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Benefits Cliffs

Written by Dr. Sarah Anderson
Published on April 3, 2023
Research Highlights

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.

Public assistance eligibility varies based on income.

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.

  • In MO, 13% of people live at or below the FPL; those most likely to live at or below the FPL are single mothers (1 in 3), children (1 in 6), have a disability (1 in 5), Black (1 in 4), Latino (1 in 5), or earned up to a high school degree (2 in 5; US Census Bureau 2021).
  • The FPL for a family of four is $27,750/year (DSS 2022). In MO, a full-time, minimum wage employee earns $24,960/year.


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.


The impact of benefits cliffs on workers’ decisions is poorly understood.

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).

  • Families primarily experience benefits cliffs when they work more hours or take a new job (Ballentine 2022).

Career advancement has long-term financial benefits since higher income people rely less on public assistance and pay more in taxes.

  • It can take 1-6 years to match the net income before a cliff, which may disincen-tivize career advancement (Altig 2021).

Few small interview studies describe how benefits cliffs impact the career decisions of workers who receive public benefits.

  • In OH, workers did not make job decisions based on benefits cliffs, but felt worse off financially after losing benefits and asked for budgeting assistance (Despard 2022).
  • In CO, 33% of workers turned down jobs to keep childcare subsidies, stating they would need at least a $4/ hour pay raise in order to relinquish that subsidy (Despard 2022).
  • In PA, low-income families reported family well-being as the primary driver of career decisions. Benefits cliffs were one of several deciding factors (Ballentine 2022)


20 states have policies to minimize benefit cliffs.

Recent studies have focused on what leads to benefits cliffs and associated challenges.

  • Economic models suggest that more access to long-term and transitional benefits for eligible recipients can mitigate or eliminate benefit cliffs (Crandall 2021; Altig 2021).

In 2019, some states enacted legislation to re-duce or eliminate benefits cliffs. However, there is not publicly available data on the results.

  • KY (KY Ch 128, Ch 174), LA, ME, and MT passed legislation to study the impact of benefits cliffs on workers and businesses and recommend solutions based on the findings.

Unclear benefits criteria can make it difficult to know when benefit cliffs are coming or how to prepare for them (Levert 2019).

    1. beneficiaries to visualize when benefit cliffs may arise and the financial outcomes between career options.
    2. CA (18901.11; 11322.82) increased awareness of public assistance programs.The Federal Reserve Bank of Atlanta has created the Carseer Ladder Identifier and Financial Forecaster (CLIFF) which allows
Eligibility and Access

11 states used multiple approaches to increase some public assistance eligibility thresholds in 2021, including:

  • allowing for different kinds of assets,
  • increasing income eligibility,
  • excluding grants as income,
  • establishing transitional benefits,
  • increasing benefit amount,
  • expanding access for people with drug related felonies (NCSL 2022, NCSL 2019).
Tax Incentives

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.

  • The federal EITC for low-income workers increases workforce participation and increases household earnings (Despard 2022).
Work Support Programs
  • CA includes adult and technical education as meeting the employment criteria for SNAP.
  • TX created a fund that provides job training for individuals who are at risk of needing benefits (NCSL 2022).
  • FL has a pilot program which extends child care subsidies as workers receive training to enter fields that have high-wage, high-demand jobs (Policy Equity Group 2022).



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 

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