Reconnecting Social Assistance Recipients to the Labour Market - March 2000

Reconnecting Social Assistance Recipients to the Labour Market

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• Introduction
• Origins of welfare reform
• The lessons from welfare reform
• Conclusion

Although frequently spoken of as a new phenomenon, "welfare reform" is as old as the welfare system itself. The term "welfare reform" is universally understood to mean changes to the social/income assistance programs with a view to reducing caseloads and increasing the labour force attachment of recipients. In general, welfare reform represents a legislative, philosophical, and administrative shift. As the millennium unfolds, welfare has increasingly shifted from being an "entitlement" program designed to help fight poverty, to a more temporary support intended to promote individual self-sufficiency through attachment to the labour force. It is this latter shift, and the change in legislation that has accompanied it, that has given recent welfare reform its distinct character as a program that is integrated with other labour market development programs, specifically education and training.

A major impetus for welfare reform has been the persistence of high caseloads despite improved economic circumstances. Until the mid-eighties, a reduction in unemployment levels usually meant that social assistance caseloads would decrease. In the past decade that has not been the situation.

Beyond the volume of cases, the composition of these caseloads also began to worry administrators. In Canada, social assistance has included young single adults who many believe should be employed or in school. It also has included a growing number of children in social assistance families.

Other factors that have helped prompt the move towards welfare reform include:

• the public opinion shift to less government spending;

• traditional educational and vocational training strategies for social assistance recipients (primarily classroom based and voluntary) seem to have failed in reducing caseloads;

• many observers argue that long-term social assistance has corrosive effects on children; and

• finally, for some people on social assistance, accepting a low wage position was often economically irrational. Recipients could earn only relatively small amounts without resulting in a reduction or elimination of benefits.

In reviewing initiatives across North America, it is possible to categorize lessons according to five main policy themes. It should be remembered that these themes provide a general framework, and not mutually exclusive categories. In addition, due to the recent character of many reforms, there is a need to exercise caution in order to avoid drawing premature conclusions.

Legislation / Regulation

While legislative and regulatory changes have been necessary for a more effective integration of social assistance programs and labour markets, alone they have been insufficient for promoting the economic independence of clients. For those jurisdictions concerned with the end state of their clients, these areas have moved on to incorporate both short and long-term interventions to facilitate their clients' transition to paid employment.

Short-term labour force attachment strategies

Many jurisdictions have used employability assessments at the initial point of application for social assistance. 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). However, in light of the complex heterogeneity of the clientele, debate exists about the effectiveness of these assessments. Employability remains a very hard concept to identify and define, particularly for those who face barriers to employment.

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. However, the evaluation data suggests 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.

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, such as "workfare" and wage subsidies. These programs can be more effective when combined with education and additional on-the-job training. They 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.

Long-term labour force attachment

Long-term labour force attachment strategies are becoming the central focus of welfare reforms. Administrators believe that such long-term strategies may mean supporting social assistance clients over an extended period of time. Although no one really knows whether these policies will be successful, an important decision for any welfare administrator is how much to spend on a client's training and support in order to gain their labour market participation.

Increasing the allowable level of earned income, earned income tax credits and employment subsidies have all proved to contribute to returning social assistance recipients to work. As with any program under welfare reform the evaluation information comprises a wide range of experience and success.

The connection between education and employability is well established. Better educated individuals have a lower incidence of unemployment, greater hours worked and earnings per hour, and less reliance on government support programs. 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. Presently, the most common educational programs are targeted at those with low education and literacy levels. However unlike previous remedial educational programs, courses may now couple together services such as literacy or ESL, adult basic education (ABE), job search, short-term job placement and counselling with classroom and/or on-the-job training. This maintains an "employment first" focus.

Presently, training programs are often more closely integrated with private and public sector employers. While in many jurisdictions, job-training strategies have been scaled back in length; they are now more directly linked with employment opportunities. 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.

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. The most common supports relate to child care, transportation, work expenses, and personal issues.

Changes to the Delivery System

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.

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, especially the needs of local employers. This last point has required that governments, businesses, and educational institutions work in partnerships to best serve clients.

While the current round of welfare reform has been successful when judged by the number of recipients who have moved off the welfare rolls and into some type of employment, concern still exists over the resilience of these recent gains if there is a future recession. In order to be in a better position to evaluate welfare reform's effectiveness, other success criteria such as changes in the standard of living, wage increases, or the ability of clients to move up the occupational ladder once off of welfare, will need to be incorporated. The main difficulty with adopting new success indicators is that there is limited or no mechanisms for tracking the outcomes of clients who leave the welfare system entirely through successful employment.

As the remaining social assistance clients, with poor education and weak job experience present more complex and difficult problems, alternatives to work-based welfare reform may need to become a larger part of the reform process. An important and often understated view is that citizens, according to their ability, should have the opportunity to be involved in rewarding activity both socially and personally. For those social assistance recipients who are unable to maintain full-time paid employment they may combine part-time work, community service work, or volunteer work, with some form of assistance as options that could support their participation in society.