by Niels Veldhuis, Amela Karabegovic, and Milagros Palacios
Surrey MLA Jagrup Brar’s attempt to spend January living on the $610 welfare rate for a single employable individual has succeeded in getting people talking about the adequacy of welfare. Brar’s actions are in response to a challenge issued by Raise the Rates, a coalition of community groups that wants to double welfare benefits.
But despite all the publicity Brar has received, the reality is that for most recipients, welfare is adequate and raising benefits would only create further welfare dependency.
To have an informed debate about the adequacy of welfare, it is important to understand that the level of benefits changes depending on the recipient’s family situation. British Columbians with children and/or those with a disability receive significantly more than those classified as “employable singles.” It is the latter category that pays the least amount ($610 a month).
In addition, welfare recipients (again depending on family situation) receive other types of social assistance payments including GST and HST tax credits, the Canada Child Tax Benefit and the federal government’s Universal Child Care Benefit (UCCB).
Had Brar, who has a wife and two children, applied for welfare as a family, he would have received approximately $1,800 a month. It’s certainly not an abundance of money for a family of four but enough to pay for the absolute necessities his family would need (shelter, food, and clothing).
The level of income needed to cover “basic needs” in different provinces has been estimated by Chris Sarlo, a professor of economics at Nipissing University. The basic needs level of income is the income needed to buy a nutritious diet, shelter, clothing, personal hygiene needs, a telephone, public transportation, household insurance, out-of-pocket health and dental care costs, and a host of other items. In other words, the “basic needs” level of income covers significantly more than the absolute necessities.
In B.C., the annual basic needs level for a family of four was $25,377 in 2010. Social assistance (welfare and other benefits) would have provided $21,608 or 85 per cent of this income. For single-parent families with one child, the basic needs income was $17,975, of which social assistance provides $17,121, or 95 per cent. For British Columbians with disabilities, social assistance provides 100 per cent of the income needed to afford basic needs.
Fortunately, the B.C. government has set welfare benefits so that total social assistance roughly coincides with the basic needs level. And even in situations where social assistance is not quite enough to meet all of the basic needs it doesn’t mean that these British Columbians are starving or go without adequate shelter. Further, the “basic needs” income level assumes families have out-of-pocket health (i.e. health premiums) and dental care costs that, in the case of low income British Columbians, are often covered by charitable organizations, community clinics and governments.
In fact, the only cases in which social assistance is significantly below the basic needs level is for single employable individuals. This, however, is deliberate.
The level of benefits available to single employable recipients reflects the fact that they are not expected to collect welfare on a long-term basis. Single employable British Columbians should be working and welfare should not be an attractive alternative for them.
This brings us back to Raise the Rates’ goal of doubling welfare benefits for single employable individuals to $1,300. Doing so will increase the number of people on welfare and create a larger problem of welfare dependency.
Consider Ontario’s experience in the 1980s when that province more than doubled welfare benefits (after adjusting for inflation). The number of welfare recipients more than tripled, from 389,800 in 1981 to 1.4 million in 1994 (to 12.8 per cent of the Ontario population).
Rather than raise welfare benefits, a much better way to help those on welfare, including single employable individuals, is to give them an incentive to work.
For starters, the B.C. government should allow those on welfare to work and keep a certain amount of what they earn without a reduction in their welfare benefits. This would bring balance to the welfare system by helping people in a tough spot while ensuring the program does not create dependency.
Welfare was always intended to be used as temporary assistance for the truly needy, not a permanent source of income. Despite all the media attention Brar’s experience has received, current welfare rates in British Columbia are adequate.
Niels Veldhuis, Amela Karabegovic, and Milagros Palacios are economists with the Fraser Institute.
