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Economic policy-making has, over the past hundred years or more, stripped out caring from our understanding of what makes the economy tick. Caring – for children, for elders, for the planet – sounds to many like a distraction from the main attraction, especially during the pandemic, when what we need are jobs and robust economic growth.

But as the COVID-19 pandemic brought the global economy to a grinding halt, locking down working parents and idling activity in many sectors, it became clear that if we don’t put caring back into the economy, we can’t achieve economic recovery. The pandemic has revealed economic fault lines that must be addressed. We can’t “get back to normal”; we need to create a better normal. And we certainly won’t be able to build back better without making the caring economy a critical component of federal recovery plans.

He-cessions and she-coveries

In past recessions, downturns would most deeply affect goods-producing industries, which have historically been dominated by men. Canadian economist Armine Yalnizyan named these “he-cessions” that were then followed by “she-coveries” as women increased their participation in paid work to support household incomes. This kind of “within-family insurance” meant women provided the stopgap in hard times.

The 2020 economic crisis has taken a different path. It’s become clear that the traditional “family insurance” model doesn’t work in a pandemic recession. Service sectors such as retail, personal services, childcare and hospitality were among the hardest hit – sectors staffed predominantly by women. In Canada, 56% of women workers are concentrated in these occupations, compared to 17% of men. This “she-cession” has meant that in March 2020, 63% of job losses fell to women, and as the economy reopens, women’s jobs are coming back at less than half the rate of men’s.

Those job losses have been exacerbated by closed schools and shuttered daycare centres. Because of gendered norms about who is responsible for children, many women have had to switch from full-time to part-time work or leave jobs entirely to care for or home-school children of all ages.

In August, UN chief António Guterres cautioned that the pandemic may undo three decades of progress toward gender equality in economic opportunity. “Without a [concerted] response,” he noted, “we risk losing a generation or more of gains.”

Writing caring out of the economy

Feminist economists have for years pointed out that production (in the market economy for goods and services) and reproduction (in starting and maintaining families) are intimately intertwined. Unpaid work caring for children, elders and households enables the economic activities that get counted by measurements such as gross domestic product (GDP). However, in traditional economic thought and practice, women’s work at home was seen as altruistic and having no “value” since it was not sold on the market the way male activities were. Though if we were to value women’s unpaid work at home, it would be something like US$10.8 trillion globally each year.

Separating care work done by women from the image of the economy has been so effective that today in implicit association tests – meant to measure our preconscious cognitive biases – more than 75% of people (of all genders) associate women with family and men with careers.

Even in Canada, which professes a commitment to gender equality, women still perform nearly two times more unpaid work for households than men. That gender gap has been exacerbated by the pandemic. Though many men took on more care work during the initial lockdowns, we are learning that – as the economy reopens – their contributions are returning to pre-COVID levels, but women’s remain elevated. (And, by the way, this analysis excludes non-binary and transgender people: another problematic aspect of traditional economic models is to reinforce the gender binary in our society.)

At the same time, women are putting their bodies on the line to make sure we get the food, medicine and care we need. Women – especially women of colour – make up the majority of workers in the nursing and personal-care sectors that have been essential for meeting the COVID-19 health crisis, as well as the majority of staff in grocery stores and other businesses deemed essential.

Further, a wave of bankruptcies has hit the childcare industry, with many daycare centres unable to weather the lockdowns or recoup the extra costs of social distancing, cleaning and disinfecting. Surviving centres will have reduced spots. These closures will have two impacts on women’s employment: since daycare centres employ predominantly women, there will be fewer jobs, and since there will be fewer spaces for children, more women will need to leave work to care for their own families. In the U.S., Bureau of Labor Statistics data show that in September alone, 865,000 women dropped out of the workforce – four times the number of men.

There will be no “she-covery” from this recession. Instead, building back will require aggressive investments in the care economy.

Investing in care pays dividends

Often in recessions, government spending has focused on major infrastructure projects to get the economy going again. After the Great Depression, Franklin D. Roosevelt’s New Deal saw the construction of dams, power stations, roads, bridges and power lines. The extraordinary success of that program has imprinted in our minds that investing in physical infrastructure is the way out. But in 2020, we need a different kind of infrastructure investment: investment in social infrastructure, primarily in the care economy.

In September’s throne speech, the Trudeau government said it recognized the urgency of the challenge, noting that “Canada cannot succeed if half of the population is held back.” The government pledged to make “a significant, long-term, sustained investment to create a Canada-wide early-learning and childcare system.” No specifics were shared, but if a federal investment is to be meaningful, it must bring public spending on childcare up to at least 1% of GDP, which is still below levels that countries like Sweden or France invest but substantially more than is invested today. It should also come with affordable prices for parents and a living wage and benefits for the workers.

One of the arguments against investing in childcare and eldercare is that it’s too expensive. But this frames the costs as an expense from today’s budget rather than an investment in tomorrow’s prosperity. The U.K. Women’s Budget Group recently analyzed the returns that come from investing 1% of GDP in childcare versus in construction (construction jobs being those typically targeted in infrastructure investing for economic recovery). They found that the childcare investment would create 2.7 times as many jobs as a similar investment in construction, more than a third of which would be in industries outside of childcare. That’s because the investment leads to direct employment in the sector as well as indirect employment in sectors that support childcare centres, including construction, in addition to jobs generated in the local economy as a result of employed workers buying more goods and services.

Of note is that the number of jobs created for men is almost the same whether you invest in childcare or construction, but the number of jobs created for women is almost four times higher in the childcare scenario (assuming the mix of women and men in the sectors doesn’t change).

Of course, investing in childcare is not just about creating jobs in the short-term but also about providing safe environments for effective early-childhood learning. All the evidence suggests that higher-quality learning in preschool leads to better learning throughout the school years, reduced needs for special education, fewer high school dropouts and juvenile arrests, and higher wealth and lower need for welfare assistance in adulthood.

All to say, spending on childcare is an investment in infrastructure, not a short-term expense: infrastructure because the benefits extend beyond direct uses to support the broader community and an investment because it creates benefits that extend well into the future, improving productivity and preventing greater need.

On top of that, research suggests that government investment in childcare pays for itself quickly. In Canada, the province of Quebec implemented a low-fee childcare program accessible to all residents. The investment led to a 1.8% increase in total employment (by creating jobs and also by freeing up women to work in paid employment). For every $100 spent by the government, the province experienced returns of $104 and the federal government, $143.

A caring economy is a green economy

Devaluing caring has also had devastating effects on the environment. Caring for our planet, much as caring for our children and elders, has been framed as an expense that we can’t afford when financial returns are at stake. Since caring has been relegated to the women’s realm, it makes sense that there is a gender gap in environmental views, with women being more concerned about climate change and other forms of environmental degradation.

It’s also true that climate change has a disproportionate impact on women around the world. Like COVID-19, climate change exacerbates existing social and economic inequalities. Climate shocks such as water shortages, heat waves and other extreme weather have increased the prevalence of gender-based violence. As families become more economically insecure, girls are also more likely to be pulled from school or forced to marry early. These impacts are taking place in the global South as well as in many marginalized communities in developing countries.

But many of the proposed green recovery plans still put construction work (such as installing solar panels or wind turbines) at the forefront. These initiatives are most assuredly needed, but it’s important to keep in mind that jobs in eldercare or childcare centres are some of the greenest out there. Care economy jobs – be they in healthcare, childcare, teaching or social services – are inherently low-carbon.

Just as with care work at home, caring for the planet has been framed as in conflict with “real” economic value as measured by our GDP. Ultimately, creating a caring economy redirects our attention, instead, to the value that comes from assuring equal opportunities for people of all genders, drinking clean water, providing good jobs with livable wages, avoiding devastating wildfires, investing in our children’s development, breathing clean air and saving our homes from flooding.

What is now clear is that a thriving economic recovery can be achieved only with a caring economy at its core.

Sarah Kaplan is distinguished professor and director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School of Management. She is the author of The 360º Corporation: From Stakeholder Trade-offs to Transformation.

 

How to pay for the caring economy 

By CK STAFF 

In 2017, the International Monetary Fund estimated that Canada’s labour force could grow by more than half a million – boosting GDP by 4% in the medium-term – if women matched men in workforce participation, and much of that participation gap could be reduced through better childcare options. 

A national childcare program built on lessons from Quebec would require additional federal investment of $80 billion over the next 10 years, representing 0.35% of GDP (assuming 50-50 cost-sharing with provinces and territories) annually. The cost would be offset by economic growth (2.4% higher in the medium-term) created by reducing the gender gap in workforce participation. Federal revenues would increase by 0.36% of GDP (using the 15% federal revenue ratio to GDP), if we base figures on an IMF study extrapolating from the Quebec experience.

Securing dignified eldercare as an element of universal healthcare almost certainly requires a national long-term-care insurance program, with a strong community-based and homecare component, according to the National Institute on Ageing. Setting this up will likely require federal contributions in the order of an additional quarter of 1% of GDP, assuming a matching contribution from provinces and territories. This kind of money would help bring the provinces to the table to hammer out a long-term-care insurance program that could fit within the CPP/CDPQ structures. Together, this would raise Canada’s spending on publicly funded long-term care from 1.3% of GDP to 1.8%, in line with our OECD peers, which would improve and extend eldercare while taking some of the load off the 35% of Canadians who balance paid work with unpaid caregiving.

The federal contribution would be offset by higher levels of GDP (1% in the medium-term) and a reduction in health transfers based on cost savings (0.12% of GDP) resulting from hospital beds being freed up through increased long-term-care spaces and in-home-care support services, which tend to be 80% more cost-effective.

If we dovetail investments in the caring economy with an annual 1% of GDP federal investment into clean-growth areas that align with Canada’s assets, this country could have a thriving economic recovery that readies us for a resilient low-carbon future. This could be financed by low-cost, long-dated sovereign bonds (issued now and put into earmarked accounts to lock in low interest rates), similar to what the EU is doing to pay for its economic recovery plans. Corporate Knights economists estimate this green-recovery investment would raise Canada’s 2030 GDP levels between 5 and 10%. At the mid-range, doing so would increase federal tax revenues by 1.1% of GDP, enabling us to manage our sovereign debt loads and sustain a clean and caring economy over the coming decades. Investing in a caring and green recovery will expand, mobilize and redeploy Canada’s productive capacity, enabling us to pay off the sovereign debt and sustain a clean and caring economy over the coming decades.

 

Building Back Better with a Clean and Caring Economy (2021–2030 annualized)
Program Federal Government Cost (% GDP) GDP Boost % Federal Government Revenue Boost %/GDP (5) Fiscally Sustainable
Childcare 0.35% 2.4% 0.36%
Eldercare  0.25% 1% 0.15%
Hospital Beds  -0.12%*
Clean Economy  1.0% 7% 1.1%

Sources: Corporate Knights estimate based on Building Back Better Synthesis Report, Canadian Institute for Health Information, Caregiving and Care Receiving by Statistics Canada, Conference Board, Finance Canada, IMF, National Institute on Ageing, RBC Economics, Scotiabank Economics

*Reduction in hospital beds used by elders who are better served in nursing homes or home care will enable trimming of future health transfers. 

 

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