Erika fell off the so-called benefits cliff when she received a raise from $9.20 an hour to $15 an hour. Erica's SNAP benefits (food stamps), Medicaid benefits, and Women, Infants, and Children (WIC) subsidy were reduced.
The next raise brings Erica's salary to $17 an hour. Because of her good fortune, she lost all benefits.
“I think it's a cautionary tale about wanting more for yourself while still receiving government assistance,” she said, focusing on education, affordable housing, employment, health and wellness issues. Erika said in a video shared by Freedom Communities, a Charlotte-based nonprofit organization that supports the government. Located in the city's Freedom Drive corridor.
(Erica's last name and that of Lavian, another woman who shared her profit cliff story, were not provided.)
Freedom Communities screened both videos during a presentation to the state's Joint Committee on Legislative Economic Development and Global Engagement. The Committee heard several presentations focused on the benefits cliff. A benefit cliff occurs when a promotion causes a family's income to exceed the eligibility criteria for welfare benefits, leaving the family in a worse financial position than before the wage increase.
The benefits cliff can cause workers to decline or delay new jobs or promotions for fear of losing government support.
Hannah Beavers, executive director of Freedom Communities, said the women's stories show the risks low-wage workers often take in their quest for a better life.
“We know that families need to increase their income to move out of poverty, but the costs to families are too high right now,” Beavers said.
Beavers said child care vouchers are critical for low-wage workers, especially single mothers. A single mother with two children could earn $16.75 an hour, or $38,840 a year, and qualify for such vouchers, she said.
“If you go one cent over that amount, you lose 100% of your child care voucher,” Beavers said.
The annual cost of early childhood care in Mecklenburg County is $14,000 per child.
“she [a single mom] I can't afford to take that raise, but I have to earn at least $22.15 an hour ($46,072 a year) to be able to afford a two-bedroom apartment, so I can't afford not to take it. '' Beavers said.
Beavers said children ages 0 to 4 are most at risk of eviction because their parents aren't getting enough raises to cover childcare costs.
“Then you won't be able to afford to pay rent,” she says. “However, 90% of children's brains are developed by the age of five, so these evictions and the stress and trauma that come with them are hindering the development of the next generation's brains.”
Legislative committees could consider whether to create a task force to study the benefit cliff during a short session starting next month and develop strategies to lessen the impact on low-income households.
According to a 2021 survey of Alabama workers shared by Brittany Berken, director of community and economic development at the Federal Reserve Bank of Atlanta, 37.7% of workers surveyed said they would like a raise or promotion. When asked if he had ever refused an offer, he answered “yes.” Fear of losing government aid.
33% of companies responding to a 2021 Florida Chamber of Commerce survey found that some employees and job seekers are not offering increased work, hours or other promotions due to fear of losing government benefits. reported reluctance to accept.
Mr. Barkin shared the state's strategy for mitigating the benefit cliff:
- florida: Lawmakers this year created Case Management as a transition benefit for households transitioning from cash assistance, giving local labor boards a tool to use with clients to show them the economic impact of changes in income and public assistance. approved legislation to require child care and create secondary child care subsidies. A program to address the parenting cliff that will qualify her for up to 100% of her state's median income.
- Washington DC: The Department of Human Services used the CLIFF tool and policy rules database to identify and test strategies to mitigate benefit cliffs as part of a five-year pilot program starting in 2023. The project served 600 randomly selected families who had recently become homeless. This pilot aligns education/training and funding to reduce loss of public assistance as income increases to support sustainable economic self-sufficiency.
- tennessee: In 2021, the Tennessee General Assembly created the TANF Opportunity Grant to invest funds from the reserve into seven community partnership trials that support economic mobility and have the potential to influence future policy. I spent it on. His one pilot in seven counties in and around Nashville increased economic mobility for 900 families through employee coaching assistance, helping to ease the income cliff. The purpose is to make a profit.
Sen. Tim Moffitt (R-Henderson) noted that Thursday's presentation focused on single-parent, female-led households.
“There is a real crisis among men,” Moffitt said. “Where are these children's fathers? What role are they missing as the breadwinners of their families?”
If the General Assembly establishes a special committee to consider the benefit cliff issue, Moffitt said, it will need to examine policies that have “led to heavy reliance on government aid.”
“We looked at the policies and we had really honest discussions about those policies and, yes, they were intended policies, but the downstream effects are creating people living in poverty or forcing them to live in poverty. “We need to say that we are there,” he said.
