14 April 1997
Tough Love the Basis of Welfare that Works
Good welfare policy is hard to make. There are moral issues as well as political and economic ones at stake.
We don’t want to abandon people who are in genuine need and unable to provide for themselves through no fault of their own. Such provision is one hallmark of a civilized society and must be a top priority.
On the other hand, we don’t want to undermine the self-reliance and independence of ordinary people who can and should be able to make their own way in the world. The fact that it is expensive to pay welfare to people who don’t really need it is secondary. Our goal must be to avoid destroying people’s lives through policies that create dependence. People should always be able to see that they make themselves better off through working than through receiving welfare payments.
These ideas have guided efforts at welfare reform in this country, the United States and elsewhere in recent years. They point in the direction of what is popularly called “workfare”, where able-bodied recipients must work in order to qualify for any kind of benefits.
This idea is controversial, and emotions run high when it’s discussed. We need to move past the emotions, though, and try and look at the hard evidence. Does workfare-style welfare reform achieve the results that I’ve suggested a good welfare policy should? New evidence from a province with innovative welfare reform policies suggests that this new tougher approach to welfare works for everybody, for genuine welfare recipients, for the poor who are able to work, and for taxpayers. That province is Alberta.
According the a new study by Kenneth Boessenkool of the C.D. Howe Institute, Alberta has been the first province in recent memory to break the upward trend in welfare caseloads. Across the country, caseloads would shoot up in each recession, but never decline again during economic upswings. The result was a long term ratcheting up of the number of people on welfare, growing dependence and spiralling costs.
Alberta challenged this pattern in two steps. First, they made a conscious effort to change the culture of their social services ministry, so that welfare was clearly made an option of last resort. People were systematically turned away who had not exhausted every other option.
Next, they aligned welfare rates with the real incomes of low-income working Albertans. This reduced the incentive to consider welfare as an alternative to low-income work where such work was available.
Striking results have been achieved. The number of people receiving welfare benefits in Alberta has been almost halved. Nor was this accomplished by striking existing recipients off the rolls. Instead it was driven chiefly by a decline in new applicants getting into the system, people with no previous involvement with welfare. Numbers here have gone down by over two thirds, to hit a low of 4,000 new people joining the rolls every three months at the end of 1995.
Critics charge that the people turned away from welfare did one of three things. They moved to B.C. to take advantage of that province’s higher welfare rates. They moved onto UI. Or they found a new career in crime. Boessenkool found little evidence to support any of these contentions. Unlike earlier economic recoveries, welfare recipients participated fully in the province’s recent employment growth.
He also found something else quite consistent with the new thinking about welfare. Those prevented from falling into welfare dependency often ofound alternative sources of support in the form of provincial education and training programs as well as federal training programs under UI – programs that cost far more than regular benefits. These programs include the formal “workfare” requirement: work in exchange for benefits. All of these programs are costly. These costs, however, are usually temporary, part of helping get people back on their feet and back into the workforce. Compared to long term dependency, this is a big step in the right direction.
Far better to spend more money now instead of leaving people dangling for years on traditional welfare. By reducing the long term welfare caseload, reform frees up at least some of the money that’s needed. Real welfare reform is expensive in the short run. The early evidence, though, shows that it’s money well spent for everyone.
