Wading into the welfare mess
As social assistance costs mount, the provinces move to put welfare recipients to work
It is so easy to tell the Couplands what they already know about where they went wrong. And it is so hard to figure out how to help them. They perch, side by side, in a restaurant booth, uneasily out of place, wearing their position as welfare recipients in a small Ontario town like uncomfortable coats. The family lives in subsidized housing on the outskirts of Cobourg, a picture-perfect community nestled 114 km east of Toronto along the shores of Lake Ontario. Brenda, 29, scrubbed rooms at a local motel until complications following the birth of her second daughter made it difficult to perform physical labor. Her husband, Phil,
29, once held good jobs with companies that cleared trees from hydro lines. Since that work ended three years ago, he has bounced among assembly lines in small factories, layoffs, unemployment insurance and welfare. Now, the couple draws $856 from the taxpayers every month, including $210 for rent.
Their despair and their regret are woven through their conversation like black
threads. They say that they should never, ever have quit school in Grade 10. “I was a smart-ass,” says Brenda. “I figured I could get a job and be all right. I found out it was different.” After years of effort, she has completed high school. She hopes soon to have a job creating party decorations at a local catering firm. Phil is half a credit away from graduation. He dreams of getting a community college degree in employment support so that he could help other people look for work. But his welfare caseworker says that he must find a job. Student loans will not cover his family’s liv-
ing expenses. And although he papers the county with résumés, day after day, he has few prospects. “I used to be gone, 12 hours a day, five, six days a week,” he recalls wistfully. “Now, all of a sudden I’m sitting here, looking for a job. It does drive me nuts.”
Something is wrong. For almost 30 years, Ottawa and the provinces have played the proverbial role of brother’s keeper, helping those who cannot help themselves. Yet most Canadians would agree that social assistance has failed the Couplands—as well as the taxpayers who support them. The crisis has assumed greater urgency because the system is bulging dangerously at the seams. Although provincial costs have multiplied, Ottawa is cutting its contributions. In response, provinces such as British Columbia and Alberta are taking tough, highly controversial steps to deal with the hard fact that the current system costs too much and delivers too little. The very word “welfare” seems destined to remain a political hot button for the rest of the 1990s.
Perhaps surprisingly, the most sweeping changes are taking place in once-staid Ontario, where almost 44 per cent of the na-
tion’s 3.1 million welfare recipients live. Two months ago, Ontario sliced 21.6 per cent from its
basic welfare rates. This week, on Nov. 29, in a tough economic statement, Finance Minister Ernie Eves will pointedly repeat the province’s intention to demand work in exchange for welfare after April 1, 1996. Eves will emphasize that such plans are a key component of his government’s multipronged program to revitalize the economy and to retrain the workforce. Still, as most politicians ruefully admit, there is no magic way to turn ill-trained, unconfident welfare recipients into working taxpayers at a time when provincial revenues are tight. As Ontario Social Services Minister David Tsubouchi told Maclean’s last week: “There are fiscal pressures. But if just throwing money at the problem was the solution, we would have no one on welfare today because the past two governments spent $40 billion over the past 10 years. There is something fundamentally wrong with the system.”
The gulf between welfare and work is simply staggering. The Couplands—and millions like them across Canada—are stranded in a nightmarish no man’s land. Their skills do not match the labor market’s harsh requirements. They look for steady, secure work that they are unlikely to find. Their benefactors, largely the middle class, have endured years of rising taxes, eroding job security and falling real wages. In exasperation, they have watched the number of people who live off their tax dollars grow. Since 1981, the number of recipients has more than doubled—from 1.4 million to 3.1 mil-
lion. The annual cost of those benefits has more than quadrupled: from $3.2 billion to $14 billion.
Worse, in most provinces and territories, single parents or single-earner couples receive far more from welfare than they
could earn at minimum-wage jobs. In 1992, in a landmark report, the National Council on Welfare calculated that a single parent on welfare in Ontario with one child could receive $16,999 per year: that is, $4,685 more than a job of 40 hours per week at the minimum wage—$6 per hour throughout most of 1992— could provide. (Recent Ontario cuts have significantly decreased that disparity—but a single parent remains marginally better off on welfare.)
That same report pointed out
that a single-earner couple with two children in Manitoba could receive $20,519 on welfare—an astonishing $9,047 more than the minimum wage in that province. (Such figures do not even take account of the free dental, eye and drug care that most recipients receive.) Those findings suggest that the system seems perversely designed to discourage work and self-improvement. As Sherri Torjman, vice-president of the Caledon Institute of Social Policy, told Maclean’s: “It is difficult for people to find a job that provides enough income to support their families. Many families are actually better off in the welfare system.”
In desperation and some frustration, governments throughout North America are turning to “workfare”: requiring recipients to work for their welfare cheques. They reason that decades of passive support have fostered dependency—and simply increased the gulf between welfare and work. Ideally, workfare would ease welfare recipients into the labor force, restoring their battered self-confidence and upgrading their rusty skills. In Alberta, Premier Ralph Klein has stipulated that welfare recipients will be cut off if they refuse jobs in such programs as Alberta Community Employment, which provides recipients with 26 weeks of work, performing such tasks as tree-planting for cities and nonprofit groups. Quebec offers higher benefits to those who accept work or training. Last week, it cut an additional $50 from the monthly cheques of able-bodied recipients who refuse work. British Columbia is cutting benefits by up to $100 per month. It will also demand that every recipient who is deemed
employable must participate in retraining, job search or other educational programs. Thirty-two American states are experimenting with programs that largely involve work or training.
The Ontario plan is probably the most am-
bitious and, perhaps, the most popular. Premier Mike Harris campaigned heavily last June on the promise that all able-bodied welfare recipients—except the elderly, the disabled and mothers with children under the age of 3—-would be required to work, train or go back to school in exchange for their cheques. He handily won a majority government. Since then, there have been stormy protests, including a door-pounding demonstration at the Ontario legislature. Rookie minister Tsubouchi has stumbled with devastating frequency,
at one point advising welfare recipients to shop for cheaper, dented tins of tuna.
But the government has not backed away from its commitment. Tsubouchi told Maclean’s last week that he will introduce or expand a wide selection of training and workfare projects throughout next year. The government could ask service clubs and municipalities to identify community needs such as bicycle paths that welfare recipients could construct. It will shepherd other recipients into educational programs such as literacy or high-school equivalency. It could hire existing job placement agencies that now receive money from business and in-
dustry to locate and train workers. Those agencies will be paid to line up prospective private employers for welfare recipients— and to provide suitable training before they start work. Most important, agencies that offer employment training will not receive the bulk of their fee until the recipient is placed in a job. As Tsubouchi asserted: “What we have to do is tie employment training programs to what you might call ‘pay for performance.’ ”
So far, voters seem to approve.
Last month, pollsters at Angus Reid Group Inc. reported that 60 per cent of Ontario residents applauded the government’s performance. Then, it added the disconcerting observation that 57 per cent of those with household incomes below $30,000 disapproved of the government. In other words, there is a widening gulf between the haves and have-nots. Angus Reid’s senior vice-president John Wright says that wealthier Ontario residents are not less compassionate: they are simply so preoccupied with their own economic plight that they have little time or money to spare for others. As a result, he says, “welfare cuts are keeping the Conservatives high in the polls. Dave Tsubouchi may not know all the words but he is singing the right tune, so he gets away with missteps right now.” Adds a Tory insider:
“The protests are keeping the focus on an issue that is clearly helping the government.”
Still, Ontario’s approach is likely to be controversial. The very mention of work-for-welfare sparks heated debates that touch upon the intrinsic value of labor, the right of the state to require work and the so-called jobless recovery that has afflicted the developed world. Its opponents maintain that work-forwelfare will simply shuffle the labor force like a deck of cards, forcing stigmatized recipients into minimum-wage jobs and throwing higher-paid people out of work. The problem, they say, is with the labor market: 1.42 million unemployed Canadians were actively seeking work in October. For four decades, the percentage of those unemployed has grown steadily— while the number of high-paying, low-skilled jobs has shrunk. Warns Lynne Toupin, executive director of the National Anti-Poverty Association: “You cannot reform your system of welfare until you can get to the more fundamental issue that there are not enough jobs for everybody who wants to work.”
Workfare advocates do not pretend that the scheme will work miracles. At worst, they say, it will ensure that welfare recipients keep their work habits and renew their skills. At best, it would function as one part of a carefully crafted labor force strategy that provides proper training, adequate day
care and income supplements for the working poor. Under that scenario, the ablest of the unskilled would become skilled. The least qualified would find jobs that, in combination with income supplements, would supply a living wage. The family’s commitment to work and education would be restored. The welfare cycle among genera-
Work is extremely important for the stability of families’
tions of families would be broken. As Simon Fraser University economist John Richards maintains: “The provision of income without work on a long-term basis destroys people’s self-respect. Work is extremely important for the self-respect of people and the stability of families.”
In practice, the relatively slim evidence on workfare is mixed. It does appear to reduce welfare caseloads and to increase participants’ incomes when up-front investments are made in training, employment preparation and competent day care. Economist Richards examined 19 cost-benefit studies of large-scale U.S. workfare experiments that were conducted throughout the 1980s. Almost all of the programs significantly slashed benefits if recipients did not participate in a fourmonth program of job training, job search and work experience. Ten of the experiments produced modest income increases for the participants; 17 saved taxpayers’ money through reduced caseloads or reduced payments. At present, the most ambitious workfare program is in Wisconsin, where Gov. Tommy Thompson has made
huge investments since 1986 in child care, training and work readiness. The state now saves $2 in benefits for every $1 that it spends to make people employable.
There are few comparable Canadian experiments. Since 1993, Alberta has cut spending on social benefits by about $500 million, to $1.3 billion. Almost $200 million
of that saving was put back into training, employment support and increased child benefits. But the province has done no formal studies to determine the role of workfare in that decline. Quebec’s PAIE program, introduced in May, 1990, subsidizes employment for welfare recipients in the private or public sector for six months. A study by policy analyst Elisabeth Reynolds for the Institute for Research on Public Policy in Montreal found that program participants have worked for longer periods than non-participants, and more of them got off welfare. But more than half of the participating private firms said they would have hired someone to do the work anyway. (They may not, of course, have hired welfare recipients.)
Still, the trend towards workfare appears inevitable—if only because welfare budgets are shrinking. Since the 1960s, Ottawa has contributed up to 50 per cent of the cost of provincial social assistance. In return, Ottawa has stipulated that the sole criterion for welfare must be need. But those rules will change on April 1, 1996, when Ottawa replaces its shared-cost programs with a single lump-sum payment, the Canada Health and Social Transfer. Over the next two years, that transfer will de-
cline by about one-third from the $16.8 billion in cash that Ottawa now transfers annually for health, postsecondary education and welfare. In return, Ottawa has sought to retain only one condition on welfare: provinces must not impose a residency requirement. Even that fragile rule has already been violated: last month, British Columbia announced that it will impose a three-month residency requirement on welfare applicants. The popularity of such defiance means that the provinces will almost certainly set more conditions on social assistance after April 1. Says the Caledon Institute’s Toijman: “It could be open season welfare recipients.”
Such conditions may be popular because some Canadians lump all welfare recipients into the same category: frauds. And, unfortunately, fraud exists. Last year, Ontario saved $66 million by tightening up the administration of its $6-billion system. Investigators attributed most of the problems to clerical overpayments. They detected outright fraud in only 1,029 of the 266,000 files that were examined. Still, Maclean’s itself inadvertently discovered three examples over
a three-week period: in two cases, couples temporarily separated, the wives applied for benefits as single parents, then the husbands secretly rejoined the household. In the third case, a single mother earned unreported income through housecleaning. And although such cases are rare, almost every Canadian seems to know someone who, in turn, knows someone who is ripping off the system.
The danger, of course, is that disgruntled taxpayers will tar all welfare recipients with the same brush. But workfare cannot work unless recipients are viewed as truly needy individuals who must be treated with dignity. Experts say that the solution to that dilemma lies in reassuring suspicious Canadians with strict controls on fraud. Bob Scott, spokesman for the Alberta social services department, told Maclean’s that his province added 32 fraud staff and hired two former senior police officers to run its Edmonton and Calgary offices: ltWe now recover $8.38 for every dollar that we spend on fraud initiatives.”
Such strict procedures might persuade Canadians to view welfare recipients and the jobs that they perform— with respect. Workfare could no longer be perceived as a punishment—but as one measure among many to repair fractured lives. In such circumstances, governments would face increasing pressure to find the up-front investments to make workfare really work. First, experts say, governments must revamp their inadequate and often incompetent training programs. Second, governments should juggle their resources to encourage the working poor. There are many potential formulas: Richards, for one, suggests that Ottawa increase its $500 per year earnings supplement for low-income working families.
Finally, and perhaps most important, most experts stipulate that adequate child care must be available. Alberta has 32,000 nonprofit and for-profit spaces with a vacancy rate of 34 per cent—so that parents have considerable choice. Parents in workfare programs do not pay a cent for child care. Ontario, in contrast, has cut full funding for 14,000 day care subsidies. Tsubouchi has even suggested that welfare parents could hire their neighbors to look after their children, conjuring up a bygone era when communities were safer and married mothers rarely went out to work. That prospect terrifies Toronto’s Lucinda Ritchie, who has two small children in subsidized day care at $10 per week. Desperate to get off welfare, Ritchie is taking a 16-week part-time course in broadcasting—which she funds through her own monthly cheque of $1,050—and she spends “every available second” seeking work. Ritchie worked for the Tories in the last provincial election—and she still
fervently applauds their determination to cut the deficit and to reform the welfare system. But she will not vote for them again.
“Mike Harris had my full support until he threatened day care,” she says. “Cut everywhere you can, but you can’t cut the kids. That is so wrong.”
^ In the end, it is perhaps best to view workfare as only one small part of the solution to a highly complex problem. Workfare cannot solve the intractable problems of a jobless recovery and an untrained
workforce. It cannot eliminate need. It cannot, magically, prompt Canadians to recreate the neighborhoods of the past where families watched each other’s children and banded together in hard times. But if it is used with other measures to encourage training and job creation, if it treats its participants with dignity, if it fosters the notion that no job is demeaning and all jobs are worthy, it may halt the inexorable slide of whole families, generation after generation, into dependency. As the experiments begin, Canadians can only hope that workfare improves the welfare of all citizens. □