By Candace Higginbotham
Ever heard of the benefits cliff? It’s a term to describe the impact of a sudden or gradual decrease in public benefits that occurs when a family’s income exceeds the eligibility threshold for an assistance program.
People who participate in programs like Supplemental Nutrition Assistance Program (SNAP) and Children’s Health Insurance Program (CHIP) or receive childcare subsidies or child tax credits can face a benefits cliff when they get a raise, take a new job or simply work more hours.
This seemingly positive wage increase can result in an individual making too much money to receive the benefits – but not enough to sustain themselves and their household. In short, their income gain results in them being worse off financially than before the income gain (a benefits cliff), or no better off (a benefits plateau).
And that can have significant consequences for families and communities: it can keep people in low-wage jobs, discourage them from joining the workforce and influence other decisions that hold them back from long-term financial success.
Education and workforce readiness is one of Regions Bank’s community engagement priority areas and the bank offers wide-ranging support to community partners that provide job readiness programs, skills training and career coaching.
These organizations are well aware of the benefits cliff problem – and the lack of simple solutions. So, as part of its Important Insights series, the Regions Making Life Better Institute® recently hosted a webinar to provide tools and information to help community partners prepare their clients for some of the difficult realities of career advancement.
Regions invited Alex Ruder, Community and Economic Development director and principal adviser at the Federal Reserve Bank of Atlanta, to expand understanding of the benefits cliff.
Ruder began the discussion with a case study that demonstrates the benefits cliff and plateau, by walking participants through a familiar example: A person working full-time in a near-minimum wage job participating in public assistance programs wants to enter the health care sector to increase their career and financial opportunities. He outlined points in the person’s career trajectory where their net financial resources would actually decline or remain the same, even with pay raises, additional certifications and promotions.
According to Ruder, there are three potential ways for nonprofits to assist clients who may face a benefits cliff in their journey from entry level to a living wage job.
Career Ladder Identifier and Financial Forecaster (CLIFF)
“Building skills, getting certifications and pursuing new roles are proven ways people can advance their career and increase economic mobility,” said Leroy Abrahams, head of Community Engagement at Regions. “Engaging in dialogue with our community partners and workforce development experts helps foster prosperity in our communities.”
The webinar participants, representing community organizations around the country, welcomed the discussion and resources.
“This has been a terrific presentation and really makes me think of new ways to have conversations that are simple and purposeful that contacts can understand and feel confident regarding their future,” said Dr. Douglas Stewart of the Tennessee College of Applied Technology.
That’s the reaction that Gina Sian, head of the Regions Making Life Better Institute, was hoping for.
Investing in knowledge-sharing and skill-building opportunities like these deepen our understanding of the barriers that our communities face and helps us work collaboratively together toward meaningful solutions. Gina Sian, head of the Regions Making Life Better Institute
“Regions launched this program of free webinars four years ago to help our valuable community partners navigate challenges and provide technical assistance as they work toward their mission,” Sian said. “Investing in knowledge-sharing and skill-building opportunities like these deepen our understanding of the barriers that our communities face and helps us work collaboratively together toward meaningful solutions.”
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