Creating New Hope
Implementation of a Program to Reduce Poverty and Reform Welfare
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.