Job Loss, Post-Secondary Education . . . and Lemonade

The big economic news published this month by Stats Canada was that for the period from the first quarter of 2015 to the first quarter of 2016, Canada’s job vacancy rate (the share of unfilled jobs over all jobs) declined in nine provinces and two territories. Yet by July of 2016, the unemployment rate increased by 0.1 % to 6.9%. So what’s the connection with lemonade?

A new study released by Stats Canada on July 19, 2016 examined what people do when they lose their jobs. Turns out, many make lemonade out of their lemons by turning back to post-secondary education. The study tracked workers aged 35 to 44 in 2001 and reported on how many of them took a back-to-post-secondary-school U-turn when they were laid off in the 2008-2009 recession.

It found that in the year of layoff or in the following year, these people were 2 to 4 percentage points more likely than other adults to enrol in post-secondary education. Specifically, over 3% of adults who lost their jobs in 2008 enrolled in a post-secondary school on a full-time basis that same year, representing five times the rate observed for employed workers. It was also found that if people got wind of potential layoffs, in the two years prior to layoff many took steps to start enrolling as soon as possible.

The primary conclusion: job loss is one of the determining factors influencing the educational decisions made by adults.

That also begets a great opportunity for tax and financial specialists to have deeper conversations with those who have recently lost their jobs and to add real value for clients who may be facing a challenging situation. You can help these clients turn their lemons into lemonade by discussing the following:

1. Ways to fund post-secondary education: For example, the RRSP Lifelong Learning Plan or TFSA withdrawals.
2. Ways to repay post-secondary education (how can costs be reduced by selecting funding options that are least expensive later?).
3. Tax deductions and credits that can help: RRSP; child care expenses; moving expenses; taxation of bursaries, scholarships and fellowships; tuition, education and textbook amounts; interest on student loan amounts; and provisions for the disabled student.
4. Is there help from Employment Insurance and how can benefits be maximized?
5. Should independent consulting and tax tips for the self-employed be discussed?

Lemonade and really good tax and financial advice can go together well, particularly before the end of the summer. Seek out a DFA-Tax Services Specialist™and an MFA-Retirement and Estate Services Specialist™for help.

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