New Hope for People with Low Incomes
Two-Year Results of a Program to Reduce Poverty and Reform Welfare
This is the second report from the evaluation of New Hope, an innovative project developed and operated in Milwaukee, Wisconsin, that has sought to improve the lives and reduce the poverty of low-income workers and their families. New Hope relied on several components and services to increase the income, financial security, and access to full-time employment of low-income workers in two areas of Milwaukee. In these target areas, all low-income workers (and those not employed, but willing to work full time) were eligible to receive New Hope benefits. New Hope began operating as a demonstration program in 1994, enrolling volunteers during an intake period that lasted through December 1995. Reflecting its broad eligibility rules, New Hope served a diverse group of low-income people. For example, 37.5 percent were employed at enrollment, and 84.9 percent had been employed full time during their adult work life (with the average longest full-time job lasting about three years). While 59.8 percent were never married and 18.3 percent were separated, divorced, or widowed, 21.8 percent were married. Men made up 28.4 percent of the full sample, and 37.1 percent of the sample were not receiving AFDC, Food Stamps, General Assistance, or Medicaid at enrollment. Participants, on average, were 32 years old.
New Hope offered access to four distinct program components: an earnings supplement to raise participants’ income to the poverty level for their household, affordable health insurance, child care subsidies, and a full-time job opportunity for those unable to find one. (Part-time jobs also were available for those who needed to supplement an existing part-time job.) In return, the program required its participants to work full time (at least 30 hours a week) and to document their work hours in order to qualify for program benefits. Program representatives (“project reps”) would meet frequently with participants to collect their wage stubs, verify their full-time employment, and discuss any needs or concerns related to participants’ employment. Thus, the project combined a requirement to work full time with the necessary supports and guarantees to enable its beneficiaries to meet this requirement.
New Hope operated outside the existing public assistance system, though it was designed to be replicable as government policy. It was funded by a consortium of local, state, and national organizations interested in work-based antipoverty policy, as well as by the State of Wisconsin and the federal government. It was designed and operated by a community-based nonprofit organization, the New Hope Project, and thus provides insights into the role nongovernmental agencies can play in income support.
One goal of the project was to provide credible information to policymakers on the implementation, effectiveness, and costs of the New Hope approach. To this end, New Hope contracted with MDRC to conduct an independent evaluation, which began with the start of enrollment. In order to provide a reliable test of the difference the program made, 1,357 applicants were randomly assigned in a lottery-like process to either a program group (with access to New Hope services) or a control group (with no access to New Hope services, but able to seek other services).
This report addresses important policy questions pertaining to the lives of low-income workers and their families, the choices they make in the labor market, and the effects of financial and other supports on their material and overall well-being.
Overall, New Hope increased employment and earnings, leading in turn to increased income during the first year of follow-up and enabling more low-income workers to earn their way out of poverty. New Hope’s effects on employment and income, coupled with its provision of health insurance and child care subsidies, set off a chain of beneficial effects for participants’ families and their children. On average, New Hope participants were less stressed, had fewer worries, and experienced less material hardship (particularly that associated with lack of health insurance) than control group members. Participants’ children had better educational outcomes, higher occupational and educational expectations, and more social competence; boys also showed fewer behavior problems in the classroom.
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