Holistic Wrap-around Services Can Improve Employment Rates
Introduction
A new wave of social service programs aims to build a pathway out of poverty by helping clients define their own goals and then supporting them flexibly and intensively over multiple years to meet those goals. The Rochester-Monroe Anti-Poverty Initiative (“RMAPI”), in partnership with the New York Governor’s State Anti-Poverty Task Force, piloted one such program called Bridges to Success (BtS), testing whether it can increase economic mobility for program participants resulting in improved self-sufficiency.
Espinosa et al. (2024) evaluate the impact of the BtS initiative through a 430-person randomized evaluation of the pilot program. Those that consent to be part of the study and complete an intake form are either randomized into the BtS treatment group or the comparison sample which receives referrals to other pre-existing community services. Given the goals of the program, the primary pre-specified outcome for the evaluation is employment, though many other areas of life are possible focuses for the participants (e.g., housing and financial outcomes).
The paper finds the BtS initiative to be effective at improving employment prospects in Rochester, NY. Participants randomly assigned to intensive, holistic, wrap-around services have 10 percentage points higher employment rates after one year compared with a control group offered only help with an immediate need. However, the paper finds limited evidence that intensive, holistic services affect areas beyond employment, even when other areas of life are participants’ primary goals.
Espinosa et al. (2024) estimates the MVPF of offering holistic, wrap-around services to individuals who are low income.
MVPF = 1.4
Net Cost
Because of its intensity, BtS is expensive compared with other social service programs. The program operates on lower caseloads than typical case management, which gives additional mentor time to each participants but also raises staffing costs. Based on program data, the typical participant costs about $5,500 x 1.25 = $6,875 (2020 dollars) to serve for one year, or $6,295 when deflated to 2015. The program also lasts longer than typical social service programs, with the average participant completing 1.65 years, yielding an average of $6,295 x 1.65 = $10,386 in direct costs per client.
The program also generates increases in earnings, resulting in increased tax revenue. The present discounted value of earnings increases by $4,465 during the three observed years, $13,927 if extrapolated out to ten years, and $29,801 if relative effects persist through age 65. Assuming an average tax rate of 9.5%, this yields tax savings of $429, $1,337, or $2,789.
The net cost is then $10,386 – $429 = $9,958 assuming the earnings increase only lasts three years. If the earnings increase persists for 10 years, the net cost is $9,050; if the earnings increase persists through age 65, the net cost is $7,597.
Willingness to Pay
The paper focuses on benefits to BtS recipients, measuring increased earnings via changes in the employment rate. Specifically, the paper estimates employment effects and multiplies these effects by earnings among employed members of the control group.
Earnings gains from BtS are substantial but depend on whether employment effects last beyond the time horizon of the paper’s data. The present discounted value of earnings increases by $4,465 ($4,036 after tax) during the three observed years, $13,927 ($12,590 after tax) if extrapolated out to ten years, and $29,801 ($27,012 after tax) if relative effects persist through age 65.
These are likely underestimates of the value of BtS to the extent that it generates improvements beyond earnings. As the paper does not find improvement in housing, education, health, social networks, family, or financial outcomes, focusing solely on earnings may be reasonable. On the other hand, the paper finds evidence that BtS generates cognitive benefits, like increased hopefulness and subjective improvements in goal achievement. The paper also only observes outcomes for the head of household. To the extent that participants value these other benefits or benefits accrue to other members of the household (e.g., children), this benefits exercise will underestimate the return to investing in such programs.
MVPF Summary
The paper finds that one dollar of net spending on BtS generates 0.41 to 3.56 dollars of net benefits via earnings. If benefits only last for three years, the MVPF is $4,036/$9,958 = 0.41. If the benefits last for 10 years, the MVPF is 1.39. If the benefits last through age 65, the MVPF is 3.56. At 7 years, the MVPF is 0.96, close to the break-even value of 1.
These values imply that a participant who cares only about income gains would prefer this program to a cash transfer if employment effects persist for at least 7 years.
References
Espinosa, Javier, William N. Evans, David C. Phillips, and Tim Spilde (2024). “How Do Holistic Wrap-Around Anti-Poverty Programs Affect Employment and Individualized Outcomes?” NBER Working Paper No. 32911. DOI: https://doi.org/10.3386/w32911
Policy Features
- Category
- Social Insurance
- Beneficiary Type(s)
- Adults
- Average Age
- 37
- Country of Implementation
- United States
- Empirical Method
- RCT
- Research Type
- Primary
- Peer Reviewed
- No
- MVPF Publication Link
- doi.org/10.3386/w32911