In 2007, New York City officials launched three related initiatives testing distinct strategies for promoting employment and economic well-being among recipients of housing assistance, particularly those receiving rent subsidies through Housing Choice Vouchers (also known as “Section 8” assistance, after Section 8 of the Housing Act of 1937). Called the Work Rewards demonstration, the collection of interventions tested the effectiveness of New York City’s Family Self-Sufficiency (FSS) program alone, FSS combined with a set of special work incentives (or “reward payments”), and the special incentives by themselves. These interventions targeted voucher holders with household incomes under 130 percent of the federal poverty level.

MDRC designed Work Rewards in collaboration with Mayor’s Office for Economic Opportunity (NYC Opportunity), the city’s two housing authorities (the New York City Department of Housing Preservation and Development and the New York City Housing Authority), and Seedco, a nonprofit workforce and economic-development organization. The demonstration was part of a cluster of three studies collectively known as Opportunity NYC. The two other projects studied were Family Rewards (a comprehensive “conditional cash transfer” program) and Spark, an education-focused incentives program designed to improve the school performance of fourth- and seventh-graders.

Using randomized controlled trials, Work Rewards assessed the effects, or impacts, of an FSS program and special work incentives, separately and in combination, on the employment and the quality of life of nonelderly and nondisabled voucher holders. As the first random assignment evaluation of the federal FSS program in the United States, the New York City study generated the first evidence about this program’s effectiveness. FSS is the main federal strategy aimed at increasing employment and earnings and reducing reliance on government subsidies among housing voucher holders, and before Work Rewards there was no experimental evidence showing whether or not it actually achieved the self-sufficiency goals it was designed to produce.

Three reports released on the evaluation show that neither FSS model tested (FSS only or FSS + incentives) produced employment or earnings gains for participants overall, or, consequently, consistently reduced their reliance on public benefits. FSS combined with incentives, however, had a large, positive, statistically significant impact on the employment and earnings of participants who were not working when they enrolled in the study.

In March 2012, the U.S. Department of Housing and Urban Development selected MDRC to conduct a national evaluation of FSS, making it possible to build an evidence base that goes beyond New York City.

Agenda, Scope, and Goals

The Work Rewards initiative targeted recipients of Section 8 Housing Choice Vouchers administered by New York City’s Department of Housing Preservation and Development (HPD) and the New York City Housing Authority (NYCHA). It was designed to test the effects of alternative strategies to improve adults’ labor-market outcomes and family well-being. Work Rewards comprises two parallel studies.

The first — the Family Self-Sufficiency (FSS) study — involves individuals who were receiving housing vouchers from HPD, which operates one of the largest FSS programs in the country. FSS is a case management and asset-building program funded by the U.S. Department of Housing and Urban Development (HUD) and designed to promote economic advancement for low-income families receiving housing subsidies. According to HUD regulations, voucher holders pay 30 percent of their adjusted incomes in rent, with the government making up the difference. An increase in a household’s income therefore normally results in a rent increase. The FSS program’s asset-building component is intended to address this problem by putting these rent increases into escrow on a tenant’s behalf. Tenants are offered case management to help them set employment goals and gain access to job-search, educational, and training assistance, and supportive services. They receive their saved funds when they achieve their FSS goals and graduate from the program.

Eligible HPD voucher holders who volunteered to participate in Work Rewards were randomly assigned by MDRC to two program groups and one control group. Participants assigned to the FSS-only group completed a Contract of Participation and became eligible to begin building escrow savings. Participants who were assigned to the FSS + incentives group were also offered special cash incentives for two employment-related activities (securing full-time work and completing approved educational or training courses). Individuals who were assigned to the control group were not eligible for FSS services or the special incentives.

The second study in Work Rewards, the incentives-only study, tested the effectiveness of work incentives alone. It targeted households receiving vouchers from NYCHA. Sample members recruited for this study were randomly assigned to two groups: a program group, whose members were offered the special work incentives, and the control group, whose members were not offered any incentives.

The workforce-related incentives were included in both the FSS study and the incentives-only study to test whether the offer of a more immediate financial incentive promoting work would help counteract the potential effects of the rent rules governing housing vouchers. Because voucher holders pay more in rent when their incomes increase, the rent rules can act as a disincentive to boosting earnings. The FSS program’s escrow component is intended to address this problem through savings. The special workforce incentives, in contrast, offered a more immediate reward for boosting earnings through sustained full-time work and for acquiring knowledge and skills that might improve tenants’ earnings in the future. The special workforce incentives were offered for two years, and were paid every two months starting in September 2008.

Design, Sites, and Data Sources

The Family Self-Sufficiency (FSS) and incentives-only interventions were operated by Seedco, New York City’s Department of Housing Preservation and Development (HPD), and a small network of community-based organizations. The community-based organizations recruited 2,168 sample members from an eligible pool of HPD voucher holders, who were assigned to the FSS study, and 2,626 sample members from an eligible pool of New York City Housing Authority (NYCHA) voucher holders, who were assigned to the incentives-only study. Eligibility for Work Rewards was limited to voucher holders whose household incomes were no greater than 130 percent of the federal poverty line. Voucher holders across New York City were eligible to volunteer for the demonstration.

As described under “Agenda, Scope, and Goals,” the program and evaluation design differed depending on the source of the participant’s Section 8 voucher. NYCHA Section 8 voucher-holder applicants were randomly assigned to a program group that received the offer of incentives or to a control group that did not receive the offer. The comparison of the two groups shows whether the offer of financial incentives for sustained full-time employment and for taking up approved educational or training programs improved participants’ labor-market outcomes and other outcomes.

HPD Section 8 voucher holders were randomly assigned to three groups. One group was offered enrollment in an enhanced version of the department’s FSS program, operated by a number of community-based organizations located throughout the city. A second group was offered enrollment in FSS and received the additional workforce incentives. The third group, a control group, was offered neither of these options. The analysis comparing the FSS-only group with the control group shows whether HPD’s implementation of the FSS program in New York City improved participants’ employment, earnings, and other outcomes. Comparing the FSS-only and the FSS + incentives groups in this trial shows whether the incentives produced additional effects on top of those FSS produced on its own.

The evaluation drew on many forms of qualitative and quantitative data to report on participant experiences, program impacts, and program benefits and costs. These forms of data include six years of records on employment, earnings, welfare and food stamp payments, and housing-subsidy receipt from various New York City and New York State agencies; FSS services and milestones from a data system used by the program operators; FSS graduation and escrow outcomes from HPD; results from an in-depth survey completed by FSS study participants about 42 months after they enrolled in the program; qualitative data obtained through in-depth interviews with a sample of FSS participants and nonparticipants and through observations of program operators selected to implement Work Rewards; and program-operation costs.