NCPA - National Center for Policy Analysis

Wisconsin's New Hope....W-2

June 27, 2000

Milwaukee, Wis., has been the testing ground for new welfare reforms. Whereas previous welfare reform concentrated on limiting benefits, Wisconsin's New Hope program raised them. Child care, health care and income subsidies were all increased. However, there was a catch. New Hope required 30 hours of employment a week to receive the benefits.

Unfortunately, the program, which was tried from 1994-1998, was not as effective as hoped for.

  • In the community targeted by New Hope, it took officials 17 months to get 11.4 percent of those eligible to even express interest and most of those enrolled were already employed for 30+ hours a week.
  • There were no significant reductions in the amounts paid to clients in cash welfare and Food Stamps.
  • Those that were working more than 40 hours a week reduced their hours and average wages fell by $0.46 an hour.

In 1997, Wisconsin Works (W-2) began and New Hope ended. W-2 set out to correct the flaws of New Hope. It had stricter work requirements (far fewer exceptions to the work quota were made), expanded the number of hours required (from 30 to 40), limited benefits to a certain length of time, and distributed benefits on an individual rather than family basis. Additionally, it opened welfare administration to competition by different non-profit groups.

W-2's results were far superior:

  • Wisconsin saved $10.25 million dollars in W-2's first 28 months and still spent 45 percent more per family according to the Wisconsin Policy Research Institute.
  • In the Hillside public-housing project the number of households with at least one full-time income jumped from 17 percent in January 1996 to 55 percent in January 1998.

While work remains to be done to improve the welfare system, the W-2 methodology of work-first and paternalistic encouragement seems to have done well.

Source: Amy Sherman, "Lessons of W-2", Public Interest, Summer 2000; Lawrence Mead, "The Twilight of Liberal Welfare Reform," Public Interest, Spring 2000.

 

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