Economists weigh impacts of added COVID-19 measures

People in Saskatchewan are waiting to see what new measures or restrictions will be coming after Manitoba and Alberta introduced new ways to control the spread of COVID-19 this past week.

Manitoba favoured more widespread measures, limiting mobility between private dwellings and limiting purchases to essential goods only, with department stores blocking off sections of the store deemed non-essential.

Alberta’s restrictions introduced on Tuesday include new masking policies, transitioning students to online learning and closing down sports, banquet halls and conference centres.

With Moe favouring targeted measures similar to Alberta in recent weeks as opposed to more restrictive lockdown measures seen in Manitoba and other parts of the country, there is a variety of tactics available to curb spiking COVID-19 cases and hospitalizations.

Moe has cited the financial implications of locking down to continue with smaller interventions.

‘There is no silver bullet,’ says economist

Joel Bruneau, the head of the department of economics at the University of Saskatchewan, said there is no perfect answer when weighing the economy against public health.

“There’s a band in here which if you can manage the health side, there is a little bit of a trade-off with respect to the economy,” Bruneau said, likening the scenario to a slippery slope.

“You can move around the top of the hill, but if you move too far, you’re going to fall down the hill. There is a little bit of flexibility in there, and that’s what governments are trying to do is encourage economic activity without going too close to that edge.”

Jason Childs is an associate professor of economics at the University of Regina. (University of Regina)

University of Regina economics associate professor Jason Childs said the argument of health against the economy is a “false dichotomy.”

“All economic activity is somebody trying to improve their own well-being,” he said. “You’re not choosing between dollars and lives, you’re choosing between lives and lives.”

This leaves governments in an almost impossible situation, and both Childs and Bruneau agree there is no correct path to take.

With more people leaving their house in the middle of the Christmas shopping season, reducing interactions becomes paramount.

“What you’re going to see is the government doesn’t want to shut down those businesses that can accommodate a reduction in social interactions, the bigger problem is going to be with the restaurants and the bars,” Bruneau said.

No matter what the measures are, Childs said any regulation put in place is “going to almost always favour the big players over the small players.”

“There is no right answer and there is no silver bullet,” Childs said. “It would be really nice if we could come up with a third way that was going to allow small businesses to continue to operate and not wipe them off the economic map.”

Childs said the hope for a local small business lies with the public supporting local business owners where they can along with further supports from the province.

No matter what route the province decides in the coming weeks and months, Childs doesn’t see a situation where businesses keep operating the way they have been since the summer.

“I really don’t see an easy way out of this — I think it is going to be another lockdown,” Childs said.

High-income earners could lessen the economic blow

With the possibility of 70,000 people becoming unemployed as they were in March and April, and the unemployment rate returning to 13 per cent, the implications are wide-ranging.

Bruneau said there is one “wildcard” that could spur recovery to avoid economic activity shrinking by 12 per cent year-over-year, and that is the available time and money from high-income earners in the province that didn’t have their finances disrupted from the spring lockdown, and won’t be going on any pricey vacations this winter.

Joel Bruneau is the head of the economics department at the University of Saskatchewan. (University of Saskatchewan)

“They literally have more cash in their pockets and they’re going to spend that,” Bruneau said. “For a lot of businesses, this is going to be an exceptionally good Christmas.”

Bruneau predicts most stores selling physical goods like sports equipment, toys and even flowers will do well, but places requiring “some kind of sit down” like restaurants and bars will struggle.

“The cruel part of this pandemic is the part of the economy that has tanked is precisely the area where the workers have low incomes to start with,” Bruneau said.

Not everything about an economic recovery is bleak. Childs said the early signs of viable vaccines being rolled out in 2021 will push more people to spend money, if they have any left. Saskatchewan also didn’t see a downturn in exports like other jurisdictions, and the province’s economy is less reliant on the service industry compared to Manitoba and Alberta.