Friday, June 5, 2009

The Real Cost Of Family Breakdown

Want to fight poverty? Start with strengthening families, because family breakdown is one of the key contributors to poverty:
June 3, 2009 (Ottawa) - The Institute of Marriage and Family Canada released new research yesterday on the cost of family breakdown in Canada at a briefing on Parliament Hill. “Private choices, public costs: How failing families cost us all” examines the relationship between poverty, families and government.

The authors, Rebecca Walberg and Andrea Mrozek, quantify government spending directed at poverty alleviation for broken families through welfare, child care costs and housing. They find that cost to be close to $7 billion annually. If family breakdown decreased by half, a conservative estimate of savings is close to $2 billion annually.

The report can be read in full, here.

The in-depth, quantitative assessment examines the links between broken homes and poverty alleviation measures. Consistently, not only in Canada but in all OECD nations — lone parent households are more likely to live in poverty. “Certainly the main concern around family breakdown is the emotional toll,” say the authors. “But the fiscal costs are evident, and those can be more readily measured.”

The report highlights the costs province by province, discussing why and how stable marriages contribute to a stronger economy. “If we are serious about reducing poverty,” say the authors, “especially children and women in poverty, we must address the effects of family breakdown.”
But apart from direct costs outlined in the report, there are also indirect costs - such as higher CPP premiums (4.95% instead of 1.8% in 1966-86) due to population aging. (And why do you think our population is aging?) Having to pay an extra $31.50 per thousand ($63 per thousand for self employed) to sustain a pay-as-you-go pension plan burdens working families, making it harder for those who have job to save for rainy days. Not to mention that higher contribution rates also penalize the employers, discouraging them from hiring more people and taking away funds that could have been used to provide higher wages and benefits for existing workers.

Calculate the average amount per paycheck (from ~$500 for a minimum wage earner to a maximum of $1348,) factor in the employer share (which is the same amount; self employed pay both) and multiply by the number of CPP contributors (15 million or so) and it turns out that nation-wide, the cost of higher CPP premiums (in other words - the cost of population aging and extremely low birth rates or the cost of the decline of the traditional family) amounts to about $30 billion a year.

Private choices, public costs. You just can't count them all.

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