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Research into recent Canadian and American welfare reforms has provided insights into best practices and key lessons learned. We have categorized lessons according to five main policy themes:
These themes provide a general framework, not mutually exclusive categories, to help organize and interpret recent welfare policies and programs. 3.1 Legislation and Regulation
Legislative change at the federal level in both Canada and the United States has created the environment for the latest round of welfare reform. While the motivation may have been largely due to fiscal restraint or provincial/territorial/state initiative, many policy analysts recognized that change was long overdue, as the number of welfare cases was not declining as quickly as expected during periods of economic recovery. This suggested that welfare programs were not providing the right incentives and/or training options to move people back into the labour market. The “welfare-to-work” focus of most legislation and regulation in welfare reform has created the framework for changing social assistance from an entitlement program to one where recipients have obligations. Restoring the presumption that social assistance is an income program of last resort is a primary focus of this legislation. Most jurisdictions have legislation compelling social assistance recipients to participate in either employment or training. Nevertheless, in addition to legislation, a few jurisdictions in the United States have appeared to rely largely on sanctions and lowered benefit levels, coupled with a rapidly growing economy, to reduce the number of cases. In these instances, sanctions exist to ensure that the welfare reform process has the mechanisms to encourage eligible applicants to participate in the labour market. Most administrators and analysts accept the importance of sanctions to convey the changed expectations of social assistance. However, most rarely apply them. On the other hand, critics of welfare reform argue that a well-structured welfare program would require few punitive measures, as most participants wish to leave social assistance quickly and would therefore willingly participate in training. In addition, administrators use other strategies during the intake process to deter or divert individuals to other programs. Deterrence strategies can include the use of quasi-contractual agreements or case plans, and orientation sessions to essentially “scare” people away from applying for welfare due to the requirements placed on individuals to move from welfare to work. Diversion strategies are tactics used to enable families to avoid receiving welfare assistance. These may be provided in many ways, such as one-time lump sum payments and/or the provision of collateral supports (health care, child care or other services) to carry a person or family though a difficult period. If these can avoid extended assistance, they are clearly cost-effective. If an individual subsequently goes onto assistance, government usually recoups the lump sum. Other diversion strategies may involve moving individuals to alternate programs such as student assistance, employment insurance or programs targeted to elderly persons or persons with disabilities. Legislative and regulatory change at the federal level, in both Canada and the United States, created the program and policy opportunities for provinces, territories and states to change their social assistance programs. Although legislative changes in Canada reduced federal funding, it also allowed provinces and territories to impose further conditions on welfare, something that the federal government had discouraged (but not disallowed) under the Canada Assistance Plan (CAP). As a result, devolved delivery to the regional level has allowed for more effective integration of social assistance and labour markets. This result has emerged as an unintended, but welcome (from the perspective of provinces and territories) consequence of legislative changes associated with welfare reform. Subsequently, some jurisdictions have continued to decentralize programming to the local level. For example:
Although changes in legislation and regulation have proven to be necessary for tightening the linkages between social assistance and the labour market, by themselves they are unlikely to be able to promote the economic independence of most recipients. For those jurisdictions concerned with the end state of their clients, these areas have moved on to incorporate both short- and long-term interventions as ways to facilitate their clients’ transition to paid employment. 3.2 Short-term Labour Force Attachment Strategies An essential element of the welfare reform process has been to redefine the social assistance applicant as a “job seeker” and broaden the population considered employable. Administrators immediately inform clients of the expectation that paid employment is the norm. With the focus squarely on employment, jurisdictions vary in the short-term strategies used for reconnecting their clients with the labour market.
Many jurisdictions use employability assessments at the initial point of application for social assistance. Intake workers usually complete initial assessments when clients call to apply for assistance and employment counsellors continue with in-depth assessments that may result in a training and work plan. In principle, the employability assessment triages clients into three general groups: job ready (those with work experience and education); training ready (those whose personal situation allows them to participate in training); and those with multiple barriers (personal and family problems that preclude participation in training or work). This segmentation makes some sense. A substantial proportion of social assistance recipients return to work without special programming and may only need assistance to get work.6 Other clients require training and the resolution of personal problems that will require substantial interventions. In the end, the percentage finding work will vary by jurisdiction, number of cases and the nature of work available in the area. In light of the complex heterogeneity of the clientele, debate exists about the effectiveness of employability assessments. Employability remains a very hard concept to identify and define, particularly for those who face barriers to employment. While research shows that employment patterns for those reporting barriers are similar to those who report no impediments (Pavetti and Olson, 1996), it should be remembered that only those with low basic skills diverge from this trend. Even though many social assistance clients would qualify as having low skills, some still argue that measured barriers to employment predict outcomes poorly and should not be used for allocating training effort. To further complicate matters, considerable variation exists among jurisdictions on the role of employability assessments. In many areas, the most skilled counsellors are involved in the process. However, these assessments have not been systematically reviewed for reliability and some jurisdictions have abandoned them entirely. Instead, these jurisdictions now use a “survival” model of triage. Those who cannot get work within three months are in obvious need of additional training. A job-centred approach, individual case management and tailored training programs for those unable to find work after the initial period is viewed as a viable alternative to formal employability assessments. The argument advanced by administrators in these jurisdictions is that assessments have poor predictive value and do not indicate who is actually able to obtain work. These assessments rely on self-reported data and collect little independent information on education and job histories. The interaction of education, work experience and family/personal barriers is complex, further reducing the value of intake assessments.
Faced with doubt surrounding the utility of employability assessments, many jurisdictions now use the labour market as the real test of a client’s employability. Most “Work-First” programs, popular in the United States, place applicants immediately into the job market through a process of job search (résumé preparation and interviewing skills) and direct job placement. Other social assistance offices actively promote the availability of workers to industry. This approach communicates the intent of the reform to the applicant and creates a direct path to potential jobs. Still other jurisdictions use an orientation workshop where intake workers tell applicants they need to look for work or participate in training in order to receive welfare. The evaluation data suggest that, for clients who have weak educational backgrounds and who encounter family/personal barriers, these policies alone may not result in wage increases that raise them out of poverty and into self-sufficiency (see Strawn, 1998; Hamilton et al., 1997; Nightingale and Holcomb, 1997; O’Neill and O’Neill, 1997; Friedlander and Burtless, 1995). Moreover, many without such barriers also find difficulty moving toward self-sufficiency. In the long run, short-term labour market skills training (e.g. job search techniques, résumé writing, interview coaching) and quick placement approaches do not seem to support clients with a poor education in gaining economic independence. Many clients cycle through a series of low-wage, low-skill jobs that require them to stack several part-time positions to support their families. In addition, the process of hiring and firing debilitates these same clients, whose poor educational skills do not allow them to obtain and maintain secure employment. Even though short-term labour force attachment strategies can increase labour market participation rapidly, especially in high-growth economies, long-term outcomes for many clients are disappointing and underscore the need for a human capital approach, involving training and personal counselling. While some short-term strategies do start social assistance recipients toward possible long-term economic independence, for those clients facing multiple barriers to employment, their ability to improve upward mobility and lead toward self-sufficiency appears limited.
Work experience (community placement) programs provide individuals who are unable to find unsubsidized employment an opportunity to develop an attachment to the labour force or to participate in some other form of activity (such as volunteering or community work). Several versions of this program exist.7
The value of community placement programs depends on many factors. These include target population (e.g. all recipients vs. the harder-to-serve); number of placement opportunities in the community; importance of community placements relative to other interventions; length of intervention; type of placements; and goals of the program (skill development or simply an opportunity to work). Administrators who have used such programs have done so in varying ways, reflecting the program’s philosophy about what is “best” for welfare recipients. Most will agree that work placements are not a terminal intervention. At best, they can provide an opportunity to work when unsubsidized employment is unobtainable. Their value to individual participants will likely depend as much on the type of placement as the program. This strategy can be more effective when combined with education and additional on-the-job training. It can help people acquire skills, serve as an economic development strategy in areas of high unemployment, and provide a longer-term sheltered work environment for those unable to compete in the regular job market. These strategies are generally considered as part-time placements, with distinct time limits (either monthly or overall) for participation. In most cases, these strategies are used as a first-step toward long-term employment. Work or community placement programs have limitations as well.10 First, they are often small-scale and assist relatively few social assistance clients. Depending on the activity of non-profit organizations and other agencies, administrators may face challenges securing enough placements. Some potential non-profit employers may be reluctant to hire social assistance recipients since the low or non-existent wage subsidy may not offset the costs of supervision. Like other welfare programs, work experience programs require substantial administration, with staff working to identify worksites, match participants with jobs, and monitor attendance and job performance. As such, work experience programs have hidden costs to both government and sponsors. Finally, some have questioned the effectiveness of using community placement in moving people from welfare to work, when education and training or placement in paid work would appear to be more obvious methods for helping individuals become self-sufficient. 3.3 Long-term Labour Force Attachment Strategies Long-term labour force attachment strategies are becoming the central focus of welfare reforms. Administrators believe that such strategies may mean supporting social assistance clients over an extended period of time. Critics of these policies question whether social assistance recipients will ever be able to secure long-term work. Although no one really knows whether these policies will be successful, many administrators accept that this represents the only option available to them at this time. Thanks largely to the rapid growth of the economy and the employment-first initiative, welfare reform has helped the “job-ready” (those with better education and job experience) return to work in many jurisdictions. Yet, despite the fact that these clients have been able to leave assistance, many will still be in need of supports if they are to consolidate their position in the labour market. Job retention is one element of long-term strategies (Rangarajan, 1998; Rangarajan, Schochet and Chu, 1998; Blank, 1997; Rangarajan, 1996; Burtless, 1995). The other element of long-term strategies concerns those clients who have been unable to find work despite a stronger economy and employment-focused reforms. These harder-to-serve clients face a range of barriers, including poor education, inadequate work history, and family or personal problems. What worked in helping job-ready clients find work will need to be adapted as the remaining clients will require progressively more support to return to work. One approach now places clients into simultaneous programs as opposed to successive interventions of increasing intensity. Job search, training, counselling, education (e.g. literacy, numeracy, high school) and other interventions may be offered simultaneously to both get clients into work immediately and to maintain their attachment. While this case management approach is both labour intensive and expensive, for caseloads representing high-need clients, it may be necessary. In the end, some clients may only be able to retain part-time work, and others may never work in a paid position. Therefore, as long-term strategies become the focus of reforms, an important decision for any welfare administrator is how much to spend on a client’s training and support in order to gain his or her labour market participation. Let us now look at the three lessons that emerged under this heading.
Earned income policies and programs help individuals supplement social assistance benefits with earnings. This is very common in both Canada and the United States. Many recipients combine full-time or part-time work and social assistance. Barring other legislative barriers (such as time limits), many will choose not to exit social assistance until hourly earnings provide an overall income level that exceeds what they can earn when combining earned income with social assistance benefits. A long period of combining income and social assistance benefits is likely given that low-income work, even at full-time, will not generally move a family above the poverty line. As such, administrators have experimented with different forms of earning and income-based policies to promote long-term labour force attachment. These programs generally take one of three forms.11
A fourth policy, lying outside the scope of this research, is the use of minimum wage legislation to provide a higher level of support for those in low-wage work, the type of work for which many social assistance recipients qualify. Some argue that raising the level of the minimum wage would provide a higher base income and relieve some pressure on social assistance to provide an adequate level of support. Given that many social assistance recipients find themselves in low-wage work and that the minimum wage level has an impact on the level of social assistance benefits received, integrating minimum wage policies with the overall reform of the welfare system may be a direction that provincial/territorial governments could pursue.
The connection between education and employability is well established. Better-educated individuals have a lower incidence of unemployment, greater number of hours worked and earnings per hour, and less reliance on government support programs (Kapsalis, 1998). A central question facing welfare administrators is not whether education is important, but how it should be structured to both benefit social assistance recipients and promote the fastest transition from welfare to work. A further question is what level of education should be provided for social assistance recipients and what costs should be borne by them. To further reduce the incentives to collect welfare, while promoting a quick transition from welfare to work, welfare administrators have scaled back the availability of postsecondary education and vocational training programs for social assistance recipients.15 Many jurisdictions have cut their postsecondary educational programs completely, while others require individuals to financially support themselves through grants or student loans, while covering additional collateral supports and living costs through either social assistance or the department of education. Other jurisdictions have retained only short-term vocational training (generally less than one year) as part of their set of interventions. This option, commonly referred to as Purchase of Training, has shown some positive effects, particularly in terms of employability; however, increases in earnings have generally not been significant. Overall, there is some indication that earning impacts may grow in the long term, although in many cases, long-term data supporting this claim are limited (Lemaître, 1993). Those adhering to the philosophy of the “shortest path to employment” see long-term vocational or postsecondary education as extra time on welfare (key informant interviews). Reducing, eliminating or transferring these programs to other funding sources clearly reduces their associated costs. Those jurisdictions transferring this responsibility and funding to other programs may also help deal with the stigma attached to welfare participation, as participants in postsecondary education or vocational training are no longer specifically social assistance recipients, but rather students receiving financial assistance as many students now do. Critics of welfare reform argue that this is nothing more than a statistical sleight of hand that shifts an additional burden onto the poor by increasing their level of indebtedness (key informant interviews). In their view, jurisdictions eliminating support for long-term training deny individuals an opportunity to gain skills and education that could potentially lead to higher wages and long-term employment. It should be noted that the transfer of a greater proportion of financial responsibility from government to the student is indicative of a societal shift in postsecondary funding, and again, not solely a feature of welfare reform. Changes have also occurred in the area of basic education and literacy. Although basic education and literacy, by themselves, do little to move people from welfare to work, most see them as fundamental building blocks in the transition. In general, social assistance recipients have a lower level of education and literacy than non-social assistance recipients, making basic upgrading a necessary first-step for many.16 Presently, the most common educational programs are targeted at those with minimal education and low literacy levels. However, unlike previous remedial educational programs, courses may now couple together services such as literacy or English as a second language, adult basic education, job search, short-term job placement and counselling with classroom and/or on-the-job training. This maintains an employment-first focus. In some cases, this integrated model, combining both education and a work emphasis, has proven to be effective at providing a basis for individuals to continue on with employment or additional training (Butterwick et al., 1998; LaLonde, 1995).17
The goal of most current welfare training programs is employment, giving job-training programs under welfare reform a greater emphasis than past educational and job-training programs. Criticisms of past job-training programs were that trainers often “creamed” participants, focusing on those who were the easiest to train and place.18 In addition, skills provided through training did not always reflect the needs of labour markets. And finally, the length and nature of training was not always effective to accomplish the target goals. Today, training programs are often more closely integrated with private-and public-sector employers and government departments of education. One American program, the Center for Employment and Training (CET), based in San José, California, partners with the private sector to provide marketable skills training and supportive services for the most disadvantaged people. This program assists students with attaining economic self-sufficiency and places them into jobs. Program participants have demonstrated both a long-term attachment to the labour force and an increase in earnings above participants of other programs. This program is growing across America because of its reputation as a program that works.19 Nevertheless, in many jurisdictions, job-training strategies have been scaled back,20 yet new approaches are focusing on direct links to employment opportunities and skill development required to participate in the labour force. Linkages between training programs and private-sector employers are cultivated in many ways. Training programs are often contracted out to third-party training organizations (service providers), including educational institutions, community-based organizations, unions, proprietary schools and private trainers. This process alone will not necessarily guarantee close linkages to the job market. It remains the responsibility of those involved in the contracting process to ensure that trainers develop tight linkages and that training will lead to future employment. Nevertheless, several advantages arise from this type of training:
However, even programs with strong labour market linkages can fail if adequate supports are not provided. In general, job-training programs that provide intensive supports have had significant income increases for the participants, when tested across a range of programs (Butterwick et al., 1998). However, as training shifts to the worksite, accessibility to child care, collateral supports (counselling, life skills) and ongoing income supports are seen by many as necessary for training to be effective. 3.4 Collateral Support Programs Collateral supports are difficult to classify as “welfare reform” per se. For the most part, they should be seen as supports available to low-income families generally, and social assistance families more specifically. As such, supports are an essential complement to welfare reform.
Government offers a range of support programs for low-income families and individuals, including those on social assistance. Most important among these are child care programs such as tax benefits/credits and direct subsidization of child care spaces.21 Ensuring that child care is accessible to clients is mandatory for any welfare reform programming. Jurisdictions that fail to arrange for child care support, while requiring recipients to work or engage in training, will experience limited success and/or impose considerable hardship on families with children. The NCB is widely seen as a critical program in support of welfare reform. The federal government will increase the Canada Child Tax Benefit to $1.7 billion by 2000 to address child poverty. In turn, provincial/territorial governments are committed to developing programs to address child poverty and to encourage low-income families to seek and retain work. Typical examples of provincial/territorial initiatives include:
Several jurisdictions in Canada and the United States have reinvested savings from social assistance into subsidized child care, thereby transferring expenditures from an entitlement program to a consolidation of long-term labour market attachment. Still other jurisdictions have explored how to provide child care through employers, or through less formal arrangements (e.g. through relatives or home-based child care). The end result of these approaches is not a reduction of total social programming. Rather, they transfer expenditures from social assistance to child care and other collateral supports in the hope of consolidating the labour market position of social assistance recipients. If successful, these programs should result in higher tax revenue from earned income at some point in the future. Transportation subsidies are another important support for welfare reform. With the “suburbanization” of the job market, urban workers often need to travel extended distances to a job. Low-rent accommodation and low-wage employment are often not co-located.22 Other areas support subsidized public transit for social assistance recipients, provide additional funding for car repair and licensing, or provide cars on loan from a pool. These approaches are beneficial, but only reduce part of the burden of low-wage employment. Medical supports are also a concern for many social assistance recipients. Extended health care can help subsidize medical costs such as prescriptions, emergency dental coverage, and eyeglasses and eye examinations. These items can represent significant costs for low-income families, and may serve as a disincentive to leave welfare, particularly if someone in the family is ill. Some jurisdictions have attempted to extend these supports for a transitional period. For example, Newfoundland has extended medical coverage six months after leaving social assistance as a result of its own NCB reinvestment strategy. Other types of collateral supports exist, although their availability varies by jurisdiction. Common supports include funding for clothing, tools, haircuts, moving expenses and emergencies. Some jurisdictions have also experimented with loan programs to provide additional funding if required. 3.5 Changes to the Delivery System Government is changing the way it does business. Prompted partly by restraint and partly by private-sector approaches to customer service, government has adopted a range of innovations that also support welfare reform.
Integrated case management is used to offer clients tailored services. The integration of social assistance, employment services, and education and training programs is well advanced in many jurisdictions. Welfare reform has added impetus to this process as it affects other areas, such as employment insurance and school-to-work transition programs. This is another example where welfare reforms parallel developments in education and labour market programming. One reason that unique lessons for welfare reform are difficult to extract is that programs and policies from many areas overlap. Single-delivery networks can also increase the success of welfare reform. Government has adopted single-site delivery for much of the income security system, where clients may arrange employment insurance, check the job listings, register for training and access a range of other services. The single-delivery network allows social assistance administrators to place clients into an employment stream immediately. This is an important step toward changing client perceptions about their obligations to find work. However, co-location does not automatically lead to a seamless integration of social assistance programming on the one hand, and education/training on the other. Many administrators we interviewed admitted that the integration of these two parts of welfare reform still has considerable distance to go. In the United States, the Workforce Investment Act (1998) provides legislation to streamline job training, adult education and literacy, and vocational rehabilitation. The main emphasis of the legislation is to improve coordination between these programs, through the creation of state and local workforce boards and the development of one-stop systems.23 In Canada, Labour Market Development Agreements have a similar intent by fostering greater coordination of services, co-location of resources and stronger linkages in program delivery.
Apart from creating attitudinal changes among clients, welfare reform has also changed attitudes within the system. Administrators have needed to shift from simply determining eligibility and administering payments. Sometimes this has meant changing the role of front-line program administrators to assist clients with becoming more independent. With the decentralization of reforms, front-line program administrators have also needed to be encouraged to develop programs that respond to local needs. Welfare administrators confirmed the importance of a system-wide commitment, and in particular the importance of political direction. In New Brunswick, welfare reforms pre-date the changes to the CAP, as the McKenna government introduced general reform in government systems. The fact that the government had all the seats in the house was also beneficial. In Florida, Democrats and Republicans unanimously supported welfare reforms. In Alberta, welfare administrators credit the explicit commitment of the Premier and Minister of Social Services as instrumental in driving welfare reform. Jurisdictions that have mobilized the political and bureaucratic leadership appear to have achieved the sharpest reductions in the number of cases. Success is maximized when reforms are driven by senior political leadership, embraced by the bureaucracy, and executed by the line staff.
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