Last week Canadians were treated to another Harper Government budget where the post doctoral stage of developing highly qualified researchers was finally recognized as an important part of the research enterprise. Post docs shared a grand “hurrah!” as this was a good thing, and long overdue.
Oddly enough, it was not just lip service as Jim Flaherty was “especially pleased to announce in the Budget, new funding for post-doctoral researchers” proposing to create a program for post docs akin to the Canada Graduate Scholarship (which recently gave select graduate students an excellent stipend over their studies at $35,000/yr) which would earmark $70,000 per year for select PDFs over the next five years.
BUT… look a little more deeply – say…somewhere around page 349 in Annex 5, it couldn’t be written more clearly:
post-doctoral fellowships will be taxable
We hear you, and thank you for the clarity. It’s been a long haul through the murky waters since 2006 when post docs were unsure whether or not their fellowships would fall under the scholarship exemption. See previous blog entries here and here to get a sense. Budget 2010 proposes to straighten this up.
So, yes – lots of post docs are upset as this represents an instantaneous $4000-$6000 pay cut. If you are getting a $38,000 fellowship from SSHRC, you get knocked down to ~$33,000 and if you get a $40,000 fellowship from NSERC/CIHR, you now take home ~$35,000. So, as of 2010, a fellowship funded PDF will take home the same or less than a PhD funded by a Canada Graduate Scholarship.
I ask you – What other career path recognizes more training and more experience with less pay and little to no benefits?
You say – what about these newly conceived $70,000/yr fellowships? I say – there aren’t enough of them to go around as there are 6000 PDFs in Canada and only 140 fellowships (2%). Also, Post docs don’t just last two years (in fact, some single experiments on their own last two years!), so after your glory years of funding, you take a 50% pay cut…sounds fun doesn’t it? Add all of that to the reality that just about every advertisement in medical science related faculties at McGill, Toronto, Alberta, and UBC amongst others has a requirement for 3-6 years of PDF experience. I had to ask my brother with the mathematics degree to figure this complicated stuff out for me.
Seriously… who thinks up these policies? Why not ask someone (oh I don’t know… maybe someone like the Canadian Association of Post Doctoral Scholars) about what a post doc actually does and would such a program work?
There are 6000 PDFs in Canada that are critical to the research enterprise and the human resource shift over the last 15 years is staggering. Will this program keep the best and brightest in Canada and attract new international fellows?
NO
The reasons are simple
1. The program is for 2% of PDFs
2. The funding lasts for two years only – the average PDF length is substantially longer
3. The wide discrepancy gives a major financial disincentive to stay longer than two years
And really… I don’t know what kind of hot shot junior scientists you think are out there, but picking post docs is not like a hockey draft where a selection like Sidney Crosby will change the fate of your entire lab. Research happens in incremental bits through the hard work and dedication of teams of scientists. Telling 98% of them to “suck it up” so 2% can enjoy an excellent salary is not sending the right message.
What the government really needs to do is improve the entire trainee environment and cultivate Canada’s international reputation as a great place to do scientific research, full stop. Stop grabbing headlines with superstar scholarships… it does very little practical good, especially at the graduate student and post doc levels.
So, in the end, the real problem is not whether or not PDFs should be scholarship exempt it’s whether or not they take home a fair wage. So the solution could be a tax exemption, but it could also be a national raise in PDF salaries.
The latter would be reasonably easy (and not so expensive) to achieve by doing three things:
1. Making fellowships worth more (and not the $70,000 kind – something civilized like $45,000 or $50,000 would be fine and clearly distinguish them from the majority of graduate student stipends)
2. Establishing minimum salaries for PDFs paid from a grant
3. Scaling the wages based on research experience (as the National Cancer Institute of Canada already does successfully with both its fellowships and for PDFs paid off NCIC program grants)
Funnily enough, this type of change would not cost the Government much more than the $45 million promised for the superstar fellowships – but of course it wouldn’t be nearly as sexy to release in a Budget, it would merely make sense.
What I hope you’ll do to push this issue:
1. Sign the online petition to maintain the competitiveness of a postdoctoral research career in Canada
2. Write your MP using the template on the CAPS site
3. Tell all your research friends to do the same and if you know a sympathetic person in politics or the media, put them in touch with CAPS.
4. Join the Facebook Group
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The vast majority of Canadian postdocs already pay taxes (including those in U of A and U of C, where I have worked). Personally, I am glad that the playing field is level across Canada and the “invisible” postdocs have been mentioned in the Federal Budget (only a hint of irony here) !
That being said, it is time to raise the funded postdoc salary (i.e. from external fellowships such as CIHR or HSFC) to at least C$ 45K/yr from the current 40K.
The minimum postdoc salary would be great, but I think the real initiative has to come from the universities rather than funding agencies.
Thanks to this blog for highlighting the Facebook CAPS group and all these important issues. Keep up the good work !!
I don’t quite understand why scholarships and fellowships are taxable. Most of the funding agencies’ money is from tax dollars, no? So it’s like a double tax?
@ mich- By this argument, all Govt employees should not be paying taxes ! And same for all the politicians …. yuck !!
Does anyone know if this means now our income will be T4 eligible and we’ll get RRSP and EI benefits etc?
Hi Kate,
I think the way it works (check with someone who knows for sure though!) is that scholarship income will generate RRSP space as long as it does not get exempted. The scholarship exemption allows you to make “nothing” from scholarships. You’ll still be taxed and therefore you still have an income and the income makes space for RRSPs.
With EI it’s different… if you’re not paid from a T4 and “employed” you probably won’t pay into EI or CPP and would not be eligible. If the scholarship ruling sticks (i.e.: when the budget gets made into law) then I’d consider trying to get employee status from your boss especially if you forsee a possible need for EI.
Dave
Thanks for the info. I asked about EI in relation to maternity leave benefits (another long-standing PDF issue). Thanks for your site- it’s hard to find good information out there!
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Hey Dave, I don’t know that you are correct re: RRSP space on taxed fellowships. Back in the days before *any* scholarships/fellowships were exempt I was on NSERC/MSFHR scholarships and WAS taxed on these but WASN’T granted any RRSP space on them. Didn’t make sense then and still doesn’t now, but that’s how it used to be…
Didn’t pay EI or CPP so didn’t get those either.
Hi Dave, a few points:
1. Scholarship/fellowship income is never considered “earned” income, and will not generate RRSP room. Unless the universities change from issuing T4As to T4s, no postdoc will earn RRSP room.
2. To say that postdocs (who aren’t receiving the new fellowships) are getting a pay-cut is a little misleading. I don’t think PDF fellowships were EVER tax exempt in the eyes of the government (except in Quebec, where they were more doing their own “Quebec Thing” than anything else). I wasn’t a PDF prior to 2006, but I don’t think postdocs back then were claiming the $3,000 exemption provided to students.
3. I do agree that it’s absurd to expect a postdoc to be complete in two years, but this is a problem that exists within lots of funding agencies. I had a two year external fellowship and now I’m struggling to find funding to continue my research, because in the eyes of most agencies, I should be done by now.
4. I’m beginning to think that a better approach is to lobby for employee status rather than tax-exempt status. Clearly we don’t have the Finance Minister on our side, and I worry that all this petitioning is going to be more akin to banging our collective heads against a brick wall. While the extra money we’d save by not paying taxes would be nice, at this point in my life (I’m 31), I’m starting to think that things like eligibility for paternity leave and being able to contribute into RRSPs might be more useful in the long-run. Not to mention that as employees we’d have access to things like real health benefits (the “plan” offered by U of T to postdocs is a joke) and possibly even guaranteed wage increases that would at least compete with inflation.
Just my 2 cents…
-Carl
Hi Carl,
Great comments and thanks for piping up with some very relevant points.
1) As I’ve professed on here a few times, I’m not a tax expert, so the RRSP room is something that I’m definitely not clear on (thanks to you too Mel!). The point is still relevant when considering if post docs should be paid on T4s vs. T4a’s, but thanks for the comments!
2) I also don’t know if post docs prior to 2006 were claiming the scholarship exemption – anybody out there have an answer (anecdotal or otherwise) on this? What I do know is that (rightly or wrongly) some professors promised post docs a “tax free” fellowship and indeed up until now these post docs were getting their fellowships tax free. For these PDFs (again, rightly or wrongly) there is most certainly a cut in take home pay. The clarity in the Budget 2010 proposal is an extremely good thing as before there was certainly a strong case for seeing post doctoral fellowships as possible for the scholarship exemption.
3) You’re right that many agencies do not cover the entire tenure of a post doc. The bigger issue I have with the 70K fellowships (in comparison to other two year awards) is the severity of pay cut that one would take as few other such lucrative fellowships exist. It is one thing to go from a 45K fellowship to being a grant funded 40K post doc and an entirely different beast to go from 70/year to 40. It seems to be counter productive to encouraging the best academics to stay in longer than two years (which is troubling when you see that most academic jobs require 3-6 years of post doc experience).
4) The CAPS group is submitting a formal petition to our Finance Minister which will get a written response in 45 days, so at least we’ll know where this all stands from his point of view. With this in hand, the debate you bring up becomes extremely relevant and CAPS should establish what it feels is in the best interest of the majority of post docs and push for that status. I’m sure this won’t be the last time the employee/trainee/student debate is brought up, and I’ll look forward to hearing more from you on it as you’ve clearly given it some excellent thinking time.
Thanks for the comments, keep it coming!
To those calling for minimum support levels for postdocs, this already exists, at least at U of T where the minimum postdoc stipend is 26,000 / year. Sign me up!
Employee status is the obvious next step. Not receiving benefits (possibility of EI, contributing toward retirement – CPP, RRSP – parental leave, extended health care) is easier to swallow when you don’t pay taxes, but without the tax benefit this just doesn’t make sense.
Ask your supervisor to hire you as an employee and he/she will say NO because the benefits are expensive. I already hear profs complaining in the hall about the high cost of grad students and postdocs. They obviously try to minimize their expenditures so they can afford reagents (and new powerbooks every 2 years).
This whole thing is symptomatic of an underfunded system, with too many trainees (grad students and postdocs), and not enough jobs at the end of the pipe. Something has to give.
Dave,
Great points all around. I do agree that the nebulous “trainee” status that PDFs are assigned (at least here at U of T) makes no sense and benefits no one other than the University. And it’s true that it would be an additional burden on the supervisors to shoulder some of the costs involved in making PDFs a bona fide employee position. I can’t help but wonder if, should PDFs eventually move towards employee status, if it would help correct the bottleneck effect we have right now with too many trainees and not enough spots? It would be a tough situation for those of us who are trainees right now, but it might be better for the system as a whole if profs were a bit more selective in taking on new PDFs since they now were responsible for more than just their base salaries.
While I do agree that the system overall is underfunded, I think a bigger problem is that everything is so front-end loaded, with more and more new postdocs getting funding and those of us underachieving (in the funding agencies’ eyes) 3+ year PDFs being left to scavenge for crumbs off of our supervisors grants.
Carl – you’ve hit the nail on the head with the last bit (re: 3+ year PDFs getting the short end of the stick). This is a reflection of universities not recognizing the shift in human resources doing the research.
I think change will be slow, but the key is sorting out exactly what a post doc is and what we should be doing with the majority of them after the training period.
Thanks again for your comments,
Dave
PS: Britain has tried to address this with a fleet of junior / senior fellowship programs that are more prestigious and more autonomous than a PDF fellowship. Mixed reviews on this as it means no permanent job for yet another chunk of time. It does allow you to have your own research money and typically involves working with a very senior PI though, both of which are good things when it comes to landing a final job.
When I was a post-doc (1992-94), my PDF was taxable but did not count as income, so I didn’t contribute to an RRSP.
I now learn that I can contribute to an RRSP and carry forward the tax benefit. If you are frugal, and can do it, it may be worth contributing to an RRSP without the immediate tax benefits, with a view to claiming the tax break at a later time when you do have the “earned income” to claim it against.
I’m not an accountant, and I’m not the CCRA, so you should check the rules on this. But contributions you make in your 30′s make a lot of difference to the retirement income you have in your 60′s, so it’s worth doing if you can swing it.
Christine,
An interesting idea, but there’s a problem with it. The CRA only allows you to contribute $2000 more than your available deduction room (regardless of whether it is claimed on your taxes or not). This is because any interest/dividends/capital gains/etc. that your contributions make are not taxed (rather the money is taxed when you withdraw it from the RRSP), and some people would start using their RRSP as a tax shelter for their money (put a bunch in but not claim it while having it grow tax-free — this is the whole point of the new TFSA).
Dave:
Great article. I totally agree that these ‘superstar’ Banting fellowships are not the answer. This isn’t related to the tax-issue around postdocs, but I want to call attention to a new blog that has a post about equity and the Banting postdocs. Due to the all-male CERC winners, the Bantings are going to be especially attentive to ‘equity’: http://www.hookandeye.ca/2010/09/here-we-go-again-equity-and-banting.html
Again, while equity is important and didn’t seem to figure much in the CERC selections, the emphasis on it with the Bantings will deflect attention from the greater difficulties for postdocs, more generally, and the lack of jobs, especially.
Hi Terri – great link, thanks for that. I have a feeling that the underpinning issue in all of this is that the majority of postdocs are unsure of life and career and find no support for either and this means that any pot of money that comes out is like dropping a sack of food into a starving village. Chaos ensues.
In practice, a superstar fellowship is not such a horrible thing (I think the CRC program is a good example of building research capacity at the top level for example) – but the problem is that so many postdocs are without proper funding/stability which makes the balance shift even more toward the lucky few who win such a fellowship. I’ve just had an article published in a Company of Biologists journal (Disease Models and Mechanisms) about the Banting awards – not sure if U Alberta subscribes, but have a glance!