TD Bank Economists Slam Ontario Welfare System
September 26, 2005

Economists for the TD Bank Financial Group have strongly criticized Ontario's welfare system and concluded that it is preventing recipients from becoming employed. In the report titled From Welfare to Work in Ontario: Still the Road Less Travelled, they also deplored changes to federal unemployment insurance rules which have meant that less than half of unemployed workers are now eligible for benefits.

The TD's chief economist Don Drummond and co-author Gillian Manning found "welfare recipients facing marginal tax rates of 100% or more at most stages along the welfare/work spectrum" giving them no incentive to become employed. Even with recent provincial reforms, they calculate that individuals still face at least a 50% marginal tax rate when they attempt to move from welfare to a full-time job.

Given the unusual source of criticism, the report drew extensive media attention in Toronto, a city which is tied with Hamilton for the highest poverty rates in the province. Writing in the Toronto Star under the heading "Now even a bank slams workfare", Thomas Walkom noted that "even hard-headed business people are beginning to realize that taking a sledgehammer to the welfare state was a bad, bad idea".

A follow-up Star feature by Carol Goar explored some of the reports recommendations including getting rid of the province's "punitive asset-stripping rules, which require welfare applicants to exhaust their savings and liquidate most of their possessions to get benefits." Goar noted these rules mean people with nothing face a much greater risk in moving from welfare to work.

The full TD report can be viewed at http://www.td.com/economics/special/welfare05.jsp.