What is the Canada Workers Benefit, and how could it be better?
Working-age adults face the highest poverty rates in Canada, yet income supports available to them remain inadequate and do not address their economic realities. At the same time, governments at all levels have been reluctant to increase the level of support available to this group.
While creating a new program to help this group is a possibility, one option for the federal government would be to enhance the Canada Workers Benefit (CWB). The CWB is one of three federal income supports available to working-age adults living in poverty.
Currently, the CWB is provided to those who have at least some labour market attachment but is unavailable to many working-age adults in Canada living in deep poverty. Given today’s economic and social context, the design of the CWB should be enhanced to provide support to those with little or no labour market attachment so that all working-age adults living in poverty would be eligible for at least a base level of CWB support. This would transform it from a “workers” benefit to a “working-age” benefit.
To outline how the CWB can better support working-age adults living in poverty, our analysis first identifies four shortcomings of the CWB. We then provide three policy options that would reduce the depth of poverty of working-age adults.
- The CWB excludes working-age adults with low attachment to the labour market: Households with working incomes below the eligibility threshold are not eligible to receive the CWB; it excludes people living in deepest poverty.
- The CWB amount is too small: Even at the maximum amount, the CWB would only marginally reduce a claimant’s depth of poverty.
- The CWB interacts negatively with social assistance: As the benefit phases in, only the claimant’s income without social assistance is counted, so their total income could be much higher than the income definition used to qualify for CWB. This creates inequities between people who receive and don’t receive social assistance.
- The CWB does not serve its original purpose: The original purpose of the program was to “lower the welfare wall” and “make work pay,” but flawed design elements (e.g., negative interaction with social assistance) have ultimately limited its success.
- Create a CWB floor for those with incomes between $0 and $3,000. This would provide income support for those living in deepest poverty.
- Increase the maximum amount available to unattached singles, as single working-age adults face the highest rates of poverty.
- Improve the interaction between social assistance and CWB by using Adjusted Family Net income (AFNI) instead of working income to determine how much CWB a claimant is entitled to.