New Hope Project Tried Guaranteeing Jobs
May 19, 1999
Project New Hope was a two-year, welfare-to-work experiment in Milwaukee, Wis., that guaranteed participants jobs -- either in the private sector at subsidized wages (via cash incentives to employers) or in jobs with nonprofit groups at minimum wages supplemented with cash assistance.
New Hope recruited 677 low-income adults -- two-thirds of whom were not on welfare -- and guaranteed them that if they worked 30 hours a week, their families would be raised above the poverty- line by a combination of pay and cash assistance. For a family of three, that threshold is now $12,802.
- Only 27 percent of the target group of were able to stick with the jobs long enough to work their way out of poverty -- but this was better than the 19 percent in a control group of poor people not in the program.
- The target group's average annual earnings were just $6,602, no better than the control group.
- But with cash supplements to wages, the program was able to raise total "earnings-related income" by 16 percent, to about $8,100 a year.
New Hope also recruited a second group of low-income persons who were already working full time and gave them two years of supplemental assistance.
- This group did worse than the group not in the program, with an average hourly wage of $7.28, about 6 percent lower than the control group.
- And their total income actually fell about 8 percent, to about $14,100 a year.
The New Hope experiment recently ended, but analysts are still debating how to interpret the results.
Source: Jason DeParle, "Project to Rescue Needy Stumbles Against the Persistence of Poverty," New York Times, May 15, 1999.
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