Reforms to Earnings Supplement Programs in British Columbia:Making Work Pay for Low-Income Workers

Abstract

Some individuals work nearly full-time and most-year at low wages but remain poor. An effective way to assist the “working poor” is to supplement their earnings, which lifts them from poverty by rewarding their work. This paper explores how an earnings supplement program for British Columbia could serve this goal. Through quantitative simulations we explore alternative approaches, such as a cost-neutral reconfiguration of the federal Canada Workers Benefit and a provincial top-up to the CWB. These exercises provide insight into the trade-offs in benefits, costs, and poverty impacts of varying the structure and parameters of programs focused on B.C. We find that a cost-neutral reconfiguration of the CWB for B.C. has limited impact on poverty rates for childless singles, while increasing poverty rates for other family types. In contrast, a combination of CWB reconfiguration with a provincial CWB top-up targeted at low-earning childless single workers could significantly improve outcomes for that group. At a cost to the province of $400 million, this scheme could reduce the numbers of such workers in poverty by 18,000 while raising the incomes of many more of the working poor. Such a program could be administered simply by the Canada Revenue Agency as an add-on to the CWB.