Low-income working parents often find that earnings from their jobs alone leave their families not much better off than they would be if they were receiving welfare benefits. This situation has led policymakers and program operators to search for new strategies that “make work pay” by lifting these families out of poverty while continuing to support parents’ efforts to remain employed, in effect building a safety net around work. These efforts stand in stark contrast to past ones, when strategies to decrease poverty were not tied to work and actually discouraged it.
Through several rigorous studies of efforts to support low-wage workers with earnings supplements, MDRC has contributed significantly to the emerging understanding of how to improve low-income families’ economic well-being while encouraging work. The evaluation of the Minnesota Family Investment Program tested a strategy to provide more generous financial rewards to people who held jobs while on welfare. The Milwaukee-based New Hope Demonstration and Canada’s Self-Sufficiency Project examined the effectiveness of innovative earnings supplement programs that operated outside the welfare system. Canada’s Earnings Supplement Project tested an innovative financial incentive designed to stimulate rapid reemployment of displaced workers and repeat users of unemployment benefits. As a whole, earnings supplements consistently increased employment and income, leading, in turn, to reductions in poverty and improvements in family well-being and in young children’s school performance.
MDRC is building on findings and insights gleaned from these completed studies in a series of investigations now getting under way. In the Opportunity NYC Demonstrations, MDRC is evaluating new forms of temporary cash payments to poor families to boost their income in the short-term while building their capacity to avoid longer-term and second-generation poverty. The Evaluation of Child Care Subsidy Strategies is examining how different child care policies affect the stability of parental employment and earnings, family well-being, and other outcomes. In the National Work Advancement and Support Center Demonstration, MDRC is assessing the merits of expanding the roles of Workforce Investment Act One-Stop Career Centers and similar organizations to increase low-wage workers’ access to job retention and advancement services and financial supports that complement work effort — such as health insurance, food stamps, child care subsidies, and the nation's largest support for the working poor, the Earned Income Tax Credit.
With support from the Rockefeller Foundation and the Charles Stewart Mott Foundation, the New America Foundation and MDRC have recently launched the AutoSave Pilot, a collaboration with employers to create savings mechanisms for low-wage workers that automatically divert, through payroll deduction, a small amount of an employee’s post-tax wages into a savings account.
In July 2010, the Mayor's Fund to Advance New York City and the NYC Center for Economic Opportunity (CEO) won a grant from the federal Social Innovation Fund (SIF) to build national evidence for antipoverty programs. MDRC is the design and evaluation partner in the initiative, which aims to replicate, improve, and continue testing five programs that draw on strategies that have shown evidence of effectiveness in New York City and elsewhere. Among the five is a replication of Opportunity NYC’s Family Rewards program in Memphis, TN and New York, NY, as well as a program called SaveUSA, which offers a matched savings account to low-income tax filers, building on the savings opportunity presented by Earned Income Tax Credit (EITC) refunds. SaveUSA will be implemented in New York, NY; Newark, NJ; San Antonio, TX; and Tulsa, OK.
Key Documents on Supports for Low-Income Workers
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