September 7, 2001
The Velvet Glove Of Welfare Reform
Largely unheralded, a notable anniversary slipped quietly by in the third week of August. Five years have passed since Democratic U.S. President Bill Clinton signed his country's massive welfare reform package into law. How has it worked out?
The numbers are impressive. The raw statistics show that in 1996 4.4 million American families were collecting welfare. By last year that number had been carved in half. The question is whether that movement from dependency to work happened because of the reforms or because of a buoyant economy. The fact that only two Canadian provinces - Alberta, and then Ontario - made similar changes allows for objective comparison. The whole continent's economy boomed over that period. Did Canada's welfare population decline at the same rate as the U.S.'s?
Not even close. Both countries experienced sharp declines in the number of welfare cases, both in absolute terms and as a percentage of the population. But the reduction of caseloads in the United States between 1994 and 2000 was on the order of 59.4%, from 14.2 million to 5.8 million people, while in Canada the amount of people on public assistance declined by only 32.7%, from 3.1 million to 2.1 million. In short, American caseloads shrank by 60% and those in Canada by only a third.
Astonishingly, we're no further ahead than we were a decade ago. As three Fraser Institute scholars point out in a new study comparing welfare reform north and south of the 49th parallel, "Although Canada has experienced a decline in the number of welfare beneficiaries since the peak during the mid-1990s, the number . . . is still above [that] at the beginning of the decade. In fact, there were actually 155,000 more welfare beneficiaries at the end of the 1990s than there were at the beginning of the decade." The Canadian economy boomed too, but dependency increased. Welfare reform in the United States explains the difference.
Canadians view themselves as being more compassionate than their southern neighbours, but the question remains whether generous welfare policies actually help the people that receive benefits. More stringent work requirements in the U.S. have reduced the number of single parent families living in poverty 3.8 million to 3.1 million, a significant advance for a segment most chronically affected by poverty. In both countries, surveys of those who made the leap from welfare to work consistently demonstrate improved living standards and increased levels of personal happiness.
Nor is it true that reduced welfare caseloads have lowered the cost of compassion. American welfare reforms have actually increased spending on social services in many regions. State agencies were allowed to experiment with different program options, and most found that a key element of success was increased spending on support services - daycare, transportation subsidies, education and training for new workforce entrants. Such programs may be more expensive, but they increase the chances for lasting employment and more productive, happier lives.
In a new report on welfare reform, the Brookings Institution confirms this point and adds a crucial element to the mix: "To build adaptable and accountable state welfare systems, researchers say the states should integrate services for families with multiple problems and provide more help to the working poor. . . . And they point out that currently both federal and state governments lack the local data needed to track not only welfare families but the working poor and others needing aid beyond cash assistance and work training."
Local knowledge of individual families and their needs is the important tool that faceless welfare bureaucracies lack. They don't measure poverty accurately, because they can't or won't include in their measures the community and family supports that augment public assistance. Nor do they include income from the underground economy, a mainstay of the young, urban poor. You can't target benefits to the truly needy without that crucial information, and you won't get it unless benefit assessment is decentralized.
The U.S. has broken up the public welfare delivery monopoly much more extensively than Canada. Although more of the work here is moving to non-profit organizations like Klinic, it's nothing compared to the mobilization of religious organizations south of the line. The 1996 reforms included a "Charitable Choice" provision to tap this resource. "Preliminary research demonstrates," the Fraser reports, " that . . . as a result of faith-based reforms, congregations have moved away from providing commodities to the poor and instead have started to focus on working with individual recipients through mentoring and face-to-face contact, which has yielded positive results."
Alberta recently conceded the value of at least localizing welfare benefits. It will revamp its welfare rates to match the different cost of living in different communities. The Filmon government did the opposite by moving most benefit delivery away from municipalities. The Tories did improvise a workfare program, but the incoming NDP government canceled it. Boxes of scrip flow from the government treasury out to folks whose lives and fortunes are a complete mystery to the cheque-writers.
Are we doing the poor a favour by making them anonymous? The notable American program of moving people from welfare to work reconnected the able-bodied poor with responsibility. Call it a velvet glove. Deliberate and focused help guiding people into the workplace, using accurate data from personal contact.
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."