main findings

Purpose

The purpose of this report is to describe the types of disability benefit programs offered by the various provinces as well as characteristics of the programs that could represent incentives/disincentives to

competitive employment. Using data from Ontario, the country’s most populous province, Ontario Disability Support Program (ODSP) data will be used to describe the use of the work-related benefit among ODSP recipients who are single adults with no children.

The information discussed in this report can inform the discussion about provincial disability programs and competitive employment of recipients of public disability programs. It will also raise questions to help direct future discussions about how benefits could be structured.

Background

People with mental disorders are more likely to either be unemployed or to have left the labour force (Bowden 2005; Ettner et al. 1997; Marwaha and Johnson 2004; Mechanic et al. 2002; Patel et al. 2002;

Waghorn and Lloyd 2005). This may be related to a number of reasons including an inability to obtain or retain employment (Lerner et al. 2004), reluctance of employers to hire people with mental disorders (Scheid 1999; Nicholas 1998) or fear of losing benefits (Cook 2006).

At the same time, there is literature suggesting that unemployment may contribute to the development of mental disorders. Maier and colleagues (2006) observed that workers who were unemployed for a year experienced a significant decrease in working capacity and increase in emotional disturbance during that first year of unemployment.

In the absence of employment, most people in industrialized countries must rely on public benefits for their livelihoods. These include unemployment benefits, disability insurance and welfare programs.

However, there is an association between receipt of disability benefits and unemployment. The fear of losing disability benefits has been identified as one of the barriers to obtaining and maintaining employment for clients with severe mental illness (Campbell et al.

2010; McQuilken et al. 2003). As a result, those who received benefits often have poorer employment experiences.

In a review of the literature, Cook (2006) points out that few people leave public disability benefits due to employment. It has been suggested that publicly funded benefits may inadvertently create disincentives to working. For example, people might perceive that they will be penalized for working. Or, if they become successfully employed and are no longer enrolled in a public benefits program, it would be difficult for them to re-enroll for benefits if they subsequently lose their jobs (Organization for Economic Co-operation and Development 2003).

Thus, a complex picture has emerged. While people with mental disorders are less likely to be employed, the public benefits on which they rely may also add to the likelihood of unemployment. Yet, there is also evidence that employment is associated with better mental health.

In response, public systems have been seeking ways to address the barriers to employment. This report gives an overview of the types of disability benefits programs offered by the various provinces as well as characteristics of the programs that could represent incentives/disincentives to competitive employment.

As discussed below, ODSP is one of the few programs in the country that offers a work-related benefit for working in competitive employment. Using ODSP data we describe the use of the work-related benefit by ODSP recipients who are single with no children. The information discussed in this report can inform the discussion about provincial disability programs and competitive employment of their recipients.

Provincial Disability Programs and Work Incentives/

Disincentives (Tables 1-5)

Each province has an income assistance program that covers people with disabilities. However, in New Brunswick, Newfoundland, Nova Scotia and Prince Edward Island, there is only one income assistance program available (Table 1, Appendix).

All of the provinces have a provision in which benefits are recouped based on earnings. Schemes

full report

All provincial disability programs have earnings recoupment⁵.

• Most provincial benefit recoupment methods proportionately adjust for earnings. As such, more is recouped from those who earn relatively more.

All provincial disability programs have some type of employment incentive program.

• Ontario and Quebec are the only provinces that offer a work-related benefit⁶.

• All provinces offer support for employment and training.

• The majority of provinces offer travel/

transportation benefits.

All provincial disability programs have some type of safety net for those who leave the programs and subsequently need to return.

• Most provinces offer supplemental health benefits (e.g., prescription drug insurance where applicable, dental, vision).

• Alberta, British Columbia and Ontario are the only provinces that offer rapid reinstatement to the program.

In the Ontario Disability Support Program (ODSP), the primary types of disabilities among single adults with no children are associated with mental disorders.

• Schizophrenia-related disorders (14.8%) account for the largest percentage of types of disabilities followed by developmental disability (13.2%), musculoskeletal disorders (11.2%), mood disorders (9.5%), anxiety disorders (8.7%) and nervous system disorders (7.4%).

There is variation among recipients who are single adults with no children receiving the ODSP work-related benefit.

5 Recovery

6 Recipients receive a benefit when they are employed.

• The largest proportion of recipients of the work-related benefit were among those with developmental disability (9.2%) followed by sense organ disorders⁷ (7.5%), infectious disorders (7.2%), mood disorders (7.1%) and schizophrenia-related disorders (6.6%).

Among single adults with no children, median earnings exceed the ODSP work-related benefit, suggesting a positive investment.

For those with developmental disability, at the median, they earned 1.8 times more for each dollar of work-benefits. The median return was 3.8 times for sense organ disorders, 7.3 times for those with infectious disorders, 4.2 times for mood disorders and 2.8 times for schizophrenia-related disorders.

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use different types of methods including sliding scales based on total amount of earnings, flat dollar exemptions and fixed percentage withholdings based on any earnings. Both the use of sliding scales based on total amount of earnings and fixed percentages withholding based on any earnings are similar to proportional taxation. That is, recipients who earn more pay more. In contrast, the flat dollar exemption is similar to a progressive tax. This means that as earnings increase, a relatively larger proportion of earnings is recouped by the disability program.

Although all the recoupment schemes adjust for the amount of income earned, these reductions could be viewed as a disincentive to working depending on the amount of benefits reduced and the type of jobs that recipients are able to obtain (Tables 2-5).

At the same time, each province also offers work-related benefits which could be perceived as incentives to employment. These benefits take a variety of forms including training supports and travel/transportation benefit. However, only Ontario ($100/month) and Quebec ($130/month) offer competitive work-related benefits.

Most provincial programs seem to recognize the chronic and episodic nature of disability-related illnesses and the need for a safety net for those who do seek competitive employment as a primary source

of income. As such, with the exceptions of Prince Edward Island, Quebec and Saskatchewan, provinces ensure access to supplemental health benefits (e.g., prescription drug insurance where applicable, dental, vision). However, only Alberta, British Columbia, and Ontario ensure there is rapid reinstatement of recipient status if someone leaves the program and subsequently needs to return.

Ontario Disability Support Program (Tables 6 & 7) Using Ontario as a case example, in this section we examine uptake of the work-related benefit among recipients. The ODSP Program provides income support to Ontarians who demonstrate financial need and who have met the Ontario Disability Support Program Act’s definition of disability. Data for this analysis included recipients who received ODSP benefits in March 2010 who were single and had no children. Sixty five percent of recipients met these criteria.

When we consider the primary types of disabilities, the greatest proportion are associated with schizophrenia-related disorders (14.8%) followed by developmental disability (13.2%), musculoskeletal disorders (11.2%), mood disorders (9.5%), anxiety disorders (8.7%) and nervous system disorders (7.4%) (Figures 1 & 2; Table 6).

Note: Includes only recipients who are single without children.

Figure 2. ODSP Recipients by Most Prevalent Types of Disabilities

Note: Includes only recipients who are single without children.

Figure 3. Percentage Receiving Work-related Benefit Within Each Type of Disability

Note: Includes only recipients who are single without children. Figure 1. ODSP Recipients by Types of Disabilities

Note: Includes only recipients who are single without children.

Figure 2. ODSP Recipients by Most Prevalent Types of Disabilities

Note: Includes only recipients who are single without children.

Figure 3. Percentage Receiving Work-related Benefit Within Each Type of Disability

Note: Includes only recipients who are single without children.

Figure 1. ODSP Recipients by Types of Disabilities

ODSP also offers a work-related benefit that is available to recipients who have earnings from paid employment. Under the work-related benefit, recipients can receive a $100 work-related benefit regardless of the amount earned. Using the receipt of this benefit as an indicator for at least one-month employment, we examined the percentage of recipients who received the work-related benefit by types of disabilities. Less than 10% of recipients in each category received the work-related benefit (Figure 3; Table 7). The largest proportion of recipients receiving the work-related benefit were among those with developmental disability (9.2%) followed by sense organ disorders (7.5%), infectious disorders (7.2%), mood disorders (7.1%) and schizophrenia-related disorders (6.6%).

Although they have the highest rate of employment, people with developmental disabilities were not among the group with the highest earnings. The monthly median earnings for those who worked and had a developmental disability were $128 (Figure 4;

Table 7). In contrast, median earnings were $531 for recipients with sense organ disorders, $778 for those with infectious disorders, $464 for mood disorders and

$265 for those with schizophrenia-related disorders.

Given that the Ontario minimum wage is $10.25/hour and assuming that all recipients who worked were paid at least minimum wage, our findings suggest

recipients were not in full-time positions (assuming a 37.5 hour work week for a full-time job). Assuming that they all received minimum wage, the total median hours would be at least 12.5 hours/month for recipients with developmental disabilities, 51.8 hours/month for recipients with sense organ disorders, 75.9 hours/

month for those with infectious disorders, 45.3 hours/

month for those with mood disorders and 25.8 hours/

month for those with schizophrenia-related disorders.

We also examined the ratio of earnings to work-related benefit as a modified return on investment (Table 7).

This approach assumes that the work-related benefit is meant to act as an incentive to obtain competitive employment. For those with developmental disability, at the median, they earned 1.8 times more for each dollar of work-related benefit.

The median return was 3.8 times for sense organ disorders, 7.3 times for those with infectious disorders, 4.2 times for mood disorders and 2.8 times for

schizophrenia-related disorders.

Based on different provincial plans, it is interesting to note that there is consistency across provinces in terms of benefit reduction related to earnings. Most provinces have chosen recoupment schemes that are either proportional or progressive. Nevertheless, it would be important to understand the extent to which these schemes serve as disincentives for employment and to identify the optimal structure to encourage employment.

To varying degrees, each of the provinces have attempted to develop incentives for employment and safety nets for those who fear losing their benefits if they work. However, with regard to these, there is less consistency among provinces. An important question would be to understand the proportion of recipients who use these safety nets and incentives and the effect of these benefits on employment.

Results using ODSP data indicate that there are relatively larger proportions of people who are

employed among those with mood and schizophrenia-related disorders than among many of the other types of disorders. But, the median earnings for those with mood and schizophrenia-related disorders are less than for those with many of the physical disorders.

This pattern raises a variety of questions. For example, are the lower earnings related to fewer hours worked or to differences in the types of jobs? If the cause is related to differences in types of jobs, what are the differences? Should vocational programs target these differences to allow people with mental disorders to qualify for jobs requiring more training?

However, the ratio of earnings to work-related benefit indicated that earnings exceed the work-related benefit, suggesting a positive investment. These results are promising and suggest that work-related benefit incentives could have positive effects on employment. To further inform these policies, it will be important to understand the optimal level of work-related benefit to maximize the likelihood of a recipient being employed. It would also be important to understand the additional factors that influence employment. Moreover, how do the pieces of the program fit together and how does each piece contribute to achieving the program’s ultimate goal?

Figure 4. Monthly Median Earnings Among ODSP Recipients Within Each Type of Disability

Note: Includes only recipients who are single without children.

conclusions

Table 7). In contrast, median earnings were $531 for recipients with sense organ disorders, $778 for those with infectious disorders, $464 for mood disorders and

$265 for those with schizophrenia-related disorders.

Given that the Ontario minimum wage is $10.25/hour and assuming that all recipients who worked were paid at least minimum wage, our findings suggest

month for those with infectious disorders, 45.3 hours/

month for those with mood disorders and 25.8 hours/

month for those with schizophrenia-related disorders.

We also examined the ratio of earnings to work-related benefit as a modified return on investment (Table 7).

The median return was 3.8 times for sense organ disorders, 7.3 times for those with infectious disorders, 4.2 times for mood disorders and 2.8 times for

schizophrenia-related disorders.

Results using ODSP data indicate that there are relatively larger proportions of people who are

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