Less Income for More Hours of Work: Barriers to Work for Social Assistance Recipients in B.C.

The School of Public Policy Publications, 2020

29 Pages Posted: 20 Aug 2020

See all articles by Gillian Petit

Gillian Petit

University of Calgary - The School of Public Policy

Craig Scott

University of Calgary - The School of Public Policy

Blake Gallacher

University of Calgary - The School of Public Policy

Jennifer Zwicker

University of Calgary - The School of Public Policy

Lindsay M. Tedds

University of Calgary - The School of Public Policy; University of Calgary - Department of Economics

Date Written: July 8, 2020

Abstract

Individuals accept additional paid work, in terms of salary increase or more hours, with the expectation they will be financially better off than before. Unfortunately, for recipients of Income Assistance in the province of British Columbia, additional hours of employment or an increase in wages, such as an increase in minimum wage, in some circumstances may actually take money out of their pocket. This is due to the design of Income Assistance and its unintended interactions with other income and social support programs and the tax system. In this paper, we illustrate cases where B.C. residents receiving Disability Assistance or Temporary Assistance (the two main programs that comprise Income Assistance in B.C.) have less after-tax income after working additional hours of employment.

In modelling after-tax income for recipients of Disability Assistance and Temporary Assistance as they increase their hours of paid work, we detail when and how additional income earned from paid work affects not only their income assistance levels, but also their eligibility and receipt of some general and health-related supplemental benefits. We show that, as Income Assistance recipients allocate more hours to paid work, the reductions in total after-tax income can be sizable. For example, if a single person receiving Disability Assistance (earning a wage of approximately $15 per hour) increases his or her paid work hours from 16 hours a week to 35 hours a week, it reduces his or her total after-tax income by $1,500 a year. This loss is not just limited to a decline in after-tax income. Access to some general and health-related supplemental benefits provided to Income Assistance recipients may also be lost from working these additional hours.

By addressing these program-design elements of the current Income Assistance program, the B.C. government can improve the well-being of those receiving Income Assistance. Reforms may also decrease expenditures on Income Assistance in the long-run. Allowing recipients to increase their hours of work or earnings within the year, as their situation permits, without the risk of having their benefits reduced, may actually help more people transition from Income Assistance towards permanent employment, thus breaking the cycle of poverty and increasing social inclusion.

Many recipients of Income Assistance already face numerous barriers to paid work, other than those analyzed here, as the result of disability-related employment constraints. After-tax income reductions like those described here create another barrier to employment for these populations that the B.C. government can and should address. Canada’s commitment to improving social inclusion for specific populations, such as persons with disabilities, heighten the importance of identifying inequalities and poverty traps within our income assistance system. Institutional barriers to inclusive activities such as employment must be removed to meet these commitments.

Keywords: income assistance, disability policy, social inclusion, employment

Suggested Citation

Petit, Gillian and Scott, Craig and Gallacher, Blake and Zwicker, Jennifer and Tedds, Lindsay M., Less Income for More Hours of Work: Barriers to Work for Social Assistance Recipients in B.C. (July 8, 2020). The School of Public Policy Publications, 2020, Available at SSRN: https://ssrn.com/abstract=3655192

Gillian Petit (Contact Author)

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

Craig Scott

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

Blake Gallacher

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

Jennifer Zwicker

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

Lindsay M. Tedds

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

University of Calgary - Department of Economics ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

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