Don't make things worse

At the beginning of the pandemic we talked about essential workers. And while we started by celebrating them, we are now at major risk of leaving them behind. 

June's inflation rate of 8.1% is the highest pace of price acceleration we've seen since 1983, and the biggest burn is due to the relentlessly rising costs of the basics: housing, food and transportation. 

This hurts households on fixed and low incomes the most, including essential workers who make sure you get your groceries, deliver your packages and care for the people you love. Remember them?

They never made enough as it was, and now are struggling with hard choices. Paying for utilities or eating? Commuting or meds? Nobody wants to risk losing where they live because there’s nowhere cheaper to go. 

Gas prices are down in the past few weeks, and may decline further in August if OPEC+ releases its promised 648,000 more barrels of oil a day; but prices may rise through the fall and winter if Russia stops shipping gas to Europe. 

Housing prices are softening because of central bank rate hikes, but that helps buyers more than renters, more of whom may lose jobs as marginal businesses struggle with higher borrowing costs. 

Food price increases have started moderating, though prices aren’t yet declining from their new highs. They may start to fall over the course of the summer; but droughts and floods and the invasion of Ukraine by Russia may ultimately reduce the supply of staples like wheat, raising the price of basics like bread and pasta by the fall. 

That will all hurt people already struggling with inflation and food insecurity, but the impacts will quickly spread to the rest of the economy.  

Household spending is the biggest driver of Canada’s economy, accounting for 56% of GDP. The economy could slow as people use up more of their disposable income on essential goods (housing and food) leaving less of their budgets available for discretionary spending. 

If more people have trouble accessing essential goods (housing and food) more people will get sicker quicker and turn to essential services like health care – which is itself on life support. 

That means fewer essential workers available for where they are needed, and less access to care for anyone who falls ill. 

We can’t afford to let stubborn inflation unleash these avoidable contagions. 

We are not talking about equitable recovery here. We are talking about not making things worse than they need to be.

There are pandemic lessons to be learned. Here are two:

1. Don’t raise rent in a period of rapidly rising prices when so many people aren’t seeing rapidly rising incomes. Don’t evict people in this period, because there’s nowhere cheaper to go. This window could help buy time to build affordable housing, but kicking people out of their homes isn’t an answer.
   

2. Don’t say another word about how much more money healthcare needs until you show us your plan to end perma-crisis management. Throwing money at the most expensive people in the most expensive parts of our system, doctors and nurses, isn’t fixing our problems. Governments need to invest in essential workers like cleaners, administrators, physician assistants and nurses’ aides to ensure there’s the right person, doing the right job, at the right time, with decent work. Otherwise, we’ll continue to pay more and get less. We need our governments to plan and act, not beg and blame. 

The essential inflation-fighting strategy of the moment is: don’t make things worse.

Find me on Twitter @ArmineYalnizyan, and on Instagram @futureofworkers.

The Atkinson Fellow on the Future of Workers is supported by the Atkinson Foundation. Find more information here.