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"Each individual should allow reason to guide his conduct, or like an animal, he will need to be led by a leash."
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Sunday, August 06, 2006

American-style welfare reform

Remember the Common Sense Revolution in Ontario and the Harris Tories' welfare reforms? Remember the hysterical tirades in and out of the Legislature, the CUPE, OPSEU and teachers' union protests, the storming of Queen's Park by the Coalition Against Poverty, the "Days of Action" and the "civil disobedience"? Similar scenarios were played out in BC when Gordon Campbell's government attempted similar reforms. A major result of all this is that serious discussion of welfare reform is effectively off-limits in Canadian "civil society".

The July 29 issue of The Economist has a great article ("From welfare to workfare") which analyzes the legacy of American welfare reforms enacted 10 years ago during the Clinton administration and initiated by the Republican-controlled Congress. The reforms imposed five-year time limits on receipt of welfare benefits , gave states incentives to reduce their welfare rolls, and gave them money and flexibility to experiment with programs to get people off welfare and into the workforce. You should read this article if you want to be prepared for a debate on welfare in Canada. Here are the salient points:

  • After peaking in 1994 (two years before the reforms, when many states were experimenting with their own reforms), welfare case loads have fallen by 60%, from 5 million to 2 million families.
  • The biggest increase in employment rates was for single mothers, from 44% employment in 1993 to 66% in 2000.
  • The poverty rate in the U.S. dropped from 15.1% in 1993 to 11.3% in 2000, despite predictions that welfare recipients being cut off from benefits would drastically increase poverty.
  • Part of the increase in employment can be attributed to the booming economy, but according to a University of Chicago/RAND Corp. study, this could only plausibly account for one-third of the drop in welfare case loads.
  • The earnings of women who left welfare for employment rose by more than their cash assistance fell; on balance their net incomes rose by 25% in real terms. Many women who started out in entry-level minimum-wage service jobs got enough training and education, with government help, to enter careers like teaching, nursing or social work. Not only was their pay boosted sharply, but they also now receive health insurance and other benefits.

The article does find that between 10 and 15 percent of former welfare recipients are currently neither working nor on welfare, and much of this group is made up of people with mental or physical disabilities or substance-abuse problems. Clearly there is a hard-core group of people that have not been helped by welfare reforms, but the states are in a much better position to target programs at this group than they were before the reforms.

Lots of work still has to be done in the U.S. to reduce poverty, but the lesson here is that the heartless Republican reforms of 10 years ago that prompted doomsday scenario predictions from the left actualy helped poor people. Canadians (especially left-wing Liberals and NDPers) would be wise to heed this lesson.

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