Efforts to promote work among welfare recipients face a fundamental challenge: Low-wage jobs, typically the only employment available to people with limited education and work experience, leave families little better off than even subsistence-level welfare benefits. As a result, most programs that require welfare recipients to work succeed in increasing employment and reducing welfare receipt but do not make families much better off financially. This conundrum has led to a search for financial work incentive strategies that can both encourage work and reduce poverty by supplementing the earnings of individuals working in low-wage jobs.
Over the past decade, MDRC has conducted a series of random assignment studies of different earnings supplementation strategies. The studies have examined the cost of various approaches, as well as their effects on work, welfare receipt, and the well-being of families and children. The evaluation of the Minnesota Family Investment Program tested a program that changed the welfare rules to both encourage and require work, while studies of Canada’s Self-Sufficiency Project and the Milwaukee-based New Hope Project examined innovative earnings supplement programs that operated outside the welfare system.
In the Opportunity NYC Demonstrations, MDRC is using these earlier findings to help design a test of new forms of temporary cash payments to poor families to boost their income in the short-term while building their capacity to avoid longer-term and second-generation poverty.
Key Documents on Earnings Supplements
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