As part of BIV’s continuing coverage of the struggle to get B.C.’s economy back on track as the COVID-19 pandemic wanes, BIV reporters Glen Korstrom, Tyler Orton, Albert Van Santvoort and Hayley Woodin asked four of the province’s leading economic experts – Pierre Cléroux, chief economist for the Business Development Bank of Canada; Chulwoo Hong, senior economist with IHS Markit; Ken Peacock, chief economist with the Business Council of British Columbia; and Martin Thibodeau, regional president, British Columbia, of RBC Royal Bank – to share their perspectives on the province’s immediate and long-term prospects for recovery.
Will the province’s rising minimum wage have much of an effect on employers hiring back workers and lowering the unemployment rate?
Pierre Cléroux: The level of job creation is going to really depend on demand. If you’re busy, if you have demand for your products or services, then that’s [minimum wage] not going to be the most important factor. Minimum wage, the fact that it’s increasing, I don’t think it’s going to have a huge impact on rehiring people or not. What I believe is the initial recovery is going to be quite rapid.… But it’s going to take some time before we go back to the pre-crisis level.
Chulwoo Hong: Overall, I don’t expect there will be a big impact. In the short term, the increase of the minimum wage will be an extra cost pressure to employers who may have already significantly suffered from the pandemic. In the reopening phase of the economy, the impact will be very minor as companies have to respond to the increase in demand after the pandemic.
Ken Peacock: I was on the fair wage commission involved in setting out the time frame for the minimum wage increase, which at the time seemed reasonable, but, of course, those were different times. There is no question that the minimum wage will add costs and the businesses that have the highest concentration of minimum wage employees are also those most hit by COVID-19, like food services, retail. So there’s no question there’s additional costs, but the flip side is that there’s a lot of families hurting right now that would benefit from higher wages particularly at this time, especially if someone else in the household has lost their job. But the real concern is there is no getting around the reality that it does add costs to business operations at a time when thousands have had no revenue or very little for a couple months. They face closures, and they’re facing what’s going to turn out to be the deepest downturn in a century.
Martin Thibodeau: Unemployment is extremely high, but also, as we reopen the economy, these numbers are coming down very quickly. We saw the country at 13% unemployment, and B.C. in better shape than the rest of the country. These numbers will improve over the summer dramatically.
Many businesses were closed or shut down in a self-inflicted recession, if you will. A lot of jobs were lost. Numbers for unemployment for April and May were unprecedented.
There was job creation in May – a net positive. In the end, the level of unemployment will be higher than the 3.4% that we had before. Where exactly is it going to land – 5%, 7% or 8%?
During the summer you’ll see a lot of people coming back to work. We’ve already seen that. We’ll see more as we reopen and kids go back to school in September.
There will be some unemployment because there are some sectors that are more affected than others.