THE TARGETED WAGE SUBSID Y: HOW PROGRAM DESIGN CREATES INCENTIVES FOR “CREAMING”

Abstract

Across most developed nations, including Canada, parallel systems ofsocial welfare and employment insurance have increasingly been replaced byprograms that emphasize work as a meansto achieve welfare goals within theso-called re-employment framework. Various authors have drawn attention tothe tension between the goal of long-term sustainable employment, and re-employment-based strategies that emphasize short-term and stand-aloneinterventions. In this paper, we focus on the implementation of one suchprogram in Canada, the Targeted Wage Subsidy. This program seeks to place themost marginal qualifying participantsin employment by offering employers afinancial inducement. By paying close attention to the experiences of thosetasked with monitoring and implementing the program in Toronto, we identifyvarious ways in which program design elements may systematicallydisadvantage the intended recipients. These program delivery mechanisms areshaped both in the practices of implementing agents, as well as by the publicaccountability framework that enforces rigid timelines and reportingrequirements, resulting in a practicecommonly referred to by employmentservice providers as “creaming.” Our observations lead us to question whetherthe target population is, in fact, the one benefiting from these return-to-worksupports.