Growing support to end New Brunswick’s punitive wage clawback for social assistance recipients

Support is growing for changes to a provincial policy that penalizes people who try to get off social assistance by working. New Brunswick’s wage clawback policy means that a minimum wage earner with no dependents sees their pay slashed from $11.70 an hour to a mere $3.51 an hour after only 13 hours of work a month.

Reg 95-61 art. 8 (2)(i) & (ii) of New Brunswick’s Family Income Security Act authorizes the province to seize 70 per cent of all wages in excess of $150 a month earned by a single social assistance recipient. Families of two or more people are allowed to earn $200 a month before the province begins seizing 70 per cent of their wages.

“The proposed reform would allow all people on social assistance to earn $500 a month before their social assistance payments are reduced,” said Auréa Cormier, a spokesperson for the Moncton Chapter of the Common Front for Social Justice. “So far, more than 25 provincial organizations have endorsed the proposed reform.”

Common Front members, including Auréa Cormier, met with Social Development Minister Bruce Fitch in January to discuss the issue.

“The wage clawback policy needs be changed so that people living in poverty have a chance to get off social assistance and become financially independent,” Cormier said, “and reforming the policy will really help businesses, notably small ones, to find the workers they need.”

“Rather than helping people become financially independent, clawing back 70 per cent of their wages after such a few hours of work actually penalizes people on social assistance for working and has the effect of locking individuals and families into perpetual poverty.”

“As well as encouraging more people to work, allowing all social assistance recipients to keep the first $500 a month they earn would eliminate their fear that earnings subject to the claw back might cause the loss of their social assistance, medicare card, and other benefits,” Cormier said.

“Even when social assistance people are able to work, the current regulation only allows them to keep a small part of their earnings and so ensures their income will remain below the poverty line,” she said. “The proposed change would allow social assistance, recipients to improve their lives.”

Robert MacKay is a social assistance recipient living in Moncton who currently receives $567 a month to cover all his living costs, including rent, food, clothing, utilities, telephone, and incidentals like toiletries.

“The current wage claw back policy hurts me, hurts potential employers and it breeds cynicism,” MacKay said. “Why should people who already live in poverty give the government 70 percent of all wages after their first $150 in earnings?”

MacKay points out that studies have shown that people with low or no incomes generally have poorer health and live shorter lives than those with adequate incomes. He notes that allowing people on social assistance to earn $500 before their social assistance is reduced would allow them to have healthier diets, and to increase their security and self-esteem.

Cormier thinks the government will give serious consideration to the proposed reform because it would benefit the community generally, and businesses in particular.

“All the wages earned by social assistance recipients are spent in their local communities,” she said, “and increased local spending means increased income for local businesses, which helps create new jobs and strengthens the provincial economy.”

“As well, health care costs will be reduced as recipients’ mental and physical health improves,” she said. “Many employers need temporary workers at peak times, and social assistance recipients can fill this gap, if the wage exemption policy is increased to $500.”

The proposed reform would greatly simplify matters for small businesses. Since a 20 hour a week, half-time job is slightly more than 80 hours a month, an employer currently needs to hire six or more recipients to avoid the claw back which limits each recipient to fewer than 13 hours a month.

Like MacKay, Eddie (not his real name) is a social assistance recipient. He says the current system is a big deterrent to people on social assistance willing to work.

“A clawback of 70 per cent traps us in the system, but a fair system would give people a chance to escape living in poverty,” Eddie said. “Very few people would chose to be dependent [on social assistance] if another option was available.”

Dallas McQuarrie is a retired journalist living in St. Ignace on the unceded Mi’kmaq territory of Sikniktuk.