Creating an Alternative to Welfare: First-Year Findings on the Implementation, Welfare Impacts, and Costs of the Self-Sufficiency Project - December 1995

This is one of two reports being published simultaneously on the Self-Sufficiency Project (SSP), a research and demonstration project conceived and funded by Human Resources Development Canada (HRDC), and managed by the Social Research and Demonstration Corporation (SRDC). SSP seeks a solution to an urgent social problem: the increasing poverty and welfare dependence of single-parent families, who are more likely than two-parent families to have low in comes and long stays on Income Assistance (IA). These twin conditions - poverty and dependency - have devastating consequences for families, but also for the rest of society, which must bear heavy social and economic costs. Unfortunately, attempted solutions have often targeted one of these conditions while exacerbating the other.

This dilemma is reflected in the experience of welfare-dependent families. Because many single-parent welfare recipients have low levels of education and limited work experience, starting wages are often less than welfare payments. Thus, it is not uncommon for single parents on welfare to confront a stark choice: either continued dependence on welfare or a lower in come in the work world, at least until wages rise with increasing experience and skills. Going to work also brings the stress of combining job and family responsibilities - a problem common to working women, but especially acute for low-wage single mothers working full time.

SSP provides a third option for single-parent IA (welfare) recipients caught between the choices of low-wage work and continuing welfare dependence. SSP offers to supplement the earnings of single-parent IA recipients who have received benefits for at least one year, as long as they leave the IA rolls and take a full-time job (at least 30 hours per week). The supplement is time-limited: Recipients who find a job within one year of being offered the supplement can receive supplement payments for up to three years. It is also generous: SSP's earnings supplement effectively doubles the income of workers who take jobs paying as much as $8.00 an hour. Thus, SSP solves a common problem for long-term IA recipients who go to work: low starting wages.

This report is the early document of record for the SSP project. It provides a wealth of information on the rationale, design, and early implementation of SSP's earnings supplement program, the structure and methods of the SSP evaluation, and SSP's first- year costs and welfare impacts. SSP traversed a long road from policy idea to operating program. This report describes that journey: the early research efforts to determine an appropriate earnings supplement amount and program design, the development of those early plans into office and payment procedures and systems, the challenge of informing IA recipients about an unusual new program, and the evolution of the program as it adapted to the needs of its early clientele. The report also describes SSP's sample members, who were selected at random from the population of long-term, single-parent IA recipients in the lower mainland of British Columbia and the lower part of New Brunswick. Finally, this report reviews the early successes of the program: The most significant one is that, despite many barriers to employment, a third of those eligible for SSP's earnings supplement program chose to leave IA and go to work full time, with participation in the program resulting in a significant decrease in welfare receipt.

This report's companion publication is The Struggle for Self-Sufficiency, a study based on focus group interviews with some of the people who were offered the supplement opportunity. The report addresses a broad range of issues related to SSP and self-sufficiency from the perspective of - and often in the words of - the single parents themselves.

In early 1996, SRDC will publish the first comprehensive analysis of SSP's early impacts on employment, earnings, and welfare receipt, entitled Do Financial Incentives Encourage Welfare Recipients to Work? This latter report will take full advantage of SSP's exceptionally rigourous research design, in which half of the people who agreed to be part of the study were randomly chosen to be eligible for the SSP earnings supplement, while the other half, similar in every way to the SSP-eligible group, became a "control" group whose behaviours over time will reveal what would have happened to the SSP-eligible group in the absence of SSP. This evaluation technique ensures that the opportunity to benefit from SSP's earnings supplement was distributed fairly and without favouritism among a large pool of potential beneficiaries. It also ensures that the SSP evaluation will provide reliable information about whether program participation leads to changes in employment and earnings, welfare dependence, and other measured activities, since it enables researchers to compare the long-term behaviour of those who were eligible for the supplement with a similar group of individuals who were not.

SRDC is a nonprofit organization created with the support of HRDC. Its mission is to identify social policies and programs that improve the self-sufficiency and well-being of unemployed, economically displaced, and disadvantaged populations. SRDC designs and manages research and demonstration partnerships, bringing together public and private organizations, researchers, and service providers in order to test new policy ideas and to discover the difference social programs make to participants and to society. SRDC's goal is to provide a framework within which organizations and individuals with diverse agendas can work together on projects requiring complementary strengths.