We were absolutely delighted to interview Armine Yalnizyan recently for our podcast episode, The Spring Economic Update: Where Does the Nonprofit Sector Fit in Canada’s Future? In fact, we so enjoyed her interview that we’re going to present the bulk of it to our readers in this 2-part article series.
Armine is the Atkinson Fellow on the Future of Workers and a leading voice on Canada’s economic scene. Before the pandemic, she was senior economic policy advisor to the federal Deputy Minister of Employment and Social Development Canada, whose budget is seven percent of GDP. During the pandemic, she coined the term she-cession and raised awareness of the scale and role of the care economy, serving on a high-level federal task group. Her most recent work focuses on private equity’s growing presence in the care economy, and how to safeguard the quality of the services and jobs Canadians rely on.
In case you missed Part 1, click here. Otherwise, read on for the second half of this important interview.
Mary Barroll: Canada’s facing major demographic pressures, including the aging and labour shortages and rising care needs. So clearly there’s an issue about governments investing at the scale that the moment requires, or at least not just now, but in our immediate future and long-term future. Based on where the demographics are going, what do you think needs to be done to address that?
Armine Yalnizyan: Well, look, I don’t think we can get to where we need to go without spending more. We seem to be able to find money in the couch cushions for defence. Not arguing with that. Not saying that we don’t need to be more vigilant. Don’t get me wrong. But the money always is there for the things that we see as being urgent.
The money is there for the infrastructure projects. The money is there, suddenly, for these major projects that did not exist until Budget 2025. We had the Canada Infrastructure Bank, which has not used up all of its money yet. And then, now we have the major projects thing. There’s money when we say we need it. So we need to somehow convince ourselves that this is actually a worthy investment in the human capital, productivity, and growth of the Canadian economy by taking care of one another.
Taking care of one another actually means there’s fewer distracted people at work. It’s a business problem. Let me lay it out for you. I did a presentation for human resource managers in April, and I don’t think anybody had thought about what I was describing as a business problem until I laid it out. When you have one or two people dealing with a childcare issue or an aging parent, it’s one thing. Or maybe one or two people that have got some kind of a health issue and it isn’t resolved yet. But when the number of people that are in these situations continues to accumulate, you have a larger and larger share of your workforce who is distracted. They’re distracted by their care needs, by the care needs of the people that they care about, but that they can’t care for because they have to work. Okay, that distraction bears a price on the business output.
Distraction means less productivity. Less productivity means less output. Less output means less revenue. Less revenue means less profit. And when you multiply that, business after business after business, you’re talking about slowing, like it’s our own goal. We are slowing our own productivity at the micro-level and at the macro-level by saying, well, we can’t afford to deal with that.
And then that’s going to slow economic growth, it is already, you know, limping along at about 1%, which is, by the way, a global trend, again, partly because of demographics, the larger the share of elderly people you have in your population, the more your economy slows because economies are propelled by household spending and people living on fixed retirement incomes need less and spend less. So that’s a natural drag right there. And then when you add to that fewer babies, which we’ve been doing now for decades, but now we’re at a less-than-replacement rate of having babies, that also drags household spending because you spend a lot of money when you have kids. So we are doing absolutely everything we can through public policy to make things worse.
We need to make it urgent that if you don’t start fixing this, we will become the 51st state of the United States. The investors will just roll in, and we will be a Canadian economy like an American economy wrapped in a Canadian flag and less productive than before, because the only reason their productivity is higher in the United States is this juggernaut that’s called AI. All this investment in technology; the five biggest corporations are headquartered in the United States. Nobody can catch up to that kind of productivity because that productivity is based on financializing things that used to be free, like your data.
Right, so there’s like a pattern that is unfolding. We’re losing our marbles saying, oh, we’re not productive enough, and we haven’t been for years. It’s like, okay, the whole internet boom started in 1997. We haven’t caught up to it for years because it’s owned by the Americans who are now globe-straddling corporations that are trying to call the shots for everybody everywhere. We’ve never seen that before in modern capitalism.
If we don’t connect the dots in the right way, we’ll be following; we’ll be whistling Dixie all the way to the toilet, right? This is not going to work for us if the only way we are talking about improving productivity is by increasing returns on investment. And those investments are only in physical capital or intellectual property. They are not in human capital. You cannot deploy financial capital if you don’t have people. Ask any business that tried to reopen after the pandemic. If you don’t have enough people to do the job, you don’t make money. So if we don’t focus on human capital, we’re not doing the right type of productivity analysis.
Mary Barroll: You’ve noted in the past that the care economy is already larger than many sectors that get far more economic attention, and that it provides more than one in five Canadian jobs. Why do you think care is still treated as secondary in economic policy debates?
Armine Yalnizyan: Because it is viewed as being a public service, which it is not; it’s mixed private and public. It generates tons of revenue for tons of businesses, but it is more heavily publicly subsidized than any other industrial sector, other than potentially utilities, but it’s huge. Like, it meets the needs of 42 million people.
So, people don’t want to spend more through governments. This is what I was telling you about. Nobody wants to spend more provincially and territorially. If I pool all of them together, they spend about half of their revenues on health and education and other care-related services. Nobody wants to grow that. No provincial government or territorial government wants to just open-endedly increase the amount of money they’re spending on that because they don’t want to increase taxes. Maybe there is one province that has not cut taxes since the pandemic started. Nobody wants to raise taxes. Everybody wants to say, put more money in your pocket. You cannot walk and chew gum at the same time on this front, right? It is a matter of sucking and blowing to say, I’m going to cut your taxes, and I’m going to give you better healthcare.
At a time when it is getting so difficult to raise taxes because of this rising share of seniors who don’t like inflation, they don’t like wage growth, and they do not like higher taxes. And they’re going to account for one in four Canadians. So you’re going to get blowback on that. And then the question is, you raise taxes on the working-age population, but you don’t give them more; that’s not resolvable either.
So, we’re doing this to ourselves over and over again. We’re not making the case for more spending on this. It’s actually useful for everybody; it boosts the economy from the bottom up. Mary, it is the end of trickle-down economics. We’ve done that social experiment for over 40 years. It did not work. And if we don’t start boosting the economy from the bottom up, we’re not going anywhere.
Mary Barroll: You’ve argued that the care economy could become the backbone of Canada’s 21st-century middle-class, much as manufacturing once was. What would have to change for nonprofit care and community service jobs to offer the kind of wages, benefits, stability, advancement, and respect that define good middle-class work and jobs?
Armine Yalnizyan: I compared it to what happened in the middle of the 20th century because of manufacturing being basically one in five jobs. Now, the care economy, which is health and social assistance, plus a lot of the services that we are talking about here are in the nonprofit sector, plus educational services. So these two sectors combined account for 21.6 % of all jobs in Canada right now and over 35% of all jobs that women hold. It is a job juggernaut.
Healthcare has grown faster than any other sector since 2024. That’s because of demand, right? So both private and public sectors, by the way, really need to know that when people kind of roll their eyes and say, how much more do we have to pay? We are paying more because most of the increase in jobs has come through the private sector, not the public sector. This is completely nuts that we’re doing this.
In the middle of the 1900s, so from 1950 to 1970, manufacturing accounted for about one in five jobs. There were plenty of strikes, tons of strikes, and tons of organization and not all jobs in the manufacturing sector were good jobs. But because people organized and negotiated in a period of growth, don’t forget 50s to the early 70s was the period in which we converted from a wartime economy to a civilian economy. So that industrial capacity was growing very, very rapidly; tons of investment to switch from a military-industrial complex to a consumer-driven economy. So lots of growth, lots of profits, lots of negotiating to make every job a good job. Didn’t happen, but came close. And that became the backbone of the middle class of the 20th century.
We could do exactly the same thing now. I mean, Ontario just had a sector-wide strike that involved, but was not organized by OPSEU, of the nonprofit services. The more we refuse to do the work that we are being asked to do on the cheap, the more people start realizing how important it is.
You know, it’s that Joni Mitchell song; you don’t know what you got till it’s gone. Striking helps clarify the mind on that. But also organizing. So what we need is more organizing in the sector to be able to improve the quality of jobs. Unions like SEIU Local One have decided that, why should the for-profits have all the fun in temporary staffing agencies? They’ve created a nonprofit temporary staffing agency for personal care workers that provides living wages, benefits, pensions, training ladders, and control over your hours of work. Like it’s a win-win, plus there’s no profits involved. So I don’t know why we aren’t replicating that left, right, and centre everywhere in childcare, in long-term care, in God knows the healthcare system, because in hospitals we are paying between three and six times the amount that we would pay a public nurse in a public hospital. Sorry, none of our hospitals are public. They are private nonprofits. But they are publicly employed people. And we are paying between three and six times the amount we would pay hourly for a nurse in our hospitals because we put a wage cap on their salaries of 1.1 % during an era of inflation.
It’s mind-blowing to me how stupid some of our policy decisions are. Or maybe deliberate. You know, maybe some governments are trying, are really living out that governments are the problem, markets are the solution. So let’s break down the government solution so markets have to take over. Well, we do that. We’re going to pay more, and we’re going to get less. So choose your lane.
Mary Barroll: I wonder if for nonprofit leaders listening to this, what should they take away from the spring economic update? Where do you think the sector has the most power to act or speak collectively?
Armine Yalnizyan: That’s a great question, Mary. I think the missing piece is measuring the gap between supply and demand, monitoring it, putting a name on it, showing when you do the work, what’s the outcome and finding colleagues that you can do that with system-wide, not just in Ontario, not just in Alberta, not just in BC, like actually trying to find best practices that you could lift up and say, if we did it this way, look what we could accomplish.
And the more you do that, I think the more it’s not just critiquing what we don’t have, but pointing to what we could have, putting in a bit of aspiration, putting in a bit of, you know, invitation. If you’re going to be invited to talk about this framework, invite them to imagine a better Canada with you.
Want to hear more from Armine Yalnizyan? Listen to her full interview in the video below or read Part 1 of her interview here.
Listen to Armine Yalnizyan and other sector experts discuss the Spring Economic Update and the future of Canada’s nonprofit sector relationship with the federal government in our latest podcast episode. Click here to listen.
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