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June 05, 2006

Welfare in the North

According to Laura Turner, Canada experienced a larger drop in welfare rolls between 1995 and 2004 than did the US, even though we instituted tough welfare reform laws and they, well, didn't. That suggests welfare reform "worked" largely because of the superheated economy of the late-90's, rather than a rejiggering of the perverse incentives set by modest income supports. As it is, I'm not really an opponent of welfare reform (though I would have constructed it a bit differently), but this is interesting data.

On the other hand, maybe Canada's not so kind after all. The report (pdf) Laura's using does indicate that has seen dramatic cuts across the region (for instance: "a single employable person in Prince Edward Island got provincial benefits of $10,039 in the peak year of 1986 and a comparable benefit of $5,988 in 2004. That represented a loss in dollars of $4,051 or a drop in income of 40.4 percent."), and even admits that "the notion of keeping welfare recipients very poor is deeply ingrained in the modern-day political psyche almost everywhere in Canada." So has the strategy of our northern neighbors been to simply make welfare inadequate, and thus force an exodus from, the rolls? What say you, Canadian readers?

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Comments

Hey, the same strategy would work for Medicaid in US. Just cut the benefit, let people die, and magically costs and participants go down.

The DC Repubs are now talking about making Medicaid a block grant program, which is surely the first step to gutting the program by just cutting the block grants each year.

Posted by: JimPortlandOR | Jun 5, 2006 9:31:27 AM

Sadly, it is one of the few points of consensus in Canada that welfare should be kept to below-survival limits.

This wasn't always so, but when the Liberals took over in 1995, they were actually much harsher than previous Conservative governments. They cancelled a bunch of revenue-sharing, and provinces responded by cutting welfare, education, and health care.

Posted by: dymaxionworldjohn | Jun 5, 2006 10:03:51 AM

Shameful. Well, there's your canadian surplus miracle, in a nutshell. As a canadian, I find this news quite disconcerting. Good thing is (for me that is), I've escaped to France.

Posted by: A. Cottreau | Jun 5, 2006 1:00:13 PM

Welfare is a provincial responsibility, although traditionally there were substantial federal contributions. In the 90s, the federal government cut transfer payments drastically. A number of provincial governments, most notably Ontario's, cut welfare, and they all instituted some level of administrative hurdles to make it more difficult for able-bodied single types to get it. Canada's "welfare reform" was different in detail than in the US, but the general tendency was the same.

Posted by: Pithlord | Jun 5, 2006 1:15:15 PM

Yeah, like Pithlord said, Canada did instigate welfare reform much like the US -- minus federally mandated timelimits (the federal government relaxed all the things provinces had to do to get federal funding, including using a strict needs-test. None of the provinces have gone Mississippi-style draconian, but the devolution of responsibility to the provinces/states is basically the same, and many provinces have made it harder to get on the rolls.)

But the real reason the rolls have fallen is that newer benefits like the big new post-1998 Child Benefit and Child Benefit supplement were basically conditional on the parent working. They go to welfare families but are clawed back in most provinces. If you're a low-income wage earner, there's no clawback. As well, most provinces use really draconian earnings exemptions with one-for-one deductions of benefits for earned income after like $100 a month. So it's work or welfare.

I'm not sure I think it's shameful that the rolls fell. 3 million recipients in a country of 28 million (in 1996)is a lot of welfare users. The thing is that by halving the rolls, most remaining recipients are people who really do need welfare and the replacement rates are disgraceful. Especially for disabled individuals -- usually less than 50% of the LICO poverty line. And these are people who, by definition, can't work. So we're no socialist utopia -- and the biggest cutters of all are actually the provincial Liberals who are in power in my province!

Posted by: laura | Jun 5, 2006 5:17:40 PM

Canada is actually a terrible example if you want to make the case that welfare caseloads have nothing to do with public policy. When social democratic governments gave way to neo-conservative ones in Ontario in 1995 and in B.C. in 2001, there was a quick drop.

Both Ontario and B.C. made a lot of noises about workfare, although neither really implemented anything.

There was also a federal unemployment insurance reform, but that was mostly reversed when the Liberals lost a bunch of seats in Atlantic Canada.

Posted by: Pithlord | Jun 5, 2006 5:28:35 PM

Yeah; the point I was making on my blog isn't that Canada didn't engage in public policy designed to get people off welfare and that the drop in the rolls "just happened" because of the economy. What surprised me was (a) how big the drop actually was and (b) that explicit time limits aren't apparently a big determinant of the size of the rolls -- since that's what everyone talked about with the US and UK welfare reforms.

Posted by: laura | Jun 5, 2006 8:19:18 PM

laura,

I don't think you were doing that, but Ezra sort of was.

Posted by: Pithlord | Jun 6, 2006 8:26:50 PM

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