Disincentives to Employment: Unreasonably Low Asset Levels

Unreasonably low asset levels are a problematic deterrent for Ontario Works recipients who want to pursue employment. Ontario Works sets maximum asset levels for recipients to determine how much monthly allowance they are to receive. For example, single adults are afforded a maximum asset level of $560 per month, while single adults with a lone child are afforded a maximum asset level of $1529 per month. These asset levels are set and adjusted by proof of necessities obtained from recipient’s receipts and include: pay stubs, hydro, water, and heating costs, bank account books and statements, fire insurance, rent or mortgage payments, income tax assessment or returns, and child care costs.

While monthly allowances are set to ensure that a recipient’s basic and immediate needs are covered, they do not allow any room for savings—an asset that Ontario Works recipients need if they are to successfully transition from social assistance to a job. Although existing asset levels cover current consumption, it is not enough, as there are a number of additional costs that a person has to take into account when transitioning into a job. These costs include the costs of a new wardrobe for the interview, transportation to interviews, additional child care for parents going through job interviews and an increase in phone costs to set up interviews. Without room for savings in the maximum assets level, Ontario Works recipients are afforded no assistance to assist with finding a job—a process that does cost money.

Ontario Works fails to recognize the instability of the transition that occurs when a person begins a new job. For example there is always a probationary period typically lasting 3 to 6 months whereby, should the job be terminated, the recently fired employee would need to fall back on a few months of savings while pursuing a new job. Also, since Ontario Works prepares recipients for low-skilled, low-paid labour only, these jobs are typically contract positions that could be terminated at any time at no fault of the employee. If there is not adequate savings in place before going into a new job, a person has no resources to fall back on should their job be terminated. Since Ontario works does not allow savings to be an asset, then individuals transitioning out of Ontario Works are afforded no opportunities to buffer transitional periods out of social assistance and between jobs with adequate resources.

What’s most oppressive about this predicament is that Ontario Works covers a recipient’s immediate consumption needs only. By not allowing for even a small fraction of the assets to include savings, recipients do not have the opportunity to participate in the work force ever the same way that individuals in the middle and upper class do. Since they are required to save and present receipts of all spending, including rent, utilities, food, clothing, and child care (a further oppressive and exploitative practice by Ontario Works), then recipients don’t have the option to even cut back on their basic necessities for the sake of savings, because cutting back on their spending would lower their allowance. What this means for Ontario Works recipients is that, while they have a greater incentive to work, they have a reduced incentive to save. This results in “a vow of poverty to maintain their eligibility for OW—which is surely counter-productive to the ultimate goal of reducing their reliance on welfare.”

Information about Ontario Works asset levels obtained from:

Region of Peel, Ontario Works in Peel: Your Responsibilities
http://www.region.peel.on.ca/ow/receiving/responsibilities.htm

Simcoe County Health and Social Services Home Page: Ontario Works Asset Levels
http://www.county.simcoe.on.ca/healthsocialservices/ontarioworks/aboutontarioworksfinancialassistance/assetlevels/index.htm

TD Economics Special Report: "From Welfare to Work in Ontario: Still the Road Less Travelled." September 8, 2005.