Defending CERB

In recent weeks, there has been some consternation in Canadian media about the link between the current supposed labour shortage and the existence of programs like CERB and CRB, which have provided around $2000 per month to many unemployed workers during the coronavirus pandemic. 

In such pieces, businesses typically complain that unemployed individuals receiving these benefits are turning down work, contributing to labour shortage and understaffing issues. Exacerbating these apparent issues is the fact that for some lower-income employees, CERB payments exceed the wages businesses would typically be offering. 

Here are three problems with this line of thinking from businesses: 

The purpose of CERB/CRB is to increase unemployment.

To the extent that COVID is still a problem and prophylactic measures (such as mask wearing and social distancing) are difficult to implement or insufficient, these workplaces should not be normally staffed. To achieve this goal, it is necessary to disemploy workers and provide them with replacement income through programs like CERB/CRB. 

In other words, the continued existence of CERB/CRB helps in the goal of reducing employment. This may be inconvenient for employers, but the CERB/CRB payments allow workers to forgo working lower-income jobs, most of which involve unavoidable contact with others, and that is a useful feature of the program. 

Canada’s unemployment system and welfare bureaucracy is not capable of easily implementing income-scaled benefits

Canada does not have a real-time incomes database or an especially easy application process for welfare benefits. As a result, it is not capable of administering benefits automatically or easily, and has additional difficulty during periods of high applications.

The only possible program that could have been implemented as a short-term response to coronavirus-related unemployment would have to be a program like CERB/CRB, which are flat payment programs that don’t scale with current income. One effect of such programs is that they may provide some workers with more income then they had prior to unemployment, which is an unavoidable side effect of setting the flat benefit at a roughly reasonable amount for most workers. 

If our existing welfare bureaucracy had better tools and databases, it may have been possible to rely on existing income-scaled welfare programs like EI (perhaps with increases in benefit amount, as the 55% income replacement rate of EI is low). 

Canada’s worker wages are low and pressure to increase those wages is good 

Canada has relatively low wages for workers, products of a relatively weak labour movement and low minimum wages. If employers find that re-employing workers requires some wage increases, that is a good thing. 

In summary, business complaints about CERB/CRB miss the mark. CERB/CRB are programs designed to provide a flat unemployment-style benefit to workers with the intent of keeping them unemployed for long periods. Businesses may dislike CERB/CRB, but ultimately these programs were well designed and implemented, and seem to have been broadly successful.