The Targeted Wage Subsidy: How Program Design Creates Incentives for “Creaming”

Abstract

Across most developed nations, including Canada, parallel systems of social welfare and employment insurance have increasingly been replaced by programs that emphasize work as a means to achieve welfare goals within the so-called re-employment framework. Various authors have drawn attention to the tension between the goal of long-term sustainable employment, and re-employment-based strategies that emphasize short-term and stand-alone interventions. In this paper, we focus on the implementation of one such program in Canada, the Targeted Wage Subsidy. This program seeks to place the most marginal qualifying participants in employment by offering employers a financial inducement. By paying close attention to the experiences of those tasked with monitoring and implementing the program in Toronto, we identify various ways in which program design elements may systematically disadvantage the intended recipients. These program delivery mechanisms are shaped both in the practices of implementing agents, as well as by the public accountability framework that enforces rigid timelines and reporting requirements, resulting in a practice commonly referred to by employment service providers as “creaming.” Our observations lead us to question whether the target population is, in fact, the one benefiting from these return-to-work supports.