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June 10, 2020 | The Money Tap

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Scott and Lisa run a four-person home reno business. Twenty-four years now. All was peachy until the virus came to town. Actually, until the CERB came to Canada. The two F/T employees asked to be temporarily laid off, so they could get an extra two grand a month. Scott objected. Big fight. The guys quit. The enterprise was crippled.

Carson says he started reading this pathetic blog four months ago, and passes on this tidbit from Victoria:

I figured I’d share with you that we are desperately seeking employees in our warehouse and we offer a great compensation package for an entry level job, $19 an hour plus a $3 dollar an hour bonus paid monthly if you show up for all your shifts, plus benefits. We’ve had the job postings for 3 weeks and have only received a couple applicants. Turns out other business owners are experiencing much the same in my area. The highest levels of unemployment ever and lots of places hiring, yet no one wants to work. Covid-19 isn’t killing our business, having no one in our area who wants a job is killing our business.

Thanks, CERB. It’s interesting what happens when you pay people not to work.

Here’s Steve in Vancouver. With a little tale about his 15-year-old daughter and the desperation now being experienced in the restaurant business.

She’s been sitting in front of a screen for two months and finally lost her marbles last Saturday.  So we went down to Granville Island and I suggested we go to a well known restaurant for brunch.  They had just opened and the servers were suited up with masks and we had to follow all kinds of procedures……like moving our dishes  to the edge of the table so the server cannot get too close to our germs.

So our daughter comes back from the bathroom and says ‘hey guys I saw a sign on the wall in there that says they are hiring here, are you OK if I talk with the manager right now?  We say yes and within minutes she has a business card and an application.  We go home and help her get it in right away.  Tuesday she gets the call for a Thursday interview and we get her down there.  She is back in 15 minutes with her first job…..as a hostess that will lead to server (and tips)…..and she starts in two weeks as soon as school ends.  She told them she was willing to start out washing dishes, but no, they said, we need you out front.  She learns that much of the staff turned over and they are desperate.   By the way, I have a friend who has two teens on the CERB, sitting at home.

Says Joanne in eastern Ontario, where she and Jim run a small business struggling to survive: “CERB was offered and given fairly freely to everyone who asked, basically on honor system, or did we miss something? As Jim said to me, take the average employee making more at home on CERB and asking to be laid off/refusing and see if they want to fight like we are to stay alive and employ people. How did the government not see this coming?”

Well, more than 8.33 million people filed 15.18 applications for CERB money. As of a few days ago more than $43.5 billion had been shovelled out the door to these folks – and it’s not even the middle of June yet. The payments are slated to last 16 weeks per person, and can extend right into October. Moreover, the Trudeau gang is under pressure to extend the benefits even longer.

Ottawa originally budgeted $35 billion for CERB. It’s now 25% over budget so the Liberals have earmarked $60 billion for the program – which will propel it 70% above the original amount.

Yup. It’s interesting what happens when you pay people not to work. Some don’t.

Because the government turned the economy off, it was ethical to compensate those impacted. As you know, the CERB gives $2,000 a month to anyone who claims to be virus-impacted, including looking after kids because the day care place closed. To qualify for total of $8,000, a person need have had an income of only $5,000 in the previous 12 months, or a thousand in a four-week period. Folks whose EI ran out could also claim it. And apparently many who are being paid by their employers through the federal payroll-subsidy program have been pocketing CERB. This week Trudeau warned the CRA will be working to ferret out fraudsters, but double-dippers who ‘made an honest mistake’ will just have to pay the extra back. Next year. Voluntarily.

Is this just the start? How does the government turn this money off? Will this lead to that UBI, giving everybody a base income?

On Wednesday the indie Parliamentary Budget Office published a costing of extending the CERB to January, expanding the benefit period to 6 months, then gradually phasing out the payments as employment income clicks in (CERB would reduce by fifty cents for every dollar earned). That, says the PBO, would cost Ottawa an extra $64 billion. For the sake of comparison, sending OAS payments of $600 a month to six million seniors requires $38 billion annually. To run the army, navy and air force costs $20 billion per year. So doling out the CERB to eight million for less than twelve months at a cost of $125 billion is, well, off the charts.

Now imagine extending a UBI to the entire workforce – about 19 million people. Pressure is mounting for this to occur. The kids want it. Thanks to Covid, we have a taste of this nectar. Intoxicating, and toxic.

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June 10th, 2020

Posted In: The Greater Fool

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