Publications

Report

SSP Plus at 36 Months: Effects of Adding Employment Services to Financial Incentives

07/2001

Since the mid-1990s, welfare caseloads have declined dramatically as the economy has improved and federal and provincial reforms have been implemented to encourage or require welfare recipients to work. When welfare recipients begin working, however, they typically obtain low-wage jobs that make them only slightly better off than they would be under welfare. In addition, many welfare recipients have trouble making the transition from welfare to work.

The Self-Sufficiency Project (SSP) met this challenge head-on. SSP is a research and demonstration project designed to test a policy innovation that makes work pay better than welfare. Conceived and funded by Human Resources Development Canada (HRDC), managed by the Social Research and Demonstration Corporation (SRDC), and evaluated by the Manpower Demonstration Research Corporation (MDRC) and SRDC, SSP offered a temporary earnings supplement to selected long-term income assistance (IA) recipients in British Columbia and New Brunswick. The earnings supplement was a monthly cash payment available to single parents who had been on income assistance for at least one year and who left it for full-time work. The supplement was paid on top of earnings from employment for up to three years, as long as participants continued to work full time and remained off income assistance. While collecting the supplement, single parents received an immediate payoff from work; for those working full time at the minimum wage, total income before taxes was about twice their earnings.

Although SSP’s financial work incentives have been found to encourage work for many, only about one third of people who were offered its earnings supplement were able to find jobs that allowed them to take up the offer. Many simply failed to find the full-time jobs that would have made it possible for them to participate, which raises the question of whether more of these recipients would have used the earnings supplement if they had been offered job-search and other assistance. Many of the people who did take advantage of the supplement offer soon lost their jobs, raising a second question: Would employment-related services help new job takers hold onto their jobs?

The SSP Plus program, which offered both a financial incentive and services, was designed to address these questions. To study the effects of the program, a small group of IA recipients in New Brunswick was offered both the earnings supplement and a range of employment services (SSP Plus), including help finding work, keeping a job, and advancing in a career. A second group was offered the earnings supplement only and a third group was offered neither supplement nor services. People were randomly assigned to one of these three groups.

Findings in Brief

This report describes the effects of the SSP Plus program through three years after random assignment. It presents an update of findings reported by Quets et al. (1999), which provides detailed information on what services the program offered and how the delivery of services was implemented. The current report has three main findings:

  • The addition of services helped a large number of people find full-time work and take advantage of the supplement offer. About one half of people who were offered both the earnings supplement and employment-related services found full-time work in the year after entering the program and, therefore, qualified to receive the program’s earnings supplement. In contrast, only about one third of a comparable group that was offered only the program’s earnings supplement was able to find full-time work during this period.
  • The combination of services and earnings supplement generated very large effects. More than twice as many people who were offered SSP Plus than were offered neither the supplement nor employment services worked full time. In addition, SSP Plus increased earnings by more than $100 per month and increased income by nearly $200 per month. At the same time, far fewer of those who were offered the earnings supplement and services remained on income assistance than did those who were offered neither.
  • Most of the effects of SSP Plus stemmed from the supplement offer. Adding services to the program’s earnings supplement had small effects on employment, earnings, income, and welfare use. A comparison of the SSP Plus program group with a comparable group that was offered only the program’s earnings supplement revealed few differences in outcomes. The program had scant effects on employment, full-time employment, and cash transfer payments. However, it did reduce the number of people who received income assistance, and it increased income by $21 per month. The added effects of SSP Plus services appeared to be growing at the end of the period discussed in this report and it remains to be seen whether that trend continues.