Encouraging Work, Reducing Poverty: The Impact of Work Incentive Programs

The Minnesota Family Investment Program, the Canadian Self-Sufficiency Project, and Milwaukee's New Hope Project are three antipoverty programs that were undertaken in the 1990s to end dependency on welfare by "making work pay." The impacts of all three programs were reviewed and compared to those of the Seattle/Denver Income Maintenance Experiment, which was a "negative income tax experiment" conducted in the 1970s in response to the mushrooming growth of welfare programs and policies that discouraged welfare recipients from taking jobs. The review focused on the following issues: (1) program impacts in the areas of promoting work and reducing poverty; (2) effects of targeting and program design on program impacts; (3) ways universal support programs might reduce work; and (4) unintended consequences of targeted work incentive programs. The comparative analysis confirmed that all three work incentive programs have effectively achieved their goals of increasing work and income among single parents without incurring many of the unintended negative consequences on employment among the working poor that plagued past welfare reduction policies. When work incentive programs were linked to participation mandates or conditioned on full-time work, they substantially increased the employment, earnings, and total income of long-term welfare recipients. (Contains 54 references.) (MN)