Front Burner - Laid off? Gig gone? Closed? Government says COVID-19 help is on the way

Episode Date: March 19, 2020

COVID-19 has sent an economic shockwave through this country with countless livelihoods impact in the short term, and maybe permanently. To help, the federal government announced an $82-billion aid package. Today, one woman who has been laid off tells her story. And CBC senior business correspondent Peter Armstrong unpacks how the federal response is intended to help.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hello, I'm Jamie Poisson. I think in a couple of days it'll be weird to be open. It'll be very tragic. It means I won't be able to pay rent, food won't be on the table.

It'll be very difficult to take care of my family. Across the country, businesses are closing their doors, whether by choice or by government order. Many bars, restaurants, daycares, shops are shut in a bid to fight COVID-19. The day was coming that they'd either be told to restrict their service or shut down completely. Their pain and their employees' pain will soon be measurable. It's leaving a lot of people unexpectedly out of work. So yesterday, the government announced an $82 billion emergency response package to help people and businesses cope. This $82 billion in support represents more than 3% of Canada's GDP. In a minute, we're going to talk to national business correspondent and friend of the pod, Peter Armstrong, about these measures and what they mean for the Canadian economy in unprecedented times.

But first, Chandni Malwani is a server and bartender in Mississauga, Ontario, and she's one of the many Canadians who's recently been laid off. This is Front Perna. Hi, Chani. Thank you so much for speaking with me today. Hi, Jamie. Thank you for having me. So first off, I want to say I'm really sorry that you lost your job this week. How are you feeling right now? Confused, a little overwhelmed, week? How are you feeling right now? Confused, a little overwhelmed, and just kind of lost as to what am I supposed to do? Where am I supposed to go? And just Yeah, mostly confused and scared. I'm really sorry that this is such an uncertain time for you. You know, you're a bartender and a server, which of course means that you rely on a lot of tips.

And can you tell me what kind of payments you've been covering with the money that you were making in your job? Yeah, my life goes as such. I go to school during the day and I work at night. And I live with my family and I help my family out. So I do have OSAP covering me for tuition expenses. But what my job does, what I need my job for more importantly, is to cover for insurance, for mortgage payments, for car payments, and for food and savings. And, you know, as you just mentioned, you're not just supporting yourself with that

money, right? Yes, I'm supporting my family as well. Okay. Now that you've been laid off, do you know if you are eligible for employment insurance for EI? Yes. So the understanding that I had with my employers was that they had to lay everyone off. So we were eligible for EI. Okay. Can I ask you, and I know that this is a personal question, so please let me know if you're uncomfortable with it, but EI is generally about 55% of your salary. And for people in your business, it would not include the tips that you make. And so what are we talking about here for you? It's not even going to break even. I was under the understanding that it was 80% and I was kind of hopeful that it would be my car payments or minimum is $300 per month. Insurance is $300 per month. That's $600 right there. Bi-weekly, 55% of my paycheck would be

approximately $300 bi-weekly. So that's just covering the minimal expenses. So I would definitely have to dip into my savings to eat food and pay for other stuff. Earlier today, the federal government announced a big package to try and ease the financial burden on Canadians. We're putting in place a six-month interest-free moratorium on Canada student loan paybacks. This means nearly a million Canadians will have an extra $160 a month. And then Canada's big banks also said today that they would allow

deferrals on mortgage payments for up to six months. All six of the big banks issued a joint statement, and the takeaway from that statement is that the banks are willing to grant up to six-month payment deferrals for mortgages and the opportunity for relief on other credit products as well. And do you think that that would help you make ends meet a little bit more? Honestly, when I heard about the mortgage payments, that was a huge, huge, huge saving grace because the mortgage payments are the most expensive payments that we have in this household. But when it comes to like energy costs, you know, phone costs and utility costs and Wi-Fi costs, like internet costs, mortgage payments, okay, all right, cool. Like I don't need to pay that for six months, but I still have the other expenses. So it would be nice to be able to figure out, okay, can I postpone those

expenses as well, just so we can live without having to deplete our savings to pay for those expenses, because those expenses add up as well every month. Okay. You know, in just a few short days, you've gone from being a full-time student in the day, working full-time at night, to not having classes and not having a job. And how are you feeling with those changes in your life? So yesterday was my first day of work freedom, and I was enjoying it. But today, now that I'm applying for EI now that I'm thinking about it a little more it is kind of a little overwhelming and dreadful and it's unsettling to to not know the timeline of when this all is going to end. Yeah I'm trying to see the positive from it, but right now it's just completely overwhelming.

Okay, Chani, I want to thank you so much for talking to me today. I'm sorry that you're facing all of this uncertainty and that it's having this cumulative effect. I really hope that you're taking care of yourself and you have a good support system around you. Do you? I do, I you? I do. I do. I do. Thank you for that.

Good. Chani, thank you so much and please stay in touch and, uh, hope to talk to you again soon. Take care. Thank you. All right.

So now that we've talked to Chani about her initial reactions to this aid package, I want to talk to Peter Armstrong, CBC's senior business correspondent. Hey, Peter, thank you so much for making the time today. Hi, how are you? I'm doing well, thank you. How are you doing? It's a little weird, isn't it, all this working from home? It is, it is. I know you were away, so you're in quarantine right now for 14 days. 11 more days. My daughter has a whiteboard upstairs where she's counting. Yeah, I know.

I see it posted on Twitter sometimes. Still bored. It sounds like they're still bored. Peter, we just talked to a woman who's been laid off from her restaurant as restaurants are ordered to close here. And even with EI, she's worried about making ends meet. You and I are lucky we're both able to work from home. But can you give me a sense of who else is suddenly finding themselves out of work

or with less work right now? Well, with less work or work insecurity, I would say most Canadians. And you and I have talked about some of these numbers before, Jamie, that 66% of Canadians make less than $47,000 a year. The two most common jobs in this country are truck driver and retail sales worker. They are not getting the hours that they used to get if they're getting hours at all. They're hourly workers, and some companies are paying them. A lot of companies aren't. When you think about the vast majority of jobs in Canada are created by small and medium-sized enterprises, right?

Like almost 70% of private sector workers work for small businesses. Those are people that are deeply worried right now. And the whole point of this isn't to solve all of their problems. The whole point of this package is to just try to get money to them as quickly as possible so they can figure out what else to do or how long this is going to last or a bigger program. Right now, this is just a bridge

to get them through the immediate crisis. Right, right. I was listening to Finance Minister Bill Morneau today. The government will be there with you every step along the way. And he said his primary job is to make sure that people have the money to keep a roof over their head.

This is about saving lives. No Canadian will have to worry about protecting their health and putting food on the table. Which is not usually the primary job of a finance minister, which brings me to my next question. Have you ever seen anything like this before? No, and it me to my next question. Have you ever seen anything like this before? No, and it speaks to exactly the point that that line in Bill Morneau's news conference really stood out to me as well, because he said, normally, I worry about very different things.

And it's funny, in talking to experts and in reading up on previous crises, and what what was done in 2008, what was done in every other previous one. You know, stimulus packages, if you divide the world into monetary and fiscal policy, monetary policy is central banks. And they set interest rates and they buy bonds and they do that kind of stuff. Fiscal policy is government spending and taxation. The stimulus packages on the fiscal policy side

are usually pretty straightforward. It's just like make money available. It doesn't really matter where people spend it or how they spend it. Just lower interest rates. People will get that money. It doesn't matter what they spend it on, just so long as they're sort of shouldering the burden and dragging the economy along with them. This is such a different crisis in that, as they say, what they need here, the primary goal is to make sure people can pay rent, keep a roof over their heads and keep groceries in the fridge.

And so how do you do that? And there is a supply side shock here. There is a demand side shock here. There's a confidence shock here. And I think all of the various models, whether you're an insurance company or a government or a central bank or a big business, you'd model out forecasting for like, what do we do in this scenario? What do we do in that scenario? The problem with this scenario is it's like every imaginable scenario all happening at the same time. Right, this incredible cumulative effect. So I want to talk about what was put on the table on Wednesday. So far, we've been hearing about EI, people have the option to apply for EI, like Chani, although she wasn't able to get through

the servers. But of course, not everyone is eligible for EI because they weren't working enough hours to qualify or because they're self-employed or a gig economy worker, for example. So what's being made available to help people in those positions? So that's probably the headline out of all of this. It's temporary income support. If you lose your job and you do not qualify for EI, we will be introducing a COVID-19 emergency support benefit to help you. This will apply also to people who are self-employed and have to close shop because of the virus. And essentially, it's EI for people who don't normally have access to EI. There's

within that sort of provisions for people who are self-employed or don't qualify for EI. The interesting thing in this, and I mean, it's a laundry list of proposals that they have here. Small business owners, for example, a lot of people who can't keep their employees on the payroll if they don't have any revenue coming in. The government is offering a 10% wage subsidy, a temporary wage subsidy for a period of three months to encourage them, the prime minister says, to keep those employees on the payroll. They're also increasing the GST credit. I know it's a lot of information, but this was all handed to us just through this press conference. Increasing the GST credit, as well as a six-month moratorium on student loan payments.

What's interesting to me is in that debate that we saw developing in the last couple of days, a lot in the United States, but even here among economists, people were saying, just cut a check, send $1,000, $1,500, $2,000 to every Canadian and just get the money out there. The interesting thing about that is that would have required a whole new system to figure out everybody, get the money out there. The interesting thing about that is that would have required a whole new system to figure out everybody, get them all into one list,

figure out who you're cutting the check to and send it to them. What they've done in a lot of cases here is piggybacked on existing programs. The Canada Child Benefit, for example, the GST tax rebate, for example. These are ways of getting money out the door way faster than they could have otherwise to make sure that they can address and specifically address the people at the lowest end of the income scale who are going to be hit the hardest and will need this money both first and kind of the most. Okay. And the government also announced some assistance for small businesses. We will provide employers of small businesses with a temporary wage subsidy equal to 10% of salary

paid to employees for a period of three months. This will encourage employers to keep staff on the payroll during these uncertain times. How is that going to work? This is actually really interesting. A 10% wage subsidy up to $25,000 per employer. It's a max of $1,375 per employee. And again, it's about sort of reaching out to those who actually employ the most Canadians, not the big companies that employ the big numbers, a bunch of small guys that employ two,

three workers here and there, and giving them some money to try to keep people on the payroll, to try to supplement just to get them through until not necessarily until this thing's over, until the health crisis has sorted itself out, but mostly right now just to get them through phase one. And then let's see what else is needed, because I think everybody has agreed this is phase one. There are many more phases to come in terms of the financial relief we're going to need to get through the broader health crisis. And while we are taking a significant step today to help families get through these challenging times, our government is prepared to do more. When the time is right, we will announce more long-term investments to assist with recovery and help Canadians get back to their daily lives.

and help Canadians get back to their daily lives. Peter, I wonder how long can these small businesses survive this, even with a 10% wage relief or even more than that down the road? You know, Jamie, it's a very good, it's a very important question. And I don't think anybody knows, but I think what we do know is those businesses operate on incredibly tight margins. And especially the smaller they get, the tighter those margins are and the less likely they are to get a federal bailout from the government. So, you know, the sad and frankly, from an economic perspective, one of the most tragic

parts of this is that those small businesses, those tiny little shops that really make up the character of our neighborhoods in our cities and of our entire towns and that become places that we drop in and out of and go to see and recognise and know everybody at, some of them just aren't going to survive. This will be a nuclear event for some small businesses and medium-sized businesses. And no matter how much support they get from the government, the weight of this crisis is simply going to be too much. In the Dragon's Den,

a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you about another move that we saw today. Canada's big banks, they announced that they'd allow mortgage payment deferrals for up to six months to help people who have been reeling from the financial impact as well. And what impact do you think that this is going to have? Well, this just buys everybody a little bit more time. And think about the domino effect, that you're a $14 an hour worker at some local shop, and the shop is now closed because everybody's in a state of emergency. So you're at home, and maybe you're getting some money or you're getting EI, but you're already looking ahead to the first of next month

and wondering, how am I going to cover my rent? That's your probably biggest concern right now. Outside of the health side of it, you're probably worried most about, how am I going to cover rent? How am I going to keep food in the fridge? The landlord is wondering, well, if my tenant can't pay rent,

how am I going to cover my mortgage payment? And the bank in turn is wondering, well, if my tenant can't pay rent, how am I going to cover my mortgage payment? And the bank, in turn, is thinking, well, if we've got all of these millions of mortgages out there, and if people aren't going to be able to make their mortgage payments, then we're going to start to see a sort of a whole cascading effect on credit markets. And that has bigger, broader macro impacts, not just for the banks, but for the entire financial sort of infrastructure throughout the world. And that's not just happening here, Jamie, that's happening in every country affected by this. So what this does is it just gives everybody along that chain a little bit of flexibility. And that's a really good thing at this time. And it's something that is direly needed. Does this move that would help people sort of have a reprieve from paying their mortgage, does it necessarily mean that then people will get a reprieve on paying their rents? Like, would a landlord then be required to not demand rent?

You're entirely right, for sure. And that's the problem here is when you have big, broad national programs and policies, there are going to be problems as they get executed, especially things that are made as quickly and as urgently as these are. And that's not to say that they were wrongheaded. That's not to say they were perfect. We're perfect. And I think if we do see a next phase in this, which we almost assuredly will, that is when we'll probably start to see maybe something around around rent breaks. But again, you're going to have a whole nother set of bureaucrats and a policy wonks behind the scenes scratching their heads, trying to figure out what that looks like and how do you address that? And what is the best way to make it fast and make it scalable and make sure it targets the right people? And on that, too, there will be mistakes. If they're sick or if they're quarantined or if they are laid off or can't work and therefore aren't getting paid, they will have access to funds.

We are doing our best to make sure that we get the funds to the people who need it most on an urgent basis. OK, so let's talk about this possible next phase. I know earlier this week, BC Premier John Horgan called for an increase in EI payouts, saying they need to be closer to full wages. There are programs in place through EI. We need to make sure those programs are expanded. The existing programs will not meet the needs of the moment. And if we're asking people, rightly so, to stay away from their workplace for a two-week period,

they need to know that they're doing that without fear of having adverse consequences for their families. Saying this is a go big or go home environment. I mean, we heard from Chan Nee that even with EI, she's still trying to wrap her head around how she'll be able to pay for her cell phone and her insurance costs, even if she can put her mortgage payments on hold. And do you think it's possible that we start to see big moves like that? Yeah, I think this notion of cutting checks directly to Canadians won't come off the table until we find a way through this, whatever that, whenever that may be. And so, yeah, I think increasing EI benefits, boosting them up and increasing the number of people that have access

to programs like that, that this is what is happening at an urgent level across the board. And like I say, I think most people that I was reading today and talking to today feel this is really just phase one. And as impossible it might have been to believe that any of this was happening six, seven days ago. I think it is as impossible to cast forward what the next phase will look like because we don't know where this crisis is going. Right. I mean, we are already also seeing other countries ramp this up as well. So the subsidies to businesses, Denmark is offering 75% of salaries as opposed to the 10 that we offered. So we're seeing this in other places in the world, too. It's extraordinary. These are not things that anybody would have talked about even it feels like a month ago right no precisely i mean the u.s is unrolling a 1.2 trillion dollar aid package 250 billion of that is going to be direct payments the germans have like a 600 billion dollar package the uk has a 420 billion dollar aid package this was literally unthinkable five days ago, six days.

The speed with which this crisis has not only hit, but has been recognized to be the crisis that it is. And you'll see all kinds of people saying, well, maybe you should have done this, or maybe you shouldn't do that, or maybe whatever. I think the best response to that I've seen so far is people saying, you want to overshoot this and address more than you possibly needed to if that's how it comes out. You want to overdo it rather than underdo it because we know we're getting a sense now of just how bad this may get. And over responding is probably the better mistake to make than under responding. responding is probably the better mistake to make than under responding. Connected to that idea, another moment today that stood out to me was during Trudeau's presser. And he said that he's making all of these moves, the government is making all these moves to ensure that our economy rebounds after this. In a number of weeks or a number of months or however long it takes,

once we get rolling again, the capacity of the federal government to invest in the economy, to support businesses and individuals will ensure that we bounce back strongly. Can you just spend a little bit of time explaining to me why that is the case? Why he's saying that they need to make these moves now in order for her economy to rebound later. Well, I mean, you have to sort of think through what's happening in the economy right now. You know, the big three automakers out of Detroit announced on Wednesday that they're going to shut down their factories, right? Like we're moving into a scale of this that is unprecedented. It's

not just people working from home anymore. It's. This is just sort of rippling across our economy. And we don't know what this is going to look like on the other side. I don't know what kind of an economy is going to emerge from this. I don't know what the new normal is going to be on the other side. Are we going to be able to go back to work in the way that we did before all of this as comfortably or as quickly? Like, will that be months? Will that? Who knows? It's certainly not going to be weeks. It's going to be longer than that. So the need to sort of prop up the economy that we have and keep it, bridge it to whatever it is that comes out after this is, I think, the most important thing the government can try to do.

But as it's doing that, to try to get its head around what the other side of this might look like. And people are starting to write about that, that we're going to go through prolonged periods of self-isolation and of staying home as a family and working way more from home. And what are the implications of that more broadly for an economy of truck drivers and of retail sales workers that, you know, we're shifting our economy increasingly in Canada towards more services, tech services. That's great. But all of these people that are still the most common jobs in this country, these jobs and the nature of the work they do is being on a long-term basis,

fundamentally altered by this crisis. Okay. And I know, Peter, we're going to have you back next week and we're going to have a more macro conversation. I hope we can dig into that a little bit more. Thank you so much. Oh, you bet. All right. So I just want to say I'm very, very sorry about that dog barking earlier. That's my dog, Henry. He waits all day at the window for this one particular enemy dog across the way to emerge for a walk. And that was not opportune timing.

And speaking of the many, many adventures that we're all encountering right now working from home, after we finished talking about the government stimulus package, Peter's kids joined us. And as we talked about at the top of the show, Peter and his family are in the midst of a 14-day quarantine. They recently returned from Mexico. And they're going to help me wrap the show today. Can you guys hear us? Yeah, yeah, I can hear you. Right now I have Jasmine with me. Okay, here come the boys. Talk to my friend Jamie. Can you just say hello? Hello. Hi.

How's it going? Good. Good. What's your name? Julian. Hey, I got a question for you. Why is it that you and me and Jazzy and Mommy and Nico are all in isolation together? Because we went to Mexico.

Because we went to Mexico. And what are we trying to do by staying home? We have to not pass sickness. Nico talk can you say hi to jamie jamie's in your ear hi nico how's it going good okay little boys why don't you guys do uh why don't you guys work on a nice sign that we can send to these guys and maybe they'll put it on their twitter feed definitely put it on our Twitter feed. Hello? Hi, Jasmine.

How are you doing? Good. How are you doing being stuck in the house with your little brothers this week? Good. Yeah? What kind of stuff have you been up to? Watching iPads. Okay. Here, we're going to...

Hey, guys, let me just say goodbye to Jamie, okay? Oh, wait. Can Jasmine just read this extra for us, and then we're good. Can you read that? That's all for today. Tomorrow on the show, we're going to be talking about the small acts of human kindness and silliness that are getting us through the outbreak. Thanks for listening to Front Burner.

That was so good, Jasmine. Perfect.