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Interim Impact Findings:
Overall, New Hope increased employment and earnings, leading in turn to increased income during the first year of follow-up and enabling more low-income workers to earn their way out of poverty. New Hope’s effects on employment and income, coupled with its provision of health insurance and child care subsidies, set off a chain of beneficial effects for participants’ families and their children. On average, New Hope participants were less stressed, had fewer worries, and experienced less material hardship (particularly that associated with lack of health insurance) than control group members. Participants’ children had better educational outcomes, higher occupational and educational expectations, and more social competence; boys also showed fewer behavior problems in the classroom.
Analyses found that New Hope’s effects varied with the employment status of its participants at random assignment. On the one hand, those working part time or not at all needed to either find a full-time job or increase their hours of work to qualify for earnings supplements, health insurance, and child care subsidies. New Hope project staff assisted them in this process, sometimes by offering CSJs when they were needed. On the other hand, those working full time (30 hours or more) could take advantage of program benefits immediately, without having to increase their work effort. Indeed, New Hope allowed these participants to make ends meet without excessive overtime or simultaneously holding multiple jobs.
Among those not employed full time at random assignment (about two-thirds of the sample), New Hope increased both work effort and earnings. Compared to the control group, New Hope reduced by half the number who were never employed during the two years of follow-up (from 13 percent for the control group to less than 6 percent for New Hope participants). Program group members who were not employed full time at random assignment worked in 5.5 out of 8 quarters (three-month periods covered by the earnings data for this report) compared with 4.8 quarters for control group members. The program increased average two-year earnings of the program group (including those who had no earnings) by $1,389, from $10,509 for the control group to $11,898 for the program group. This increase in earnings, boosted by New Hope’s earnings supplement and the Earned Income Credits (EICs), resulted in a substantial income gain of $2,645 over the two-year follow-up period, which made it possible for many of these participants to work their way out of poverty.
CSJs were important in bringing about the employment effect for participants who were not employed full time at random assignment. However, it is unlikely that the entire employment effect was due to this program component. For that to be the case, one would have to assume that no CSJ user would have worked if there had been no CSJs. The data suggest the opposite, because most CSJ users transitioned into unsubsidized employment once their eligibility for CSJ employment ended, and many CSJ users had both CSJ earnings and earnings from unsubsidized employment in the same quarter.
For the remaining one-third of the sample (those employed full time at random assignment), there were modest reductions in hours worked and earnings. These participants were less likely to work more than 40 hours a week and did not experience net income gains, partly because New Hope reduced their receipt of AFDC and Food Stamps. In the second year of follow-up, New Hope’s effect on income for this group was a reduction of $1,148, or 7.5 percent.
The evaluation includes a "Child and Family Study" (CFS) of family dynamics and outcomes for children. Focusing on sample members with children aged 3-12 at the two-year follow-up — 89.8 percent of whom were women, and 69.4 percent of whom were receiving AFDC at enrollment — this study found evidence that New Hope increased the use of center-based child care and other structured out-of-school activities. Among those employed full time at random assignment, New Hope increased the quality of parent-child interactions. This may reflect participants’ greater ability to achieve a sustainable balance between work and parenting by cutting down on long work hours.
To capture possible effects on participants’ children, the CFS obtained permission to survey teachers of these children. From the teacher reports, it appears that New Hope had substantial positive effects on the classroom behavior, school performance, and social competence of children in the sample. These effects occurred primarily for boys, who also showed less problem behavior and higher educational and occupational expectations than boys in the control group.
This report has important implications for policymakers and program developers who are concerned with improving the lives of low-income working families. The analyses show that a package of earnings supplements, health and child care benefits, and full-time job opportunities can substantially increase the work effort, earnings, and income of those who are willing to work full time, but need assistance to do so. Such effects are not limited to nonworkers and welfare recipients, but extend to many different groups of low-income people.
On the other hand, the analyses show that earnings supplements may lead to modest reductions in work effort among those already working full time or more than full time. Interestingly, New Hope shows that such reductions can be kept to a minimum and can actually benefit the families involved to the extent that these reductions limit excessive overtime or multiple jobs.
Finally, the New Hope evaluation shows how modest changes in income, employment, and family resources can have significant effects on noneconomic outcomes, such as family well-being and child outcomes. A narrow focus on economic outcomes may understate the effects of interventions like New Hope, whose benefits extend beyond those outcomes.
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