Baby Benefits Don’t Cut It For Modern Canadian Families

Alissa Von Bargen

Friends of mine just had a baby, and the math on their baby benefits is not adding up. She makes $55,000 and he makes $35,000 – a combined income of $90,000. Employment Insurance provides an amount equal to 55% of their income for the baby year (17 weeks of maternity and 35 weeks of parental) up to a max income of $47,400 – a maximum of $26,000, and that money is taxable.

She’s staying home and with the benefit of $26,000 their income is now $61,000. But, had it been her husband who made the bigger salary, they would have made $81,000 – another $20,000 in the bank for their baby’s first year.

Like I said, something doesn’t add up.

Our EI program for maternity and parental leave is grossly outdated for new generations of parents – it assumes that a male partner is the breadwinner, and it provides a maximum amount that barely breaches the poverty level. It doesn’t account for different types of family composition, and it certainly doesn’t account for the dramatic drop in income it’s creating for families with female primary breadwinners – who account for 31% of Canadian households, and that number is climbing as more women achieve higher education.

If we wanted to be completely, coldly efficient about it, we could say that all lesser-earning partners should stay at home for some of that year, but the reality is that only mothers are entitled to the first 17 weeks of maternity leave, and it’s realistic to expect that they will take some portion of the parental leave too (not to mention the health benefits of breastfeeding, but that’s a debate for another blog).

The initial intent of these benefits was to support women who worked – but it never assumed that women would be raking in more money than men. The opportunity cost is not just for women but also for their whole family. It adds another layer of calculus to the increasingly monetized decision to have a child. It’s not that Canadians don’t want to have more kids – in fact, we’re having fewer kids than we hope to have. When you add daycare costs into the mix it’s a recipe for aggressive birth control.

We need to start looking at maternity benefits as support for a family, not just support for a woman. What’s more, we should also be cutting all Canadians in on baby benefits, not just full-time workers – our increasingly precarious job market adds the factor of labour insecurity into the decision-making process. What about all the mothers who are working contract to contract, or who are self-employed? If you don’t have a job for long enough you can’t claim EI benefits; and if you’re self-employed, tough luck. All of this doesn’t even touch the total possible amount of benefit – if you happen to be a single mother, your total income in a very expensive year is barely above social assistance levels.

Canadians are having fewer children than ever, and research shows that as women are more educated and earn higher salaries, the opportunity cost for them to have children grows. And it’s not likely that women are going to become less educated over time.

For my mom’s generation, there was much less of an income drop if a mother stayed home with her baby. In a two-income earning household (as most Generation X and Y households need to be in order to deal with stagnant incomes, higher housing prices and student debt), it’s no longer the case.

We need to make child-bearing less of an economic tradeoff for families, and that should include better supports. It could take the form of a flat benefit for any expecting parents, not tied to traditional employment – and an increase in total funds is likely overdue. If we don’t start taking some steps to help out young would-be parents, Canada might have to say bye-bye to more babies.

Alissa Von Bargen is the manager of Canadian Doctors for Medicare, a physician-led organization that advocates for preserving and improving Canada’s public health care system. She is a former Editor-in-Chief of the Public Policy and Governance Review and an alumnus of SPPG, Class of 2010. She is also one of the editors of Generation Squeeze’s Echo blog


6 Comments Add yours

  1. Lisa says:

    great points! you can get maternity benefits if you’re self employed, you just have to set it up 12 months before and pay into it:

    1. Alissa Von Bargen says:

      Thanks…and wow – you better plan that baby if you’re self-employed! I’m still not sure we should be tying maternity to employment, period.

  2. bednarva says:

    I don’t know the EI rules very well. This piece seems to miss what the EI formula/calculation is (that assumes the male is the breadwinner).

    *What about the Conservative’s very generous (NOT!) $100/month benefit?

    Also, if she (friend) is taking time off work, presumably the employer is paying her some proportion of her salary (am I right?) – like 60 or 75 or 80%. So this doesn’t seem to be factored in.

    **Another problem with EI is that it assumes/files pregnancy/maternity as a “disability payment”. My sense is that the EI transaction is not intended to be liveable, but a complement to other transfers.

    Curious also about other policy ideas for optimal supports.

    1. Alissa Von Bargen says:

      Thanks for this!

      RE: the $100 – the benefit is for child care, and isn’t tracked – we have no idea what that money is really going towards in a family’s budget.

      Good point on employer benefits, but the employer is not always paying into the salary – that’s a minority case. Only one in 5 mothers in Canada has a top-up. So, maternity only complements other transfers if you’re one of the lucky one in 5 – and those getting such benefits tend to be in better-paying, more stable jobs.

      I think we should look at flat benefits in the range of 30K – I somehow doubt Cdn women will become baby farms just to get their 30K, considering the cost of raising them these days 🙂

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