Social Assistance in Ontario: Periods of Tumult and Calm

For the first time in over a year and without much fanfare, the Ontario Government has begun to publish monthly social assistance caseload numbers. One guesses that the reason for the hiatus was the much-reported troubles with their new social assistance computer system called SAMS.

The newest figures are for November 2015 and the new charts on the MCSS website include caseload figures going back two years including  the 13 months from November 2014 to November 2015 that were missing.

They are here for Ontario Works: http://www.mcss.gov.on.ca/documents/en/mcss/social/reports/OW_EN_2015-11.pdf

and here for ODSP: http://www.mcss.gov.on.ca/documents/en/mcss/social/reports/ODSP_EN_2015-11.pdf

This has allowed me to update an excel file which many readers have seen in the past that includes reliable data for the last 35 years (since 1981) for caseloads (payments) , beneficiaries (men women and children receiving assistance), unemployment, and population.

Some may ask “Why 1981?”

The simple answer is that 1981 marks the first year in which a computer program called ONTAP that covered the old Family Benefits (FBA) and GAINS (Disability) programs could be coupled with the municipal MAIN computer system along with a variety of standalone systems in Peel, Hamilton – with honourable mention to local proprietary systems such as Schooley-Mitchell and O’Donnell-Morrison – to provide reliable numbers. In other words, MCSS staff finally found a way to get all the systems to report cases and beneficiaries in the same way under MCSS Deputy Ministers Bob Carman and Bob McDonald.

Of course, it is in theory possible to collect case and beneficiary counts for periods before 1981 but these would be entirely reliant on manual calculations collected from municipal reporting data (something called Form 5) and the provincial payment systems. I wouldn’t touch pre 1981 beneficiary counts with an 11 foot pole although the caseload data is likely reasonably reliable.

Now that we have 35 years of reliable data, what does it tell us?

  1. Two Clear epochs: Tumult and Calm

The time period from 1981 to 2000 was a period of social assistance tumult. The percentage of population on assistance varied from 4.5 % in 1981 to 12.4 % in 1993, only to fall to 7.1 % in 1999.

At the turn of the millennium in 2000, the percentage of population on social assistance in Ontario was 6.0% and in the intervening 15 years to the end of 2015, the lowest point was 5.3% of population in 2004 and the high point was 6.7% in 2012. We now stand at 6.5 of population in November 2015.

In other words, the amplitude in the 1981 -1999 period was 7.9 percentage points and in the post millennium era: 1.4 percentage points. Now that’s tumult and calm!

The period of tumult had two major recessions (early 1980’s and early 1990’s) but caseloads only rose to their post-Depression peaks in the 1990’s recession.

The period of calm had one major recession (the crash of 2008-09) but it must be said that this recession had negligible effects on overall caseloads in Ontario.

Two other points of interest: Ontario in the new Millennium has never experienced a single month when overall beneficiary counts as a percent of population went above 1999 levels.  The other is that there is a statistical oddity with years ending in the number ‘9’. In each of the years 1989, 1999, and 2009, the percentage of social assistance recipients compared to Ontario’s population averaged exactly 6.0%.

  1. Misconceiving Tumult and Calm

It is easy to misconceive the period of tumult and calm in Ontario’s long term social assistance numbers. The conditions that led to the huge caseload run-ups in the 1990’s recession were almost entirely absent in the Great Recession and crash of 2008-09. The most important is unemployment as it relates to beneficiary counts. Starting in 1987-88, a significant pattern emerged between the count of social assistance beneficiaries and Ontario unemployment rates. This pattern is continuous and is alive and well in 2015. The ‘R-squared’ between the two is very tight and increasingly so as we enter 2016. Three years in the early 1990’s of 10%+ unemployment was much different that the great recession of 2008-09 where unemployment exceeded 9% for less than a year and never reached 10% at any point.

I won’t go into all the reasons for the 1990’s run-up in social assistance here as I have done this elsewhere in a slideshow called “A Difficult Puzzle” (2012) where I explain all the reasons for what happened in the 1990’s in comparison to the 1930’s.

A reasonably good understanding of the 1990’s run-up also made it very easy to predict that caseloads would not run up with the Great Recession of 2008-09. As markets were crashing and unemployment rapidly ascending, I received numerous calls from the press looking for juicy predictions about soaring welfare caseloads. I refused them all but tried to explain why it would not happen. No one was interested and the fourth estate pursued their predictions elsewhere. The CCPA, to their credit, was brave enough to publish in February 2009 – before the stock market had bottomed out – my piece called “The Silence of the Lines” where I predicted that caseloads would not rise – and why.

In the ensuing post-crash years, Ontario social assistance beneficiary counts rose – at their post-recession peak in 2012 – by one percentage point. No reporter has come back to ask why.

If they had, I would have pointed them to the four biggest additional reasons for the post-millennial calm in caseloads that have little directly to do with unemployment:

In the early 1990’s, the single social assistance rate had reached 70% of the minimum wage while it stood at 35% at the beginning of the great recession. The former ratio is almost an invitation to higher caseloads while the latter is a massive deterrent.

In the mid 1990’s, the number of lone parents receiving social assistance was 225,000 when Ontario’s population was less than 11 million. In November 2015 with MCSS’s newly published figures, the count is 73,002, down by 4,000 over the past two years alone. Each lone parent has 1.78 children meaning that for each lone parent who leaves social assistance, almost 3 people (2.78) leave assistance. This means that the continuous slow rise in ODSP single recipients and the doubling of single OW recipients from 2005 to 2012 (now leveled off) was almost completely offset by the massive exits among lone parents.

In 1995, there were 436,000 children in Ontario Works (equivalent) families. In November 2015, there were about 160,000 children. It was the post millennial period that was entirely responsible for the advent of children’s benefits outside of social assistance. Nominal clawbacks were ended in August 2008 just one month before the bankruptcy of Lehman Brothers. And the OCB stacked on top of the UCCB and other federal credits to allow a mother with two children to receive 60% of her income from benefits outside of social assistance.

We are also seeing an acceleration in the welfarization of disability benefits causing huge setbacks in attempts to create a basic income for low income people with disabilities that continue to be offset by the exodus of single parents and children from assistance in Ontario Works.

Conclusion 

 The period of relative calm in social assistance in Ontario as measured by comparisons to unemployment and percentage of population on assistance in the post millennial period is very misleading. The relative calm is disguising the fact that things are roiling under the hood and that the need for reform is even more acute (while making the long term regression to the mean between percentage of population on assistance and unemployment look somewhat baffling).

MCSS has already announced in effect that they will find different reform solutions for Ontario Works and ODSP which is entirely appropriate given the massive shifts in both programs caused by very dissimilar and disparate forces.

With the stars aligned (so to speak) at all three levels of government across most of Ontario, poverty reduction strategies can now be harmonized to implement real reform. We can bring in income security for all children outside of social assistance and implement a basic income for all low income adults with a special supplement for people with disabilities as recommended in Brighter Prospects. We can build new work incentives into income security for adults while making benefits adequate (a complete impossibility under the present benefit structure).

As we move further away from the pre-millennial epoch of tumult, we can use the present period of relative calm to breathe life into ‘real reform’.

John Stapleton
January 3, 2016

 

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