Many experts point to cliff effects as the primary reason low-income families fail to achieve self sufficiency. Cliff effects occur when benefits from public work support programs (such as medical assistance, SNAP, child care assistance, etc.) decrease or end completely as household income increases. Because program eligibility and benefit amounts are based on income, as families earn more money, public work support benefits phase out or end abruptly. Often the increased amount of income a family may receive by accepting a new job, getting a raise or increasing hours worked does not make up for the loss or decrease of benefits. The result is that families are stuck on a one-step forward, two steps back pathway that delays their progress toward economic stability and prevents them from successfully making the transition to self-sufficiency.
Children’s Defense Fund-Minnesota recommends a variety of approaches that could be taken to address the benefits cliff challenges faced by struggling families. Using our Economic Stability Indicator (ESI) tool, we are able to build scenarios that allow us to analyze and evaluate potential solutions that would soften the impact of cliff effects.