So as I sit here on my three month count down to my own mat leave (which will be wholly subsidized by my company), our federal government is about to finally pass some legislation that would bring mat leave benefits to the self employed. Bad timing or me? (I’m too far down this road to be eligible). I’m not so sure. As when I read the fine print I’m not sure I would take it if I had the chance. The package the feds have put together presents a bit of a Faustian bargain for the business owner. Not to get too caught up in dry/dull Canadian tax law here, but the ways things currently work business owners like myself don’t pay into Employment Insurance, and we aren’t eligible. While it would be great to have the option to pay in (which the new Mat/Parental leave changes would offer) we’re currently just living entirely outside of the system.(To be clear, as employers we do pay into EI for our staff).The new mat/parental leave legislation would have the self-employed, who wish to be eligible, pay in for a year prior (which is frankly a bit of a tricky one, as I know very few people who’ve been able to time their conception dates that well and given that it takes roughly 40, not 52 weeks, to grow a human you’re going to have to have some real foresight/magical crystal ball powers or risk paying in for more than a year or getting caught unaware and ineligible). Then comes the real devil in the details: once you’ve accepted the mat/parental leave you need to continue to pay into EI for the rest of the time you are self-employed (not sure what happens if you switch your business altogether and become self-employed under a different company). That means, that for the maximum benefit of $447/week (taxable income) for a total of 50 weeks (so $22,350 total before income tax), you’ll have to start paying EI for a year ahead of time and then continue paying it for the rest of the time that you have a business (details on this here at the gov’t site). Note that as the employer and the now eligible “employee” I assume (but can’t at this time verify) that you’ll be paying both the employer and employee contributions to EI (so double the cost to your business over what the typical employed individual pays for this benefit). Edited to say that I have since learned that you would only need to pay the employee and not the employer portion of the EI.
Now, fair is fair. EI is insurance after all, it’s not just a pot of money that we each deposit cash into and then get to withdraw exactly what we put in, but given the many other problems that the current EI set up presents for mothers who run businesses, I’m not sure this is really an improvement. And here’s why:
- Flexibility: I’ve been doing a lot of research/talking with other moms who run their own business and many of them say that the flexibility that running your own business affords is actually great for raising a child(ren). That said, it’s hard financially and personally. It requires taking some serious downtime, and then poking your head back in to make sure that your business is also still running. Taking a full year off is simply not realistic for most self-employed women or business owners. That means that unless they then do their regular work unpaid, they would not be eligible for the maximum benefit anyway, as they’re like to be back at work (and therefore earning money and ineligible for the benefit) before the year is out, though they certainly won’t be working full time during that period.
- Benefit level: I don’t think I’m alone in finding the maximum benefit that women are eligible for for mat leave kind of insulting/out of touch/unrealistic. If you’re running a small business, as I am, you are making a heck of a lot more than $22,350 a year. Or you really should be if you’re getting paid appropriately. The current maximum I feel is totally out of touch with women’s realities in the current workforce. (NB: This criticism also applies to female employees who have long been eligible for this benefit too. If I were at a director level in a company, or heck even just earning a living wage here in an expensive city like Vancouver, $22,350 before tax salary would not be a livable wage for a year, especially when you look at adding in the expenses that a new household member brings).
- Long term cost: The ongoing cost of the benefit to the individual and the business can not be overstated. Adding in additional EI premiums as overhead for the business and for the individual has to be weighed very carefully against the short term gain of what I’ve already argued isn’t a really awesome benefit package. I think the thing that business owners/self employed women really need to look at is not just the first year, but the first 5 or 6 years of their child’s life (assuming here that they’ll only have one child during the life of their business). Their capacity to work full time is almost certainly going to go down over those initial years as their expenses go up. Adding onto the bottom line cost of their business and taking money out of their take home pay during what are already vulnerable years for their business, (from what I’ve heard from many women who walked in these shoes) as they try to balance motherhood and business ownership may not be the best longterm strategy.
So what can the federal government do to support the growing and significant body of women who are self-employed/running small businesses, making up a significant percentage of the Canadian economy and at the same time trying to have and raise families?
For starters, they should talk to some women who’ve been there. From all the discussions I’ve had this package they’re offering (though to be fair they’re just looking at reworking EI it’s not a bill aimed at helping women business owners specifically), this EI change is pretty much out of step with what this sector of the economy is actually looking for.
From what I hear and from all the research I’ve done, the resounding answer if you asked women what one thing they really want would be: childcare. Now we had this debate — though I would argue in a rushed and sensationalist fashion — a few years ago when the Conservatives took power from the Liberals federally. And arguably the Liberals failed us by taking so damn long to roll out a decent childcare package for the many years they were running the show, but this topic needs to come back on the table in a very serious way. From an economic perspective we need to help the many women who are making valuable contributions to Canada’s economy in the business world by providing them with better, cheaper and more readily available childcare for children from infants on up. And do not get me started on the whole monthly childcare benefit the Conservatives introduced. That is not in anyway a replacement for/supplement for better, cheaper and more accessible childcare. (Of course this would benefit all families not just entrepreneurial ones, which should only strengthen the argument).
We also need to relook at the EI program as it stands for maternity/parental leave. I strongly feel that it would be a much more attractive option if it offered more flexibility for women in terms of the period of time they could take it, or how they could structure additional income over that period of time, say something that allowed them to make more money as a supplement that was averaged over a period of 3-4 years, or perhaps just the ability to take the leave in pieces over a 3-4 year period rather than all in the first year. And frankly it needs to be higher. Women (and father’s taking parental leave) should be able to expect that they’ll get more of a decent income during that period of time. While I’m certainly happy to live in a country that offers a year long (50 week) benefit to parents, and know that many employers do top that benefit up, I know that there is room to improve on what we are giving parents. I hate to get all cheesy on y’all but parenting is an important part of our society, and these are people who are going to go back to work and who are on a limited term for taking the benefit they’re not just people looking for a free ride from EI (though that said, I find arguments against decent EI packages that focus on abuse of the system totally aggravating).
So now that I’ve had my very long rant tell me, what would your government be able to do for you as a parent and a business owner to make the whole balancing act a little bit easier? (And holding the baby so you can take a shower, doesn’t count).