Friday, 15 March 2013

The EI Battleground

If I give you a piece of cake, you would be happily surprised (assuming you like cake). If I give you a piece of cake tomorrow, you will also be happy. You would likely be happy with it on the 7th and 8th day as well. On the 89th and 90th day, however, it may have become old news. That said, when I stop giving you cake on day 756, you may actually get upset. You have become used to the cake, and you expected it. At this point it doesn't just seem like I've stopped giving something; I’m taking something away.
The Canadian EI system is not something that exists in nature. It is not a system that is based on instinct or would otherwise spontaneously manifest itself, like an earthquake, hurricane, or volcano. It is a man made social program, which I believe, was created to provide a safety net for those who lose their jobs. Every employee pays a portion of their salary into a government-run fund, and every employer pays in 1.4 times what their employees pay. If an employee who has paid into EI for a set minimum amount of time loses their job (generally for reasons other than misconduct) they are eligible to receive benefits, which are to be used to bridge the gap between jobs.
Recent changes to the EI system have been implemented, which will make it more difficult for employees who are seasonal workers to obtain benefits during their off season. My initial reaction to this was ‘finally!’ I always felt that the EI system was to assist those who, through no fault of their own, lost their job. Surely it was not designed to assist those who took a job knowing it was a short-term gig. Somebody who is taking a short-term job can plan and budget for the off-season. They are aware of the end date. There is no surprise. There is no ‘lost job’ – the job ended when everybody expected it would end.
I based my understanding of the concept of “EI” on the ”I” portion of the title. While it has been rebranded from Unemployment Insurance to Employment Insurance, the ‘Insurance’ portion of the name has held fast. Insurance is there to protect you against potential risks; not certainties. For example, if I am terminally ill, I will have a hard time getting life insurance. If I have a long list of DUIs, I will have a hard time getting automobile insurance. If my house is on fire, I will have a hard time getting home insurance. Why, therefore, should EI, if it is actually insurance, provide benefits to people when their job’s end date was a virtual certainty when the job was initially taken?
I have read news stories on this topic that included statements like ‘this is an attack by Harper on Atlantic Canada’, or ‘the Feds did this without consulting the Atlantic Provinces’. Well, I don’t know enough to conclude if it was an attack on Atlantic Canada or not, but nothing about the changes made me jump to that conclusion. I think the change makes sense regardless of which region is impacted most. As for provincial consultations, why would the Feds bother? EI is a Federal system. They could have consulted as a courtesy, but EI is their bailiwick.
Then I read other statements that do contain ideas that are worth considering. “We can’t afford to work at our seasonal job without EI”, “We aren’t lazy, we want to work, but the only jobs available are seasonal”. As I see it, there are two issues at play here.
One is that some seasonal workers may not earn enough during their working season to last them throughout the year. Now presumably their employer is earning a profit from being able to employ individuals who are willing, and available, to work on a seasonal basis. If the employer wants to be able to employ such people, the employer should pay the employees a sufficient amount to make it worth their while, which would include a financial acknowledgment that in many cases it is unlikely that the employee will be able to find work in the off-season. What is happening now, as far as I can tell, is that year-round employees and employers are subsidizing the seasonal employer’s business model.
Until very recently, the seasonal employer didn't have to worry about paying their employees a wage that will last them for the entire year. The system will take care of that for them. All they have to do is make sure their employees get the minimum number of working weeks. Why should EI dollars go to pay seasonal employees just so that they can be fresh and ready to go when the seasonal employer wants to start business again? I believe it is the seasonal employer’s job to make sure their employees earn enough for the whole year. This is not a cost that should be spread across the entire EI system.
If, however, employers cannot afford to pay their employees more such that the employee can afford to keep the seasonal job, I think that it is on the employees to find a new job (which may require a move). I don’t believe that EI should be used as a mechanism to subsidise unsustainable lifestyles.
The second issue brings me to my introduction. Every species has learned to adapt, in its own way, to seasonal changes. Humans had to do this for millennia. I am not a historian, but I am assuming that seasonal workers were able to make a go of it before EI, or put another way, I don’t believe that seasonal work is something that sprung out of the advent of the EI system.

So, after the introduction of the EI system, people who were used to the ups and downs of seasonal work started getting a slice of public cake during their down time. This was great. After a while, it became routine, and then a way of life, and (again I am assuming) it likely generated a greater willingness on behalf of employees to accept a seasonal job; the expectation was that the system would float them during the down times.
My whole view is premised on my understanding that the EI system is there to minimize the upheaval that is caused when a person unexpectedly loses their job. If my understanding is correct, then those who have been receiving benefits as seasonal workers are just having a windfall removed, they aren’t losing an entitlement.  Again, my attitude is not “who cares about them” or “let them suffer”, it is “if employers want to have access to seasonal workers, let those employers pay for it, don’t make me pay for it.” Or at the very least, propose another program that is designed to subsidize seasonal work, and see if the Canadian voters have an appetite to fund it.
I imagine that in the event that seasonal employers had to pay more for their employees, we would see an increase in the cost of seasonal goods/services. I have no problem with that at all; it is then my choice if I’m going to buy. Right now, I have no choice but to pay my EI premiums (unless I become self employed I suppose). Now, if these changes go through, and we don’t see a reduction to the rates, I see a reason for upheaval. Government shouldn’t be in the business of reducing services without reducing the costs.
My final point on the EI changes is in regards to the home visits, or as others call them, home invasions.
I don’t know enough about the system, or the areas that are susceptible to fraud, to say if the home visits are a good thing or not. My intuition tells me that the cost of administering home visits may not be worth it in terms of the value of the additional fraud that would be detected. Again, it is my guess, and I would gladly listen to somebody who is knowledgeable on the subject of EI fraud detection explain the business case to me. But as it stands, I wonder if sending investigators out to people’s homes is cost effective.
This system is, at its root, simply a mechanism for transferring wealth from people who are earning income to people who are not.  It does not generate wealth, it merely moves it from people who presumably can afford to lose some wealth to those that have a greater need. As the system doesn't generate its own value (other than interest), every dollar that is spent on administering the system directly impacts what the system can pay out.
As for gripes that the government is making you feel like a criminal however, you better get used to that. We are subject to income tax audits, capricious border guards, property tax assessors, creditor initiated search and seizure of property, and invasive airport security. The government has countless ways of invading your personal space. There is (hopefully) always a reason behind it, but when they want to get up and personal with you, they can usually find a way. In the case of an EI home visit, they are only visiting those who have voluntarily signed up to receive benefits.

I obtained government funds one time through a Canadian Student Loan (this was before I had as strong feelings about government run programs as I do today). All I can say is that it has been nothing but a mess. All of my dealings with them have been difficult and unproductive, and the amount of paperwork and information they want before they will even change something as simple as the bank account you want your automatic withdrawals to come from is simply astonishing. I have obtained mortgages, credit lines, and credit cards. They have, together, been easier to manage than my $4400 Canadian Student Loan. Most recently they lost a hard drive that has my personal information on it, along with thousands of other Canadians.
I believe this is poor service, and we should expect more from our government. I also have come to learn not to expect more from the government. I was not aghast or outraged when I found out my information was lost. I kind of chuckled at the wonderful example of hypocrisy it provided; the government is an entity that flouts the importance of privacy laws, but isn't very good at following them. But other than such eye rolling, my only real feelings about it was “what did I expect, it’s the government”.  
Canada has systems in place that have been designed to help people get back on their feet. Unfortunately, I believe that these systems, in some cases, have ceased to be a stop-gap, but have generated a culture of reliance. Government cake (well, to be fair, government crumbs) is meant to be eaten only sparingly. It comes with its drawbacks, and certainly isn’t ‘free money’. And like cake, if you want to eat it every once and a while, go ahead, but it is not a regular part of a healthy fiscal diet.


  1. What is your take on "family or Parental" leave, or the 37 weeks of "maternity" leave that eitehr the mother, OR the Father are eligible to take?

    Clearly, people EXPECT to go on this type of leave as soon as one member of a couple knows they are "expecting"...


  2. It is funny because somebody just mentioned to me that they went on EI when they had their baby, and I had sort of forgotten about that element of the program.

    As far as a policy decision goes, I do see a value in providing assistance for child rearing. Every person I talk to who works with children says that the primary difference between a well-adjusted child and a poorly-adjusted child is parenting. I think that poorly adjusted children grow up to be poorly-adjusted citizens, so I can see a very good business case for spending public funds for the benefit of parents raising children – either pay now, or pay later.

    As far as the benefits being properly classed as ‘insurance’, I see your point. There is an element of certainty once a person becomes pregnant. Also, there is an element of expectation, at least on behalf of the employee, that they will become pregnant if they are attempting to do so.

    Maybe that level of uncertainty is enough to call it insurance. Maybe the program, while not initially designed to fund family leave, is the one best suited to do so with minimal additional overhead. Either way, it does give the EI program a two pronged purpose, one which very closely resembles insurance, and one which may only sort of resemble insurance.

    But as far as the policy goes, I am very much in favour of better parenting, and spending money to allow somebody to be a parent today will (hopefully) avoid a pile of costs tomorrow.

  3. Maternity leave and EI should be two different programs. I recently lost my job two weeks before returning from maternity leave. Now I am not eligible for EI and left with no income until I am able to find another job.

  4. Craig, I think while you make a good point that the government has inefficiencies, you are overlooking the wider social impact of EI and the cycle of poverty. You personally will probably never apply for EI and are not living paycheque to paycheque like most of us. You have the means and freedom to move to Alberta or Toronto should you need to.
    Many do not, so they take the all the work available and in small towns, it’s often seasonal (tourism, fishing, harvest, fruit etc.) While many have “chosen” the seasonal work lifestyle, often it’s out of short term need, which turns into long term. For many reason, people have chosen to stay in their small communities. Without seasonal workers, we would have no Canadian employees in fishing industry, and they already have to bring in foreign seasonal workers to pick fruit and tomatoes in Ontario. Then these former seasonal workers, will be full year recipients.

    Societies that have a more equal distribution of wealth have significantly less crime and people are more healthy. They don’t commit crimes out of desperation and hunger. The life of a seasonal workers isn’t lavish. However, there will always be around 5-10% of a population who will never be able to work a full time job. And they will need to be supported by the state. EI will barely bring you above the poverty line. But providing a menial income in the off season means they don’t have to turn to black market activates to make ends meet.

  5. I believe an over-reliance on EI contributes to the cycle of poverty. One of my main points is that we did without it for generations; people made hay when the sun was shining, and saved for winter. Now people don't need to worry about preparing for the future to the same extent as we had to in the past, and I think that causes a lot of problems; everything is more 'now' focused.

    I also think this 'now' culture is one of the main reasons behind the widening gap in incomes. Somebody who sells temporary pleasure (soft drinks, booze, movies, fashion, fast food, expensive toys, status symbols, professional sports) can make a mint - people are throwing their money at these things as fast as they can earn it (often faster than they can earn it), and the vendors are only too happy to collect it, save it, and reinvest it.

    I know that people don't live lavishly on EI money. I imagine it is actually somewhat of a soul crushing experience to be a habitual user. I had the benefit of working in Nunavut, and I got to see first hand the damage that over-reliance on system funds can do to people. Those that had jobs were fairly happy and well adjusted, but those that didn't were often a very different story. What is the solution for them? I have no idea, but I fully believe they were a happier group of people before we interfered with their lifestyle - even with the rigors of living off the land in the Arctic Circle.

    Anyway, if there is a business case to be made for subsidizing seasonal work, I think that is something that should be dealt with separately from a program that is run to protect people against unexpected job loss.

  6. You are right in one regard, it IS a 'wealth distribution measure', just like our tax system is. The vast majority of canadians will NEVER collect a single penny of EI. Just like we in our home get ZERO value for the (large) percentage of our tax dollars which go to support educating children we will never have. The reason we have this is because when our country did not have such a distribution, our society was far worse off. Just like we don't NEED to have universal healthcare, after all, our country USED to do without it, but it became very clear that our society was far better off with it.

    Apart from your post and other 'emotional' blogs, NOBODY is arguing the legitimacy of seasonal EI. The feds have simply made a couple of changes that people (rightly in my opinion) are fighting back against. As for the 'visitations', workers have a 'quota' to collect. To answer your question, according to news reports it IS cost effective, with workers catching enough deadbeats to cover the cost of the program. However, there is no mention of exactly WHAT people are doing that may get them kicked off EI, but it can be as simple as going to the store and not being home because a potential employer may call. Those who get kicked off, people who already deal with the stigma of unemployment, may be loathe to appeal, and sink further into poverty.

    From NB's perspective its even grimmer. Any shortfall from EI will simply have to be picked up by the province's welfare system. As it stands, if your weeks get shortened, its highly doubtful you will move to Moncton, get an apartment or car, just to cover the few more months til you start work. You will apply to welfare, which is provincial revenue, rather than federal.

    That doesn't even get into the employer's side of this. We aren't talking about Coca Cola here, many seasonal companies are barely making a go of it as it is. I ran a seasonal company when I was in school and my workers made more money than I did. But companies like that serve a variety of purposes, for one thing, enough companies like that and you can perhaps have a full time supplier for those companies. So basically cutting off their cheap labour puts ALL of them out of business, and pretty soon there's no population left.

    That brings me to your notion of insurance. Insurance, as you say, is there for when people need it. Ok, but the only difference here is that as opposed to most people's 'surprise' that they need it, seasonal workers KNOW in advance. So what? Anybody SHOULD know they could lose their job, that doesn't mean that besides paying into EI, people should have the 'knowitall' to have a special reserve of cash. Of course people should, but we don't dock their EI on that basis. Many seasonal jobs pay little, but like income tax, these people pay into EI, the difference is that they don't get paid as much-otherwise they WOULD fund their own EI.

    It is all about being fair. The feds and Alberta don't cut off NB's equalization and say "well, we're just contributing to your cycle of poverty". Things CAN be much worse, and that is what public policy should be trying to avoid. It's no coincidence that virtually EVERY organization in NB has condemned these changes, from the Ganong's to the NDP, to the conservative government. They do this because they know its bad public policy.

    1. Keep on paving with those good intentions.