The Canada Emergency Response Benefit (CERB) should be winding down in July 2020 as the economy revives. But because recovery won’t be instantaneous, the nightmare continues for millions of jobless Canadians. Income support is still necessary if jobs are scarce or returning to work is not yet possible.
Without a replacement program, the only choice left is to extend CERB. The federal government did what was necessary. People maxing out their taxable benefits can apply to receive an extra $4,000 or $500 per week for another eight weeks.
Canadian Prime Minister Justin Trudeau recognizes that a lot of people still need pandemic money to pay their bills. About 16.2 million have yet to find work. Between February and April, 32% of employed Canadians worked fewer hours.
CERB payments are beneficial to the economy too. The financial relief supports regular consumer spending. Every time you spend your CERB, you provide income to another person. The economy churns when there is money to pay for rent or groceries.
The CERB extension is not without disadvantages, however. A person can receive more money by not working than working. You are ineligible to receive CERB if you earn more than $1,000 a month. Thus, an employed person can end up with less money during the pandemic.
In a way, CERB is an incentive not to work or discourages people from going back to work. Others will decline a job offer that pays less than the CERB. As such, employers are having problems finding workers to fill vacant shifts. The program somehow penalizes people for finding a job rather than rewarding them.
An emergency measure like CERB has a prescribed period and, therefore, not limitless. After the pandemic, you can start saving and investing in creating an enduring income by yourself. If you have the resources today, now is a good time to invest.
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Extending CERB’s life will alleviate the financial hardships of millions by eight more weeks. The extra $4,000 will go a long way. Meanwhile, there must be ways to redesign the program or maybe introduce a replacement.
The federal government needs to come up with something after the CERB extension. Otherwise, you won’t see the end of the program. People might stay home and not seek employment anymore.
Speaking of CERB extension...
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.