US, Canada: jobs that help shed welfare dependency

One of the most difficult challenges facing any society is chronic poverty.

A decade of economic prosperity and welfare reforms have brought dramatic cuts in the number of people getting public handouts. But how do governments help the "hardcore" poor - those who just manage to get off welfare for a year or two, before sliding back into poverty and reliance on state subsidies?

In Canada, and in several US states, there's growing evidence that one way to break the cycle of poverty is by adopting a system that actually boosts the range and amount of government support. Or at least temporarily continues to provide government subsidies to people, even after they get a job.

Take Michelle Medcalf of Coon Rapids, Minn. This single mother had been in an abusive relationship and for years she'd been on and off welfare.

"It seems so long ago," she now says of the dark days in 1992 when she moved to Minnesota with her small son. But Ms. Medcalf has since gone from chronic welfare dependency and a lack of any career goals to responsible fulltime employment in which she helps others get off welfare.

She is a "graduate" of the Minnesota Family Investment Program to "make work pay." MFIP not only lets welfare recipients keep their earnings from work, but their public assistance as well, until their total incomes are 40 percent above the poverty line - or $18,648 annually, for instance, for a family of three.

MFIP also provided job counseling and other support. At the time, MFIP was just a pilot program. Medcalf's first job was a clerical position for the state. "My counselor called to say, 'Michelle, there's a job. I advise you to call.' I was scared. But I thought, she believes in me. The same day I interviewed, I got the job," Medcalf says. "My counselor gave me a lot of support. That was a huge piece of it. With AFDC, you didn't have that support. I learned how to network, to find other people who could move my career forward."

Medcalf has moved progressively from one job to another. Since July 1997, she has been completely off assistance. The idea behind this and similar "make work pay" programs is not just to get welfare recipients off the dole as quickly as possible, but to ensure that when welfare recipients take jobs, they don't incur so many additional expenses such as child-care, for instance, or lose so many benefits like Medicaid and subsidized housing that they are worse off than before.

In recent years, several North American jurisdictions have yielded "hard evidence" that making work pay helps reduce long-term welfare dependency, says Gordon Berlin of the Manpower Demonstration Research Corporation in New York, a social-policy research organization. He adds that it's "something we can feel good about."

There are at least two impediments to broad adoption of this system, however. "We understood it would cost more" to make work pay than just focus on cutting welfare rolls, says Charles Johnson of the Minnesota Department of Human Services. The first is that making work pay isn't cheap.

Indeed, when the MFIP went from a trial to a permanent program, the income level for easing recipients off assistance was lowered from 140 percent of poverty level to 120 percent. Nowadays a family of three, for instance, would leave assistance when their income reached $17,052. The other obstacle is time. It takes years for social scientists and policymakers to measure whether this kind of program works long term.

But fresh evidence that it does is coming in from Canada's Self-Sufficiency Project. This was a federal government experiment conducted in British Columbia and New Brunswick from 1993 through 1998. Single parents who had been on welfare for a year had up to a year to find a full-time job. If they did, they would qualify for a cash supplement to their earnings, which would effectively double their income for three years.

The Social Research and Demonstration Corporation (SRDC), the Ottawa agency that conducted the SSP experiment for the Canadian government, has found that 28 percent of participants were still employed three years after their supplements expired. This was nine percentage points above a control group receiving no supplement for getting off welfare.

"We need to get a substantial number of our participants far enough beyond the withdrawal of the supplement to ensure that they're not just using short-term strategies, such as spending down savings," to maintain their headway against poverty, says John Greenwood, executive director of the SRDC. "We're optimistic."

The new approaches appear to be coming at a time when the popular mood in both the US and Canada is more ready to accept positive incentives rather than just punitive approaches to welfare.

"Six years ago, the discussion was on reducing dependency - on getting tough in a variety of ways," says Tom Corbett, associate director of the Institute for Research on Poverty at the University of Wisconsin in Madison. "Now that the caseloads have dropped dramatically, I think the discussion is quite different.... There's a recognition that getting the first job is not enough."

Indeed, it used to be that a dollar earned in a job was a dollar docked from benefits. But over the past several years, 44 states have increased their earned-income disregard so that welfare recipients can keep more of their earnings. It's not quite the same as the cash supplements paid under Canada's SSP, but it has a similar effect: It makes work pay.

And despite the get-tough approach some states have taken by insisting on time limits, they've also been implementing the kinder, gentler approach that encourages work. It's an "inherently contradictory" message that states are going to have to somehow reconcile, says Mr. Berlin.

(c) Copyright 2000. The Christian Science Publishing Society