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Moving on Up: Helping Families Climb the Economic Ladder by Addressing Benefits Cliffs

Jul 1, 2019

Across the country, businesses striving to fill their workforce needs are turning to hard-toemploy and chronically underemployed parents. Business and government leaders face aging demographics, slow population growth, low unemployment rates and industry-specific workforce shortages as they attempt to increase, or at least sustain, economic growth and competitiveness. States are intensifying efforts to connect industry's workforce needs with available workers to get more people on a sustainable career path, leading to a stronger economy."Benefits cliffs"—or "the cliff effect"—are a hurdle for businesses and workers alike. The cliff effect refers to the sudden and often unexpected decrease in public benefits that can occur with a small increase in earnings. When income increases, families sometimes lose some or all economic supports. These can include Supplemental Nutrition Assistance Program (SNAP), school nutrition programs, health care, child care assistance, Temporary Assistance for Needy Families (TANF) and housing. Often, wage increases result in a net loss of income or only a small overall increase. Sometimes the cliff effect looks more like a slope or plateau, but it is still a disincentive to work. When lost benefits outpace a wage increase, many families "park" or fall off the cliff's edge, stalling progression in their jobs and careers.