The internationally known Self-Sufficiency Project (SSP) demonstrated that single parents who were long-term welfare recipients would leave income assistance (IA) for full-time employment faster if work could be made to pay significantly more than welfare. SSP also showed that this could be accomplished while increasing employment earnings and reducing poverty. The increased taxes revenue and lower transfer payments paid for much, or in the case of new welfare applicants, almost all of the cost of the program.
This widely recognized randomized experimental study was funded by Human Resources and Skills Development Canada (HRSDC) and conducted by the Social Research and Demonstration Corporation (SRDC).
SSP offered substantial supplements to the earnings of single-parents who had been IA recipients three or more years, but only on the condition that they left welfare for full-time work within 12 months of becoming eligible for the supplement.
To measure the effects of this financial incentive, SSP was designed as a social experiment using a rigorous random assignment research design. Single parents in southern New Brunswick and the lower mainland of British Columbia were selected at random from IA records. Half were randomly assigned to a program group and offered the SSP supplement, while the remainder formed a comparison group. Because the two groups were similar in all other respects, the “impact” or effect of SSP can be measured by the difference between the program and comparison groups’ subsequent experiences. The supplement program ran from November 1992 until December 1999, and enrolled roughly 9,000 volunteers.
SSP was comprised of three linked studies — the Recipient SSP study, the SSP Plus study, and the Applicant study.
The Recipient SSP study targeted long-term IA recipients who had been receiving welfare for at least one year, and for most, a much longer period of time. It measured the effects of the financial incentive alone.
The SSP Plus study targeted a similar group, but only in New Brunswick, and assessed the effects of the same financial incentive offered in combination with employment-related services.
The Applicant study offered new IA applicants in British Columbia the supplement if they remained on welfare for one year before leaving IA in the following 12 months for full-time employment.
In each of these studies, the supplement was generous. The combination of supplement and earnings approximately doubled the income that an individual would receive from a full-time job at minimum wage. Individuals had one year to find full-time employment in order to receive the supplement. The one-year “clock” started at random assignment in the Recipient and SSP Plus studies, and one-year after random assignment in the Applicant study. Participants could receive the supplement for up to 36 months after their first supplement payment but only in those months when they worked full time and did not receive IA.
The experimental research has been completed. All three studies showed that SSP is a “triple winner.” SSP increased employment earnings and reduced IA receipt and poverty. A large portion of the cost of SSP was offset by IA savings and by the additional income tax revenues generated by employment earnings and supplement payments. The program produced its biggest effects immediately after the close of the one-year period limit for finding full-time employment. In all three studies, the effects of the supplement had a substantial but declining effect over subsequent years.
In the Recipient study, one third of the program group took up the supplement. As a result, SSP nearly doubled the full-time employment rate in the second year after random assignment, increasing it to 29 per cent. In the same year employment earnings rose by more than one third, and welfare receipt fell by 13 percentage points. Moreover, SSP raised incomes for these poor families, creating a substantial anti-poverty effect during the period of supplement receipt. Impacts remained substantial during the period of supplement receipt, but became relatively small after that period.
Overall, SSP had few effects on children of participants in the Recipient study. Their parents’ return to work has had no negative consequences on their lives. Overall, SSP had no effect on very young children and a number of small positive effects for school-age children. For adolescents, the program had few effects, and those that it did have appeared to be initially negative, but no longer-term negative effects were detected.
In the Applicant Study, 58 per cent of new welfare applicants remained on welfare for one year and became eligible for the supplement if they found full-time work within the next year. Half of the eligible recipients did so (27 per cent of the entire program group), and received at least one supplement payment. The impacts were largest in Year 3, when SSP reduced IA receipt by 10 percentage points and increased full-time employment by 12 percentage points. SSP substantially increased earnings through to the sixth year of the follow-up period, and reduced poverty throughout much of the follow-up period. Program impacts on IA receipt and full-time employment persisted for five years. During the last of these years, no program group members received the supplement. The total cost of SSP for welfare applicants, (including supplement payments and operating costs) was almost completely offset by increased tax revenue and decreased welfare benefits. There was a small net cost to the government budget of $660 — or $110 per year — per program group member over the full six-year follow-up period. SSP also produced larger financial gains for program group members of the Applicant study than for program group members of the Recipient study, and was also much more cost effective. However, the net costs of the Recipient study are modest compared with other transfer programs.
SSP Plus combined the SSP earnings supplement with services to help people find and keep jobs. This combination resulted in larger effects than did the earnings supplement alone. About half of the people offered this SSP Plus program were able to take up the supplement offer. Many of the people who took up the supplement offer due to the effect of the SSP Plus services also lost their new jobs quickly. However, the effects of SSP Plus were remarkably strong near the end of the follow-up period, when parents were no longer eligible for SSP’s earnings supplement. This finding suggests that the job-related services had helped some members of the SSP Plus program find more stable employment than their counterparts who did not receive services.
The evaluation of SSP has been completed and final SRDC evaluation reports have been released. A series of analyses using SSP data were commissioned to further study the lives of single parents on welfare, and findings from this research were released in the SRDC Working Papers series. SSP came to an end on March 31, 2006.
SSP was funded by Human Resources and Skills Development Canada (HRSDC).
Published: March 2006
Policy Area: Income Security - Welfare and Employment - Social Assistance, Employment - Employment Supports and Services
Population: Social Assistance Recipients - Low-income Populations