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Policy Framework
Until recently, reforms of the welfare system did little to alter a reality that can keep low-income families dependent on public assistance: Many who find employment remain poor because they work less than full time, for low wages, or both. To help promote work while reducing poverty, some pilot welfare initiatives created in the early 1990s tried to “make work pay,” an approach in which public funds are used to boost the income of low-wage workers. This strategy was the centerpiece of the Self-Sufficiency Project (SSP), a large-scale demonstration launched in Canada in 1992. Targeted at single-parent welfare recipients, the voluntary program offered a generous earnings supplement to those who left welfare for full-time work.
Sponsored by the Canadian government, SSP was managed by the Social Research and Demonstration Corporation (SRDC). MDRC helped develop and organize the project and had primary responsibility for evaluating it. The evaluation is notable for its rigorous random assignment design and long follow-up period and for collecting extensive data on how SSP affected parents and their children.
Agenda, Scope, and Goals
Relative to other make-work-pay programs, SSP offered a particularly generous earnings supplement that roughly doubled enrollees’ monthly pretax earnings and could last up to three years. To find out whether job search assistance would enhance the supplement’s effects, the demonstration also tested SSP Plus, a variant of the program that offered enrollees services such as résumé help, a job coach, and job leads as well as the supplement.
The SSP evaluation was designed to address the following questions:
- Can offering welfare recipients a financial incentive contingent on full-time work raise employment and income while reducing poverty? If so, do these benefits outlast people’s eligibility for the supplement?
- How does SSP Plus’s offer of employment services in addition to the financial work incentive change the program’s effects on employment, income, and poverty?
- Are SSP’s effects on newer recipients different from its effects on people who have already received welfare for a year?
- What are the costs and benefits of SSP and SSP Plus to the government and to program enrollees?
- How does SSP affect the behavior and school performance of enrollees’ children? Does SSP encourage or discourage marriage and childbearing?
Design, Sites, and Data Sources
The SSP evaluation encompassed about 9,000 single-parent welfare recipients and applicants in British Columbia and New Brunswick who volunteered for the study. Starting in 1992, each one was randomly assigned to one of two groups: the SSP group, which was eligible for the earnings supplement, or the control group, which was enrolled in the traditional welfare program. For a brief period in 1994, single parents in New Brunswick were randomly assigned to the control group or to one of two program groups: the SSP group or the SSP Plus group, which was eligible for the earnings supplement plus employment services.
Because people were assigned to the program and control groups at random, the groups did not differ at the outset of the study. Therefore, any differences between them that emerged during the follow-up period can be attributed to the SSP programs.
To qualify for the SSP supplement, enrollees had to start working full time (that is, at least 30 hours per week) within two years of entering the program. They could not receive cash welfare and the earnings supplement at the same time.
Three separate analyses were conducted to estimate the following:
- The effects of SSP on long-term recipients, that is, people who had received cash welfare throughout the previous year
- The effects of SSP on applicants, that is, people who were beginning a new spell of welfare receipt
- The effects of SSP Plus on long-term welfare recipients
The data sources for the evaluation included surveys conducted at the time people were randomly assigned and — for long-term recipients — 18, 36, and 54 months thereafter. Welfare applicants were surveyed at random assignment and 12, 30, 48, and 72 months thereafter. Administrative records were used to gather information about welfare payments and supplement payments as well as use of SSP Plus program services.
Findings
Findings from MDRC’s evaluation of Canada’s Self-Sufficiency Project can be found in Making Work Pay: Final Report on the Self-Sufficiency Project for Long-Term Welfare Recipients and Can Work Incentives Pay for Themselves? Final Report on the Self-Sufficiency Project for Welfare Applicants.
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