Minimum Wages and Employment during COVID-19: The Case of Canada

Abstract

COVID-19 is a contagious respiratory disease that first emerged in December 2019 and spread around the world within months. The infectious virus has created numerous health, social, and economic challenges worldwide, among others. On March 11, 2020 the World Health Organization (WHO, 2020) announced COVID-19 as a global health crisis, while declaring the disease as a pandemic. 1 The disease has created an unprecedented global economic recession: The World Bank (2020) projects a 5.2 percent contraction in global GDP in 2020, the deepest global recession in decades. In Canada, the first case of COVID-19 appeared in January 2020. By the end of August 2020, there were approximately 129,000 active cases in Canada. Figure 1 shows a timeline of the outbreak in Canada from January 2019 to August 2020. Starting in March 2020, most Canadian provinces had imposed restrictions on companies, which included the closing non-essential businesses. While necessary, these measurements have placed economic constraints that led the country into a recession. In addition, unemployment rates have been soaring around the world, and Canada is no exception. The federal and provincial governments have put in place different economic response plans to support businesses and individuals, such as the Employment Insurance and the Canada Emergency Response Benefit (CERB). Along with this policies, provincial governments have maintained yearly increases in the minimum wage. Figure 3 shows the minimum wage across those provinces that increased it throughout the pandemic.