Given that we start a new year, all folks who receive paycheques (I believe the Japanese term is Salary-man) get to start paying CPP and EI premiums again. For a lot of folks, they are just deductions that appear on every pay stub, but for folks who make over a certain amount, this deduction occurs sometime in the year, and after that, they get a “virtual raise” given they do not have to pay these deductions for the rest of the year.
Michael James is a lover of numbers (but not a numerologist, luckily) and pointed out one day how easy it is to approximate how much someone makes by when they stop paying EI premiums (and you’d be surprised how many people talk openly about the fact that they have stopped paying the premium (in fact I had just told Michael James that very fact)).
It’s a pretty simple game to play and well worth a couple of minutes to create a miniature model to figure this thing out.
Jack gets paid bi-weekly and works as an employee of XYYZZ. He gets paid a regular salary (assume no bonuses and such), so if we list the month, Jack tells us, “I stopped paying EI premiums this month,” we can then approximate how much Jack makes in salary. We know from the EI website that your premium is 1.73% of your insurable earnings (the maximum insurable earnings were $42,300 in 2010).
|Month||Effective Pays||Approx Gross Income|
Just remember, what you tell folks can sometimes have more meaning than you might think.
Past CPP & EI
Yes, it is a topic I write about, as it is essential to me. Here are a few from the past years to compare and contrast (hint see how much CPP has gone up).
- For 2022 the CPP and EI Limits went up again
- The 2021 limits for CPP and EI were
- CPP and EI for 2020
- CPP and EI for 2019
- Merry New Year, CPP, EI and #MoneyTalk (2017)
- Gosh Darn it! CPP & EI Again!!! (2014)
- Fun with Numbers for 2013 (CPP and EI)
- Gosh Darn CPP and EI! (2010)
- Fun with Numbers with CPP and EI (2007)
Pingback: CPP and EI for 2021 – Canadian Personal Finance Blog – Employment Insurance
Sweet. Now I know when I should be free of this tax.
It’s been a while since I tried to figure out someone’s salary this way, but I remember it being quite accurate. Nice post.
One more raise and I might have an EI-free paycheque at the end of the year. Woot.
You and I apparently have different definitions of what’s “worth the time.” I figure it’s only worth knowing how much your coworkers make if you have comparable responsibility, education and experience. That way you can decide how big of a raise you deserve. For random people, I really don’t care.
How noble a view of your workplace. I always like the reaction folks have when you tell them you have figured out how much they make, it’s more fun as a tool of “Mayhem and Confusion”.