnerable Workers.<\/i><\/a> During traditional recessions these workers typically see their unemployment rate spike to double or triple the national average. Recent announcements by the federal government expanding the employment insurance program through the Canada Emergency Response Benefit (CERB) may provide some relief. For many of these low income workers, the $2,000\/month income flow may fully replace or even exceed lost wages. Furthermore, the announced 75% wage subsidy<\/a> should go some distance to maintaining employer-employee relationships, making it easier for workers to return once activity ramps back up.<\/p>\n

Low-wage workers may be particularly hurt by this shock<\/h4>\n

The nature of the response to the COVID-19 shock, including social distancing and the closing of non-essential businesses, is disproportionately affecting services industries and smaller firms relative to past shocks. This is negatively impacting low-wage workers (defined here as earning less than $750 per week\u201433rd percentile of full-time weekly earnings in 2019) employed in retail and accommodation and food services industries. These industries account for 37% of all private sector employment (not including the self-employed) that earn less than $750 per week. <\/p>\n

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