Benefits cliffs, or sudden losses in public benefits as people reach income thresholds, result in net losses of income.
Beneficiaries can have difficulty predicting when a benefit cliff is coming.
There is little data on what is effective in mitigating the impact of benefits cliffs.
Several state and federal programs aid low-income households, but the eligibility criteria for each program varies based on income, work status, assets, and criminal history (Table 1).
The U.S. Dept. Of Health and Human Services sets the federal poverty level (FPL), which is often used as a standard for determining eligibility for public assistance programs.
Table 1. Income eligibility for MO public assistance programs included in HB719 & SB82 (HH = household size). See Supplemental Table 1 for additional eligibility requirements and utilization.
A benefits cliff refers to when small income increases result in significant benefit losses. Cliffs mainly affect workers earning between $13-17/hour and may disincentivize work since the net income with benefits is higher than individual income (NCSL 2022).
Career advancement has long-term financial benefits since higher income people rely less on public assistance and pay more in taxes.
Few small interview studies describe how benefits cliffs impact the career decisions of workers who receive public benefits.
Recent studies have focused on what leads to benefits cliffs and associated challenges.
In 2019, some states enacted legislation to re-duce or eliminate benefits cliffs. However, there is not publicly available data on the results.
Unclear benefits criteria can make it difficult to know when benefit cliffs are coming or how to prepare for them (Levert 2019).
11 states used multiple approaches to increase some public assistance eligibility thresholds in 2021, including:
Tax credits, especially refundable tax credits, can increase a family’s net income to mitigate the financial impact of benefits cliffs (Despard 2022).
34 states, DC, Guam, and Puerto Rico have an earned income tax credit (EITC); 12 states have a child tax credit.
Acosta, S., & Gartland, E. (2021, July 22). Center on Budget and Policy. Retrieved from Families Wait Years for Housing Vouchers Due to Inadequate Funding: https://www.cbpp.org/research/housing/families-wait-years-for-housing-vouchers-due-to-inadequate-funding
Altig, D., Ilin, E., Ruder, A., & Terry, E. (2021). Benefits Cliffs and the Financial Incentives for Career Advancement: A Case Study of a Health Care Career Pathway. Retrieved from Federal Reserve Bank of Atlanta:
Ballentine, K., Goodkind, S., & Shook, J. (2022). How Low-Paid Parents Navigate The Complex Financial Landscape Of Benefits Cliffs And Disincentive Deserts. Health Affiairs, 1707-1714.
Crandall, Susan; Beauregard, Brian; Eng, Sokha; and Karakilic, Emek, "Exploring Financial Situations and the Cliff Effect for Single-Mother Families in Allegheny County, Pennsylvania (Working Paper)" (2021). Center for Social Policy Publications. 87. https://scholarworks.umb.edu/csp_pubs/87
Despard, M. (2022). Benefits Cliffs: Effects on Workers and the Role of Employers. Retrieved from U.S. Chamber of Commerce Foundation: https://www.uschamberfoundation.org/sites/default/files/USCCF_BenefitsCliffsBrochure_Digital.pdf
Glasmeier, Amy K. Living Wage Calculator. 2023. Massachusetts Institute of Technology. livingwage.mit.edu.
Hall, L., & Nchako, C. (2023, February 13). A Closer Look at Who Benefits from SNAP: State-by-State Fact Sheets. Retrieved from Center of Budget and Policy Priorities: https://www.cbpp.org/research/food-assistance/a-closer-look-at-who-benefits-from-snap-state-by-state-fact-sheets#Missouri
Ilin, Elias and Ellyn Terry. 2021. 'The Policy Rules Database.' Federal Reserve Bank of Atlanta.
Available at www.frbatlanta.org/economic-mobility-and-resilience/advancing-careers-forlow-income-families/policy-rules-database.aspx.
Levert, M. (2018, May 10). Policy Brief Benefits Cliff. Retrieved from John T. Gorman Foundation: https://www.jtgfoundation.org/wp-content/uploads/2019/06/Cliffs-Policy-Brief.pdf
Missouri Department of Social Services. (2021, January 26). House Appropriations Committe on DHSS, DMH, DSS 2021. Retrieved from Missouri Department of Social Services: https://dss.mo.gov/reports/legislation-presentations/2021/hac-2021.pdf
Missouri Department of Social Services. (2022, October 1). Benefit Program Limit Chart. Retrieved from Missouri Department of Social Services: https://mydss.mo.gov/media/pdf/benefit-program-limit-chart
Missouri Department of Social Services. (2022). Temporary Assistance Brochure. Retrieved from Missouri Department of Social Services: https://dssmanuals.mo.gov/wp-content/uploads/2022/01/temporary-assistance-brochure.pdf
Missouri Department of Social Services. (2023, February). Caseload Counter. Retrieved from Missouri Department of Social Services: https://dss.mo.gov/mis/clcounter/
National Conference of State Legislatures. (2019, November). Whole Family Approach to Jobs: Helping Parents Work and Children Thrive | Lessons from the Field. Retrieved from National Conference of State Legislatures: https://www.acf.hhs.gov/sites/default/files/documents/oro/whole_family_approach_to_jobs_lessons_learned_and_outcomes_acfnov2019.pdf
National Conference of State Legislatures. (2022, November 9). Introduction to Benefits Cliffs and Public Assistance Programs. Retrieved from National Conference of State Legislatures: https://www.ncsl.org/human-services/introduction-to-benefits-cliffs-and-public-assistance-programs
National Conference of State Legislatures. (2022, November 9). Introduction to Benefits Cliffs and Public Assistance Programs. Retrieved from National Conference of State Legislatures: https://www.ncsl.org/human-services/introduction-to-benefits-cliffs-and-public-assistance-programs
Policy Equity Group. (2022, May). Families’ Ascent to Economic Security (FATES): Integrating Child Care and Families Interim Evaluation Report. Retrieved from Florida Alliance of Children's Councils & Trusts: https://facct.com/wp-content/uploads/FATES-Interim-Evaluation-Report-Kellogg-Final.pdf
U.S. Department of Housing and Urban Development. (n.d.). Housing Choice Vouchers Fact Sheet. Retrieved from U.S. Department of Housing and Urban Development: https://www.hud.gov/topics/housing_choice_voucher_program_section_8#hcv01
United States Census Bureau. (2020). Small Area Income and Poverty Estimates Supplemental Nutrition Assistance Program. Retrieved from United States Census Bureau: https://www.census.gov/data-tools/demo/saipe_treemap/saipe_snap_treemap.html
United States Census Bureau. (2021). S1703 selected characteristics of people at specified levels of poverty in the past 12 months. Retrieved from United States Census Bureau: https://data.census.gov/table?t=Official+Poverty+Measure:Poverty&g=010XX00US_040XX00US29&d=ACS+5-Year+Estimates+Subject+Tables&tid=ACSST5Y2021.S1703