Preface
At this time of national debate
about the best way to promote and reward work among low-income
people, Milwaukee's New Hope Demonstration provides an unusual
learning opportunity. With its goals of increasing employment,
reducing poverty, and reducing receipt of welfare, New Hope
is an ambitious undertaking. It seeks to achieve these goals
through a simple offer: Participants who work full time (defined
as an average of 30 hours per week) are assured of earnings
above poverty, access to subsidized child care and health
insurance (if needed), and a paid community service job if
they are unable to find unsubsidized employment. This mix
of work-conditioned incentives and services makes New Hope
unique among the tests of reforms under way today. The Board
and staff of New Hope are unusual, too, in having committed
themselves from the very beginning to a rigorous research
agenda, believing that for their project to influence national
policy, it would have to be studied seriously.
The program is operated by
a community-based organization, the New Hope Project, outside
the traditional public assistance system. During the demonstration,
the program is operating in two low-income areas of Milwaukee.
Eligibility is based solely on income and a willingness to
work full time, without any requirement that there be a single
parent or even any children present in the household, as has
been common in many welfare programs. At entry into the program,
approximately 70 percent of New Hope participants lived in
households with children, and 63 percent were receiving some
type of public assistance.
This report, the first major
product of the evaluation, presents findings on New Hope's
context, design, and implementation. A future report will
present findings on the program’s impacts on key outcomes
and costs. Funding for the evaluation has been provided by
the Helen Bader Foundation, the Ford Foundation, the John
D. and Catherine T. MacArthur Foundation, and the State of
Wisconsin’s Department of Workforce Development.
Several messages emerge from
the findings of this report. First, through an analysis of
the context in which New Hope operates, the report presents
a picture of the conditions in two central-city, low-income
areas within a very strong metropolitan economy. This illustrates
both the benefits of the strong overall employment picture
and the limits on residents’ abilities to participate
in the economic growth.
Second, the New Hope Project
successfully put in place the benefits and services called
for in the program design, in the process learning many lessons
about how to administer monthly earnings supplements,
subsidies for health insurance and child care, and paid community
service jobs. The program thus provides an opportunity to
learn how to link more closely work and supplemental financial
support than is possible under existing earned income tax
credits, which largely operate on an annual basis. Among the
insights emerging from the New Hope experience is the central
role program staff can play in helping participants understand
the various financial incentives, make informed choices, and
pursue employment.
In New Hope, unlike many other
programs, participants must work to receive program benefits,
so this report’s findings on use of the benefits are
also of special importance. New Hope was not designed with
any fixed sequence of program participation. Instead, it provides
a collection of benefits that participants can access as they
wish. Approximately three-quarters of those accepted into
the New Hope program worked full time at some point in the
following 12 months and received a program benefit, but —
not surprisingly — patterns of benefit use were complex
and varied.
Final results on the effectiveness
of New Hope in meeting its goals must await later reports
on program impacts. Nevertheless, this report illustrates
how the New Hope Project succeeded in putting in place services
that have the potential to provide low-income workers with
a bridge from below-poverty incomes to greater economic security.
Judith M. Gueron
President
Introduction
Much of the current
effort to find new strategies for helping the poor is focused
on finding ways to link income support more closely to work
or work-related activities. The New Hope Project in Milwaukee,
Wisconsin, offers an innovative approach to reducing poverty,
reforming welfare, and addressing the economic insecurity
of low-income workers. It seeks to increase employment and
reduce poverty by creating better financial incentives to
work and by changing labor market opportunities; it offers
assistance that enables poor people to support themselves
and their families through full-time employment. New Hope
serves as a model program for planners involved in the design
of welfare reform and antipoverty programs nationwide. It
addresses many issues on the nation's social policy agenda,
including the design and operation of the Earned Income Credit
(EIC) for low-income workers, community service jobs for people
who need employment, and access to health insurance and child
care for working families.
Participation in the
program is voluntary, and eligibility is based on income and
a willingness to work at least 30 hours per week. Adults (defined
as age 18 or over) are eligible regardless of whether or not
they have children or are current or past recipients of public
assistance. Persons meeting these criteria are eligible to
receive these benefits or services:
- help in obtaining
a job, including access to a time-limited, minimum-wage
community service job (CSJ) if full-time employment is not
otherwise available;
- a monthly earnings
supplement that when combined with federal and state EICs
brings most low-wage workers’ incomes above the poverty
level;
- subsidized health
insurance, which gradually phases out as earnings rise;
and
- subsidized child
care, which also gradually phases out as earnings rise.
New Hope staff are
actively involved with participants — explaining the
rules for accessing the various program components, providing
information on health and child care services, reaching out
to those not active in the program, and serving as coaches
to support individuals’ employment efforts.
New Hope operates outside
the existing public assistance system, though it is designed
to be replicable as government policy should the demonstration
findings be favorable. It is 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 is 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
is to provide credible information to policymakers on the
implementation, effectiveness, and costs of the New Hope approach.
In 1994, program designers initiated a demonstration of the
program in two inner-city areas in Milwaukee. New Hope operated
in two racially and ethnically diverse areas of the city (defined
by two zip codes) that are economically depressed, but nevertheless
contain working residents and households that do not fit the
stereotypes of "dysfunctional" families. Geographic
targeting of New Hope was intended to concentrate resources
in two areas with high levels of poverty, thus allowing a
more detailed analysis of program context than would be possible
in a program that served a wide geographic area.
New Hope contracted
with the Manpower Demonstration Research Corporation (MDRC)
to conduct an independent evaluation of the program's context,
implementation, impacts on key outcomes, and costs. Among
the central questions in the evaluation are: How much will
New Hope services actually be used, and do those with access
to New Hope achieve better outcomes than those with access
to the pre-existing service supply? In order to provide a
reliable test of the difference the program made, 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). The differences in the two groups’ outcomes
over time (for example, their differences in employment rates
or average earnings) are the observed impacts of the program.
This report examines
the creation of the New Hope Project, the implementation of
the demonstration, the labor market and neighborhood context
of the experiment, and the use of program services by participants.
It offers insights on program design, administrative and operational
issues, and benefit use rates in New Hope. A future report
will analyze program impacts and costs.
The early findings
on implementation and program use, reported here, reveal that
the New Hope package of benefits and services has considerable
appeal for participants seeking to work and support themselves
and their families. Even though this program may differ from
reforms contemplated elsewhere, it has much to teach about
the nature and appropriate responses to issues arising as
programs change to supplement the payoff from work.
I.
Findings in Brief
A. Demonstration
Context
- New Hope was
implemented in a strong labor market and a time of rapid
change in the welfare system. In late 1995 at the point
that recruitment for New Hope ended, the unemployment rate
in the Milwaukee metropolitan area was low. However, much
of the growth in jobs, especially those open to workers
without a high school diploma was occurring in suburban
locations difficult for residents of the New Hope neighborhoods
to reach by public transit. Thus, while these strong labor
market conditions increased the overall probability that
those in New Hope could find an unsubsidized job and access
program benefits, CSJs would still remain important for
some participants. In addition, the public welfare system
in Milwaukee and the State of Wisconsin was undergoing major
reform. Within Aid to Families with Dependent Children (AFDC),
program participation and work requirements increased over
time and the caseload dropped substantially. At the same
time, cash assistance under the county’s General Assistance
program ended. These contextual factors do not invalidate
the basic comparisons involved in the study of program impacts
because they affect both those served within New Hope and
those in the control group, but probably a more disadvantaged
group applied for the program and fewer participants needed
CSJs than would otherwise have been the case.
- Within this changing
context, New Hope offered a distinct package of benefits
and services with broader eligibility rules than normal
in income support programs. For most single individuals
and families without children, New Hope's benefits were
not available under any other program. Even for families
with children — the group typically served in public
assistance programs — the package of benefits was unique.
For these families, some of New Hope's benefits are available
through other sources; subsidized health insurance and child
care are available through public assistance programs and
Medicaid, and earnings supplements are available through
the federal and state EIC. However, paid CSJs are typically
not offered. Furthermore, one premise of New Hope's design
is that the combination of benefits is more than the sum
of its parts because together they address the main barriers
to the achievement of an income above poverty through work.
Also, the assistance and "coaching" of New Hope
project representatives can help participants take greater
advantage of the services than they otherwise might.
B. Program Implementation
- Recruitment for
the New Hope Demonstration occurred over a 16-month period
beginning in July 1994 and produced a diverse sample for
this research that in many ways reflected the characteristics
of the eligible population in the neighborhood. Program
applicants resembled in most ways the larger pool of neighborhood
residents eligible for the program and interested in its
services. Applicants included those traditionally served
in public assistance programs (for example, unemployed parents
with dependent children) and also low-income working parents
and adults without dependent children. Recruitment proved
a difficult challenge for New Hope staff. Key problems were
finding ways to bring the program to the attention of potential
applicants and explaining the geographic eligibility rules
and program participation requirements. However, when people
who met the program’s eligibility rules attended an
orientation explaining the program, most found it an attractive
option and applied to participate in the demonstration.
- The community-based
organization operating New Hope successfully put in place
the intended program services. Program services were
fully implemented and available to program group members.
A vital role is played in the New Hope program by the "project
representatives," staff who explain program services,
compute benefits, and monitor participation for their caseloads
of approximately 75 participants each. Despite such efforts,
participants had some difficulties understanding how the
various parts of the New Hope offer worked.
- The random assignment
impact research design was successfully implemented, providing
a means to understand the net impact of New Hope on key
outcomes. The goals of achieving a diverse and sizable
sample were met; the background characteristics of the program
and control groups are similar, allowing a comparison of
the program and control groups’ levels of employment,
earnings, public assistance receipt, family and child outcomes
(where applicable), and other key measures. These findings,
based on follow-up using administrative records and a survey,
will be the subject of a later New Hope evaluation report.
C. Program Use
- At some point
in the year following random assignment, approximately three-quarters
of the applicants accepted into the New Hope program group
worked full time and claimed a program benefit. Use
of New Hope benefits is affected by the availability of
and changes in other "safety net" programs, as
described earlier in this summary. During the follow-up
period for this report, earnings supplements were most frequently
used (by 72 percent of the program group), followed by health
insurance (38 percent), and child care (23 percent). Twenty-four
percent took a CSJ for at least a day as a way to meet the
New Hope requirement of employment. About 60 percent of
these CSJ workers made a transition to a full-time, unsubsidized
job at a later point in the follow-up period, which qualified
them for New Hope benefits.
- People used the
program in many different ways, with differences in use
reflecting their different initial circumstances, their
ability to find and retain a full-time job, and their desire
to maintain contact with the program. After an initial
start-up period (defined as the first three months after
random assignment), 32 percent of the program group used
benefits steadily or nearly so, 39 percent intermittently,
and 29 percent not at all. Since most participants do not
use services continuously, it appears that New Hope serves
principally as a resource for those beginning employment
and as a support and safety net for those who obtain a job.
Later data collection will provide details about reasons
for nonuse of program benefits.
II.
The New Hope Program Design
A.
The Program Model
Four principles underlie
the New Hope program: (1) that people who are willing and
able to work full time should be assured the opportunity to
do so; (2) that people who work full time should not be poor;
(3) that people who work more hours should take home more
pay; and (4) for those eligible for public assistance, that
full-time work should make people better off financially than
they would be on welfare. These principles are realized by
providing four benefits and services to participants who are
willing to work an average of at least 30 hours per week:
help in obtaining a job (including access to a CSJ if full-time
employment is not otherwise available), an earnings supplement
to bring low-wage workers’ income above the poverty level,
subsidized health insurance, and subsidized child care. The
major benefits and services offered by New Hope are summarized
in Table ES.1.
The program is designed
so that there will always be a financial incentive to increase
work hours and earn higher wages. Because the New Hope earnings
supplement and subsidies for health insurance and child care
decline as earnings rise, a participant does not see a $1
increase in total income for each $1 increase in earnings.
New Hope designers developed an earnings supplement that phased
out at a slow enough rate so that participants always saw
total income rise as they worked more or earned higher wages.
In New Hope, people see at least a $.30 rise in total income
for each $1 increase in earnings, compared with no increase
in total income for some existing public assistance programs
that reduce their grant $1 for each $1 earned.
New Hope is intended
to be flexible. People in the program group may enter and
exit voluntarily and use whichever benefits they need. They
may also access public assistance alone or in combination
with New Hope if they wish and are eligible. However, receipt
of New Hope benefits generally makes people ineligible for
welfare benefits because their total incomes become too high.
Some people may use New Hope on an ongoing basis to boost
their incomes and help them stay employed; others may use
it as insurance for the times they need help. At all times
staff try to provide full explanations to participants of
program operation, benefits, and alternatives. In short, New
Hope is a new antipoverty resource for individuals willing
and able to work.
B. The New Hope
Demonstration
During the demonstration,
the New Hope Project is serving a diverse program group of
678 low-income people drawn from two areas of inner-city Milwaukee.
The eligibility requirements are that applicants must live
in the targeted service areas, be age 18 or over, be willing
and able to work at least 30 hours per week, and have a household
income at or below 150 percent of the federally defined poverty
level. Single- and two-parent families and adults without
children who meet income and geographic eligibility requirements
are eligible to participate, and no past or current receipt
of public assistance is required. Because of budgetary constraints,
the New Hope offer is open to members of the program group
for a period of three years from the date they became part
of the demonstration. Such a time limit is not integral to
the design of the program, and the New Hope demonstration
was not intended to provide a test of the effects of time
limits on public assistance.
The New Hope program
is being evaluated to determine its effects on economic measures
such as employment, income, public assistance use, access
to and use of health insurance, and purchase of paid child
care. In addition, the evaluation seeks to assess the consequences
for participants’ sense of well-being as reflected in
various other measures of material well-being, family stability,
and progress in achieving personal goals. The evaluation will
also focus on understanding outcomes for families with children.
III.
Program Context
A. Labor Market
Conditions
New Hope was
implemented during a period of strong economic growth and
falling rates of unemployment in the Milwaukee metropolitan
area. However, as in other older metropolitan areas, a “spatial
mismatch” was evident: The greatest employment growth
was occurring in the suburban fringe, not in the central city
and not in the vicinity of the New Hope target areas. While
many jobs are still available in the central city, the selection
and wages offered are not generally as good as elsewhere in
the labor market.
B. Public
Assistance Reforms
Profound changes
have also been occurring in the state and national welfare
systems. General Assistance (a program of cash assistance
largely for single adults and families not eligible for federally
funded welfare) was recently eliminated in the State of Wisconsin,
and the state’s AFDC program (now called Temporary Assistance
for Needy Families) became more restrictive. In early 1996,
the state began requiring applicants for AFDC to conduct a
job search prior to the approval of their AFDC grant and linked
payment of AFDC benefits to compliance with program participation
requirements (with reductions in the benefit for hours of
required activities or work missed). Both of these changes
are elements of a major state welfare reform initiative —
Wisconsin Works — which was implemented statewide in
September 1997. Since New Hope operates entirely outside the
public assistance system, any New Hope program group members
who are also receiving public assistance are required to comply
with relevant program requirements. Receipt of New Hope benefits
normally raises a person’s income above the eligibility
cutoff for cash assistance, but participants may still be
receiving Food Stamps and Medicaid.
By altering the
prospects for persons relying on the traditional safety net
provided by AFDC, these state changes have affected, and will
continue to affect, program group members’ perceptions
of the usefulness of the New Hope package (probably making
it more appealing relative to welfare) and the alternatives
available to members of the control group (making them more
linked to work effort, like New Hope). These changes did not
affect low-income program group members who were not receiving
public assistance and were not contemplating accessing the
affected programs.
Despite these
changes, New Hope’s package of benefits and services
remains unique in Milwaukee and control group members cannot
access any comparable program. No other provider offers paid
CSJs and earnings supplements. Other New Hope benefits and
services — job search assistance, health insurance, and
child care assistance — may be available in some form
through the welfare department (or in the future Wisconsin
Works service providers) or other agencies. New Hope offers
an alternative to services through the public assistance system
and serves people who are ineligible for welfare.
C.
Conditions in the New Hope Target Neighborhoods
The two areas targeted
by New Hope have high unemployment and high poverty, and contain
many families receiving welfare. They include many census
tracts that have been identified in recent social science
literature as exhibiting "ghetto poverty." Initially,
program recruitment focused on smaller geographic areas that
were based on census tracts. To facilitate recruitment by
providing more easily identifiable target areas, they were
expanded to include addresses in two entire zip codes: 53208
on the Northside of the city and 53204 on the Southside. The
location of the target areas is illustrated in Figure
ES.1. The majority of the population in the Northside
area is African-American, while in the Southside area Hispanics
predominate. In both areas there are more women than men,
but the imbalance is somewhat greater on the Northside. Educational
attainment is somewhat higher on the Northside; 66 percent
have a high school diploma or a General Educational Development
certificate (a GED), versus 57 percent on the Southside. Mobility
is also substantial in both areas: One-third of Northsiders
and one-quarter of Southsiders had lived at their current
address less than a year when they applied to New Hope.
At approximately the
end of New Hope recruitment, the circumstances of residents
in the New Hope target areas were assessed with the New Hope
Neighborhood Survey (NHNS), a general household survey of
a random sample of more than 700 respondents from the two
New Hope zip codes. Although substantial parts of both the
Northside and Southside recruitment areas were economically
depressed, the survey reveals that these neighborhoods contain
many working residents and two-parent families. Nevertheless,
one adult in four was jobless; among African-Americans the
jobless rate was 47 percent. Almost 50 percent of the jobless
residents reported that they were available for full-time
work. About 70 percent of the jobs reported by employed residents
of the targeted neighborhoods produced earnings in the range
that made them eligible for the means-tested EIC. One-fourth
of full-time workers and two-thirds of the part-time workers
did not have health insurance. Few full- or part-time workers
received assistance with child care.
The NHNS suggests that
New Hope’s diagnoses of the problems confronting low-income
workers and unemployed individuals in the target neighborhoods
is relevant for a substantial portion of area residents. Many
people appear to need jobs, child care, and health insurance.
Using the NHNS, an estimate was constructed of the number
of persons who fell within New Hope’s income eligibility
rules and reported that New Hope would interest them "a
great deal" if it were made available to them. Using
this approach, one adult in four in the New Hope target area
was judged a likely participant. Of these 12,400 people, 78
percent were jobless at the time of the survey and 59 percent
live in households with children present.
The NHNS also identified
some labor market difficulties facing residents that are not
directly addressed by the New Hope program. Almost two-thirds
of the 12,400 people referred to above lack a high school
education. Eighteen percent of adults who reported being jobless
but available for full-time work cited lack of transportation
as a reason for not having a job. New Hope does not include
skills training or transportation facilities; but project
representatives are expected to refer participants to other
agencies and programs to obtain these services if needed.
IV.
Program Recruitment and Sample Characteristics
A. Recruitment
Challenges
Recruitment of the
sample was more challenging than staff had anticipated, partly
because of the special circumstances of a research demonstration,
which would not be present in an ongoing program. Achieving
the sample goals required multiple recruitment tactics, a
sustained campaign over many months, and expansion of the
original target neighborhoods. Among the difficulties encountered
were the constraint imposed by geographic targeting to two
relatively small areas that could not be described easily;
the resulting inefficiency of using many outreach tools such
as newspapers, television, and radio that served the entire
metropolitan area; residents’ unfamiliarity with New
Hope; people "tuning out" new messages because of
information overload; and the possible negative effects on
word-of-mouth recruiting and willingness to enroll created
by the research requirements, including the random assignment
process.
Once contact was made,
some people had trouble understanding or believing the New
Hope offer; the arbitrary feel of the geographic restrictions,
the unfamiliarity of the package of New Hope benefits, the
complexity of the earnings supplements and copayment requirements,
and the "too good to be true" nature of the offer
all had to be overcome. Nevertheless, most of those who attended
New Hope orientations and were eligible for the New Hope offer
found it appealing and followed through with an application
for the program.
In sum, the experience
provides another illustration of the difficulty that new programs
face in establishing themselves as "known quantities"
within low-income communities. A telling measure of this difficulty
comes from the NHNS: Even in the immediate aftermath of the
recruitment campaign, 86 percent of eligible residents reported
that they knew nothing about New Hope.
B.
The New Hope Research Sample
The New Hope research
sample (678 program and 679 control group members) was recruited
over a 16-month period starting in July 1994. The recruitment
effort led to a diverse sample, as the program operators desired.
Table ES.2 summarizes
the characteristics of applicants in the research sample.
Applicants included
people who at random assignment were employed and unemployed;
on welfare and not on welfare; living alone, with children,
and/or with a spouse or partner; and from different racial
or ethnic groups. Nearly everyone in the sample had work experience.
However, all had low earnings (97 percent had earned less
than $15,000 in the prior 12 months); and 71 percent had used
some type of welfare or Medicaid in the previous 12 months.
Forty-three percent of the sample lacked a high school diploma
or GED.
Persons who applied
to New Hope often indicated (in focus groups and conversations
with project reps) that they were ready to make a positive
change in their lives. In addition, applicants were often
recruited from other service organizations in the community,
implying that there may be a high level of participation in
employment and social service programs other than New Hope
by both program and control group members. This reinforces
the importance of documenting participation in the program,
comparing it with participation in other programs, and conducting
an impact analysis of key program outcomes.
The research sample
appears representative of the eligible residents in the target
neighborhoods. Comparison of the characteristics of NHNS respondents
interested in and eligible for New Hope services with actual
program applicants in the research sample reveals few major
differences, and most of these are attributable to specific
strategic recruitment choices (for example, maintaining rough
equality between the Northside and Southside samples or emphasizing
inclusion of single individuals).
V.
Program Operating Experience
All of the New Hope
components — the earnings supplements, health insurance,
child care assistance, and CSJs — were implemented and
readily available to those assigned to the New Hope program
group. There is no typical New Hope participant; in fact,
the program is designed with an expectation that people will
use the program in different ways. However, describing how
the program works in general and for several hypothetical
participants is useful in conveying how participants interacted
with and used the program.
A. Experiencing
New Hope
With few exceptions,
participants access New Hope benefits and services by talking
with the project representatives (project reps), who see their
role as encouraging maximum use of these benefits and services
to raise participants’ household income and improve their
future economic prospects. Many participants seek only one
or two of the New Hope benefits; the earnings supplement,
for example, is used by virtually everyone active in the program.
Others do not fully understand the various components of the
program or how they can use them. Project reps try to make
participants aware of their options and inquire regularly
about changes in employment or family circumstances that might
cause participants to need different benefits or services
than they had in the past. Reps also serve as informal counselors
and as "coaches" when people are searching for employment,
providing leads on jobs and help in developing employment
plans and résumés. In these roles, many of the project reps
are able to draw on personal experience, having an "I
have been there" credibility. For many participants,
the help and encouragement offered by project reps is reported
to be as helpful as the financial benefits offered by the
program.
People working 30 hours
or more per week are eligible for the earnings supplement
and health insurance and child care. Those not working full
time conduct an individual job search, with some assistance
from project reps, to find qualifying employment. If they
do not find full-time work after a search of eight weeks,
they can interview for a CSJ that pays the minimum wage and
that allows them to access other New Hope benefits. If they
have been working and lose a job, a three-week job search
is required prior to the offer of a CSJ. Staff have developed
more than enough CSJ slots in various nearby nonprofit agencies
for participants to choose from, but participants have to
interview for the jobs, be selected by employers, and meet
the attendance and other standards expected of regular employees.
About 40 percent of CSJs are office support or data entry,
30 percent are construction and property maintenance, and
the remainder are spread over a wide range of occupations.
Once participants are
working and eligible to take advantage of New Hope’s
financial incentives, the project reps’ role includes
benefit processing. To qualify for financial benefits, New
Hope participants have to provide proof of full-time employment
by the fifth of each month. Reps review the pay stubs submitted
to determine hours and earnings, and use worksheets and automated
payment schedules to calculate the amount of benefits (earnings
supplements and subsidies for health insurance and child care)
that participants are to receive. Benefit processing is done
on a monthly basis with payment made by the twentieth of the
month following employment so that the amount of work and
earnings will be quickly reflected in participants’ benefits.
The child care and
health insurance assistance provided by New Hope is largely
a financial transaction. Participants must find a qualifying
child care provider they like; New Hope does not run its own
child care center, nor do staff refer participants to specific
providers. Payments can be provided to any state licensed
or county certified provider, and the participant is required
to pay a portion of the cost of child care through a copayment,
adjusted based on family size and income. New Hope reimburses
providers up to the same maximum level as the county provides
for welfare recipients enrolled in work programs.
Of the benefits offered
by New Hope, health insurance is mentioned as the most important
by many participants and staff. While some participants are
covered by employer health insurance or Medicaid, for those
without coverage, the New Hope benefit is often the only affordable
option. Participants working the required hours and not covered
in another way can enroll in a health maintenance organization
(HMO) that provides comprehensive services. Most choose the
HMO that is used by the Milwaukee County Medicaid program.
The participant copayments are set to reflect income and household
size and are intended to fall within the range of the premiums
that workers in many employer-sponsored plans pay.
Staff learned that
it took continued effort to educate participants about the
benefits and services available and to help participants understand
how to use New Hope when their needs and circumstances changed.
Despite these efforts, many participants had difficulty understanding
how the benefits and services worked. Participants had the
most difficulty understanding how earnings supplements were
calculated, especially because of fluctuations in supplement
checks. Differences in earnings from month to month often
occurred because of differences in the number of pay days
in a month or changes in hours worked. Former welfare recipients
often were uncertain how New Hope supplements worked because
they were used to relatively stable monthly welfare grants.
Participants also had some difficulty understanding how health
insurance and child care assistance would be affected if they
lost a job or had a cutback in hours of work.
B. Illustrative
Cases of New Hope Participants
Rather than creating
a set sequence of services, New Hope designers created
a collection of services and benefits that they believed
would serve the needs of people in a variety of circumstances.
The following three examples, two defined based on use of
New Hope and one for a group often excluded from income support
programs, illustrate the varying ways in which people use
the program.
- Steadily employed
full-time workers: About one-third of participants
entered New Hope already working full time. Nearly three-quarters
of these participants are women, about one-fifth were living
with a spouse or boyfriend/girlfriend, and about three-fourths
had children who lived with them. About one-fourth were
receiving AFDC at entry into New Hope, and about one-fourth
had earnings of $10,000 or more in the prior year.
For these participants,
New Hope serves as a means to increase the returns from
work and raise household income and — for many —
a way to access health insurance and child care. If the
participant in a household with one worker and two children
works 30 hours per week at a minimum wage job, she would
earn $618 per month, and receive a New Hope earnings supplement
of $131, plus state and federal EICs of $281. In addition,
she could access subsidized child care (by making a copayment
of $65 per month) and health insurance (by making a copayment
of $14 per month).
As long as a participant
is working full time, her main contact with the program
will come when she submits her pay stubs each month and
receives her financial benefits soon thereafter. Project
reps may have to explain differences in benefits from
month to month if her earnings fluctuate and may play
an informal counseling/adviser role, depending on the
issues the participant faces and how she chooses to use
the New Hope program.
- Unemployed
persons without recent work experience: About one-fourth
of the sample entered the program unemployed and with no
earnings in the prior year. In terms of gender, age, race,
parental status, and household composition these participants
were quite similar to those who entered the program with
a full-time job. However, only 83 percent had ever been
employed and 66 percent had ever held a full-time job. Further,
rates of receipt of public assistance were higher and education
levels lower than for those working full time.
The community service
job option is intended to provide participants who are
unable to find an unsubsidized job with employment that
qualifies them for New Hope benefits. Slightly more than
one-third of those without recent earnings took advantage
of this option. If a required initial eight-week job search
does not produce employment, project reps refer participants
to designated New Hope staff who help them find a CSJ.
The New Hope CSJ placement coordinators have listings
of potential employers, and participants pick jobs they
are interested in and interview for the position. CSJs
give participants a chance to establish a work history
and gain references, assess the pros and cons of various
occupations, and build up some skills needed in the workplace.
Once hired in a CSJ, they submit pay stubs to qualify
for benefits like any other working participant, and the
benefits they receive are calculated in the same way.
New Hope staff seek to maintain contact with CSJ employers
to determine how participants are doing on the job and
whether employers are providing adequate supervision and
feedback on employee performance.
Staff emphasize
that CSJs are temporary placements, and participants are
encouraged to continue their job search for an unsubsidized
job and leave a CSJ for regular employment prior to the
six-month limit. As the end of a placement nears, staff
remind participants that they need to be conducting a
serious job search to find employment that will allow
them to continue their New Hope eligibility.
- "Single"
men: About one-sixth of the sample is made up of
men who are living with neither spouse nor other partner
and without dependent children. Members of this group have
traditionally been excluded from many public assistance
programs, but are eligible for New Hope if they meet income
and willingness-to-work tests.
Single men in the
sample tend to have a somewhat stronger work history than
the rest of the sample, but fewer resources on which to
rely when unemployed. Only 30 percent were receiving any
kind of public assistance at application compared with
63 percent of the full sample. This lack of a safety net
may help explain the special appeal of New Hope to unemployed
single men; the unemployment rate for single men in the
sample is higher than for the sample as a whole.
A higher-than-average
percentage of single men need to find employment to establish
eligibility for New Hope benefits. Despite their need
for full-time employment, these men are no more likely
than other participants to use CSJs. The men are often
seeking as a long-term job a type of employment (either
an occupation or industry) not included among the nonprofit
CSJ employers. They tend to conduct individual job search
or use CSJs as a steppingstone to other work. They usually
need health insurance, but rarely access subsidies for
child care. When working 30 hours a week at the minimum
wage, single men earn $618 per month and receive a New
Hope earnings supplement of $141 per month. Further, they
can access subsidized health insurance for a copayment
of $6 per month.
C. The Use of
New Hope Benefits
In
program evaluations the use of program services is often of
interest, but it is central to the New Hope story. In many
other programs designed to help people find work (for example,
training programs and job clubs), participation in the program
is still one step removed from the outcome of central interest:
employment. In New Hope, work is an eligibility rule for the
program. For people to receive the New Hope benefits, they
have to work full time. Hence, information on receipt of program
benefits also conveys early information about the level of
full-time work for those in the program group.
Table
ES.3 provides summary data on benefit use for the portion
of the New Hope program group for which 12 months of post-random
assignment follow-up is available. Seventy-four percent of
New Hope participants received at least one New Hope benefit
at some point during the 12-month follow-up. Earnings supplements
were used the most (by 72 percent of the program group), followed
by health insurance (38 percent), CSJs (24 percent), and child
care assistance (23 percent).
In interpreting these
use rates, it is important to remember that New Hope is designed
so that participants can access only those benefits that they
want or need. Participants who are covered by employer health
insurance, for example, do not need New Hope’s health
insurance. Participants who had been receiving AFDC are encouraged
to use transitional Medicaid and child care assistance before
using New Hope’s benefits. About 30 percent of the sample
lived in a household without children and therefore had no
need for child care. It is also important to remember the
labor market context in interpreting the CSJ use; the strong
local economy meant that most participants found jobs in the
private economy.
Once people moved beyond
what might be considered a start-up period (the first three
months after random assignment when unemployed applicants
could find a job and qualify for benefits), approximately
two-fifths of the program group used some type of New Hope
benefit in a given month of follow-up. In this post-start-up
period, about one-third of the entire program group used at
least one New Hope benefit continuously or nearly continuously,
about one-third used a benefit intermittently, and about one-third
did not use any benefit.
Among subgroups:
- Those who were
working at entry into the study, and especially those
working full time, were more likely to access New Hope benefits,
and used these benefits for more months on average.
- Of applicants
with children (about 65 percent of whom were receiving
AFDC at application to New Hope), those with access to
a car and those with a high school credential
were more likely than those without these characteristics
to use benefits.
CSJs were intended
to be the job of last resort for participants and tended to
enroll lower-skilled and less-experienced individuals. Twenty-five
percent of the participants who used CSJs moved directly into
full-time, unsubsidized employment. The remaining 75 percent
quit or left for personal reasons, were terminated by employers,
or reached the CSJ time limit (six months in a placement and
a total of 12 months overall) without finding unsubsidized
work. But about half of those who left a CSJ without other
employment found full-time unsubsidized work that qualified
them for New Hope benefits at some later point in the 12 months
of follow-up. Thus, about 62 percent of those working in a
CSJ did make a transition to unsubsidized, full-time work
during the 12-month follow-up.
A full explanation
of why some in the program group did not use New Hope benefits
and services will have to await completion of follow-up surveys
with program group members. Among the known reasons, the two
most common were that participants moved out of state or dropped
out of the labor market to pursue schooling or become homemakers.
In most instances, the reasons for nonparticipation are not
clear. It could be that these individuals do not understand
New Hope’s eligibility rules, decide to use the program
only as "insurance" when they experience a job loss
or other problem, have had negative experiences with the program,
or have income exceeding program eligibility guidelines.
Whether these results
are good or bad news for New Hope is hard to tell at this
point. Complete information is not yet available on the employment
behavior of the program group, nor is any information on the
employment and service use of the control group outside New
Hope (especially on child care and health assistance) ready
to analyze. The follow-up survey currently in the field will
yield information on why program group members did not use
New Hope in months of nonuse.
The results presented
in this report suggest the importance of recognizing that
people do not use a program like New Hope in a simple way:
Few of the program group members joined the program and immediately
started participating, used the benefits continuously, and
moved off the program permanently to "self-sufficiency."
(Longer follow-up beyond the current 12 months will reveal
the percentage leaving the program because their income has
increased above program limits.) Instead, the use of benefits
is likely to be much more complex and "nonlinear."
Just as people go on and off welfare, get and lose jobs, and
move into and out of poverty, their use of New Hope benefits
will change to reflect these dynamic elements in their lives
that affect their use of the New Hope benefits. Policymakers
need to anticipate this pattern of use in work-based programs
like New Hope, which fill the gap between earnings from available
private market jobs and the poverty level and provide employee
benefits not otherwise obtainable. Program designers and operators
need to plan for multiple entries, exits, and spells of activity.
Assessment
of the net effect of the New Hope offer on the likelihood
of employment, movement to self-support, and movement out
of poverty of program group households awaits accumulation
of more data and comparison of outcomes between program and
control groups. This comparison will be the subject of a later
New Hope report.
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