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Policy Framework
For some Americans, even full-time work is no ticket out of poverty. In some cases, wages are too low; in others, earnings are offset by the cost of necessities such as health care or child care. This reality belies a cherished American ideal: that anyone who works hard need not be poor. The principle guiding the New Hope Project, a demonstration program implemented in Milwaukee from 1994 through 1998, was to make this ideal a reality by virtually guaranteeing income above the poverty level to poor people who were willing to work full time. The project was launched by a community-based organization that believed in the effectiveness of this bold approach to encouraging work while reducing poverty and was committed to having it rigorously assessed. MDRC was selected through a competitive process to conduct an evaluation of the program in partnership with researchers at the University of Texas at Austin. Because New Hope served an unusually diverse cross-section of low-income people, the findings have wide-ranging implications for policies affecting the poor.
Agenda, Scope, and Goals
New Hope, which operated outside the public assistance system but was designed to be replicable as government policy, offered its enrollees these services and benefits:
- Job search assistance, and, if no full-time job could be found, a time-limited community service job
- A monthly earnings supplement that brought most low-wage workers’ incomes above the poverty level
- Subsidized child care and health insurance, both of which phased out as earnings rose
All adults over 18 in two low-income areas of Milwaukee who had income below a certain cutoff and a willingness to work at least 30 hours per week could apply for the program. These inclusive eligibility criteria set New Hope apart from other programs for low-income people, most of which are designed specifically for people who have children, receive public assistance, or both.
Design, Sites, and Data Sources
More than 1,300 New Hope applicants were included in the study. Starting in 1994, each was randomly assigned to New Hope, which made them eligible for the program’s services and benefits for three years, or to a control group. Because the two groups did not differ at the outset, any differences between them that later emerged can be attributed to New Hope.
Data sources used in the evaluation include unemployment insurance records, welfare and food stamp data from other state databases, and surveys of New Hope enrollees and control group members.
Effects on families and children were measured in the Child and Family Study, an in-depth look at 745 families who had at least one child between the ages of 1 and 10 at the time of random assignment.
Administered two, five, and eight years after random assignment, the surveys asked respondents for information about their employment history, job characteristics, other sources of income, material hardship, and access to health care as well as their feelings about their financial situation, job security, and — in the case of New Hope enrollees — experiences with the program. Respondents in the Child and Family Study also provided extensive information about parents’ and children’s well-being.
Findings
The project published a final report in July 2008.
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