Common Front visits MLAs to demand action on the wage clawback affecting social assistance recipients

On May 3, members of the Common Front for Social Justice delivered letters to half of New Brunswick’s Members of the Legislative Assembly (MLAs) calling on the province to reform the wage clawback policy affecting social assistance recipients so they can keep more of their income.

Currently, a social assistance recipient who finds a job can only keep a portion of their salary, known as the salary exemption, which is the first $150 and only 30 per cent of the rest. The government claws back the balance of the salary. The regulation, part of the Family Income Security Act, greatly hinders the person’s ability to work more hours; reduces the possibility of increasing their income; and increases their dependence on the government and hurts employers who would like to give them more hours.

The Common Front’s proposal is simple: Increase the salary exemption amount to $500. This change to the policy would allow people to keep more of their salary and therefore be able to accept more hours of work in a month. This proposal currently has the support of 30 community and labour organizations.

This provincial lobbying activity is part of the organization’s campaign to reduce regulatory and policy barriers within the Department of Social Development, which would help citizens and their families have a decent income.

Below is the letter delivered to the MLAs.

The Common Front for Social Justice (CFSJ) is proposing an amendment to the Department of Social Development’s Family Income Security Act Regulation 95-61, subsections 8(2) (.e01) to allow more social assistance recipients to increase their income through work. The current wage exemption regulation discourages them from accepting work for more than a few hours per month. 

This policy of wage exemption hinders the possibilities of recipients to improve their financial situation. Therefore, the CFSJ proposes that all social assistance recipients be able to keep the fixed portion of $500 + 30% of the balance of income. Many community organizations would like to see the policy changed as we propose. (See list in Appendix A).

The Department of Social Development informed us that 1,236 social assistance recipients worked in 2020 but did not tell us how much money the Department had accumulated from these deductions. Under the current policy of deducting a fixed portion of $150 + 30% of the balance of income, a social assistance recipient who works 75 hours per month at $11.75 per hour receives $881.25. However, he or she can only keep $369.37 of this. The remaining $511.88 is clawed back by the department. With our proposed change to this policy, the recipient would be able to keep $614.37 and the department would recover $266.88. Clearly, the recipient would be better off financially if he or she received a monthly income of $1,178.37[1] compared to the $933.37[2] he or she receives under the current policy.

As explained in Appendix B, if none of the 1,236 single people on social assistance had worked in 2020, the Department would have had to pay all of them their rate of $564 per month, or $8.4 million.  However, if all of these recipients had worked at minimum wage ($11.75/hour), part-time (75 hours/month), all year, the current wage exemption policy would have resulted in a recovery of $7.6 million. Under the CFSJ’s proposal to increase the wage exemption, the department would have recovered less, namely $4.0 million. 

The current government wants more people on welfare to get jobs. Although the government would get less money back with the new wage exemption policy, it is important to stress that the Ministry is not there to make money on the backs of social assistance recipients. 

Under the CFSJ proposal, a welfare recipient working 75 hours a month at minimum wage receives $14,818, including the GST/HST credit and the provincial tax credit. According to the federal government, the poverty line for this individual is $21,515. If the provincial government wants to reduce the number of people living in poverty, an effective way to do so is to change this punitive regulation.  

1. _______ , we hope that you will support our proposal, and in so doing, support recipients who are in the labour market in their efforts to become more financially independent.

Please accept my best wishes.

Johanne Petitpas, CFSJ provincial co-chair

Auréa Cormier, secretary of the Moncton Chapter of the CFSJ

[1] Calculation details: salary (75 hrs at 11.75) = 881.25; allowable earnings: 500 + 114.37 (30% of remainder) = 614.37; remaining salary: (881.25 – 614.37=266.88; amount deducted from cheque: 564-266.88; monthly income = 881.25 + 297.12 = $1,178.37

2] Calculation details: salary (75 hrs at 11.75) = 881.25; allowable earnings: 150 + 219.37 (30% of remainder) = 369.37; remaining salary: (881.25 – 369.37=511.88; amount deducted from cheque: 564-511.88 =52.12; monthly income 881.25 + 52.12 = $933.37.

Appendix A

Appendix B

Wage clawback by the province in three scenarios. 

Jean-Claude Basque is a member with the Moncton chapter of the Common Front for Social Justice.