The Self-Sufficiency Project offered a temporary financial incentive to single parent, long-term income assistance (IA) recipients who left income assistance for full-time work. This demonstration project was designed to test a policy innovation intended to make work pay better than welfare.

"The Self-Sufficiency Project (SSP) Applicant study recruited single parents receiving income assistance (IA) and offered a temporary earnings supplement to selected long-term income assistance recipients. 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 income assistance for full-time work. [This] supplement was paid on top of earnings from employment for up to three years, provided recipients worked 30 or more hours each week and remained off income assistance. The supplement was designed to provide an immediate payoff to those who found full-time employment because it could effectively double pre-tax income received from a minimum wage job. This report describes the impacts of the supplement offer through six years after random assignment." (p. ES-1). (Abstractor: Author)

Full Publication Title: Can Work Incentives Pay for Themselves? Final Report on the Self-Sufficiency Project for Welfare Applicants

Major Findings & Recommendations

• "58 percent of program group members became eligible for the supplement by remaining on income assistance for a year or more. 27 percent of the program group nearly half of those who became eligible” took up the supplement. • SSP increased full-time employment and reduced IA receipt for five years. During the first year after random assignment, when program group members had to remain on income assistance to qualify, SSP increased IA receipt by 3.9 percentage points but had no net effect on full-time employment or IA amounts. From the second year onwards, SSP significantly reduced IA receipt and IA payments through to the sixth year of follow-up, while simultaneously increasing full-time employment in each of those years. The impacts were largest in Year 3, when SSP reduced IA receipt by 10.3 percentage points and increased full-time employment by 11.7 percentage points….Impacts on IA receipt and full-time employment persisted for five years. • In the first 71 months after random assignment, on average, program group members each earned $7,859 more than control group members. In Year 3 average earnings for program group members had increased by $2,405 per year. • The rise in income led to an increase in total expenditures on basic necessities for food, clothing, and housing throughout much of the follow-up and a decrease in the proportion of program group members who reported using a food bank. • These averaged $7,504 per program group member net of increased taxes on earnings and reduced welfare benefits. The total cost of SSP, including supplement payments and operating costs, was nearly offset by increased tax revenue and decreased welfare benefits. After accounting for all costs and 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 produced larger financial gains for welfare applicants than for long-term recipients, and was much more cost effective in doing so. The net financial benefit to Applicant program group members ($7,504) was about 50 per cent higher than that observed for SSP Recipients in British Columbia ($5,007). The net cost to government was about 10 per $1 in financial gains to program group members in the Applicant study. This was much lower than in the Recipient study, where the net cost to government was approximately 67¢ for $1 in financial gains." (p. ES 3-4). (Abstractor: Author and Website Staff)