November 11, 2011
Temporary Income Assistance for the Unemployed
Michael Mendelson and Ken Battle investigate the gaps in Canada’s system of support for the unemployed and propose to fill them with Temporary Unemployment Assistance, a new federal benefit.
In Canada today there are two main programs providing financial assistance to unemployed adults of working age: Employment Insurance and social assistance (better known as welfare). Each of these programs serves important objectives, but there is a critical gap between them.
Many workers who have paid Employment Insurance premiums find themselves ineligible for benefits upon becoming unemployed. Many other workers are not even able to participate in and pay premiums to the Employment Insurance program in the first place. When unemployed Canadians who cannot collect Employment Insurance find themselves in dire financial straits, having used up all their savings and borrowed as much as they can from family and friends, welfare is their only alternative.
But welfare rates are low in every province and territory, especially for single employable recipients. Welfare is inadequate to maintain basic living standards during periods of unemployment for many of the jobless, even when all possible ‘extras’ are cut out. To become eligible for welfare, applicants must exhaust their financial assets, including RRSPs, as well as non-financial assets—excepting only an older car, a home and personal possessions, such as clothing. Further, the paternalistic requirements of welfare administration are inherently stigmatizing and draining of self-confidence and independence, as discussed at length elsewhere (e.g., Battle et al., 2006; Herd et al., 2005). All of this makes it difficult both psychologically and materially for those who have to rely on welfare to bounce back into the economic mainstream. Yet welfare remains the only alternative today for unemployed workers who do not participate in or are otherwise ineligible for Employment Insurance.
Something is needed between Employment Insurance, with its relatively higher benefits but limited reach, and welfare, to which anyone in need can apply but only for inadequate benefits if in fact they are deemed eligible.
Proposals to fill the gap have commonly focused on loosening the entry and other rules for Employment Insurance (e.g., Vosko, 2011). While improved access to Employment Insurance would go some way to providing an alternative to welfare for some of the unemployed, we show in this paper that many other jobless Canadians would still be left in the cold. So we propose a new program to fill the gap that would remain between Employment Insurance and welfare, even were Employment Insurance to be somewhat enhanced.View PDF
Ken Battle & Michael Mendelson
November 11, 2011