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Originally published in The Hill.
A U.S. Senate committee recently discussed a decades-old federal policy trap that punishes poor families for getting a raise: social safety net-benefit cliffs. These cliffs hamper upward mobility and harm small businesses dealing with workforce challenges. To fix this, Congress should take the next step towards innovative reform and enlist states as part of the solution.
A benefit cliff occurs for families on government assistance programs when new earnings trigger a loss of benefits that can outpace their additional income. This leaves them stuck in the same place or even financially worse off.
The fear of such cliffs discourages low-income families across the country from taking steps that would otherwise help them gradually move out of poverty. Nationwide, 22 percent of low-wage workers on government assistance have reacted to benefit cliff incentives — for example, refusing additional work hours, turning down raises, promotions or new job offers — for fear of losing benefits that are more valuable. Theirs is a clear, and rational, response to a benefits system that lacks a cohesive programmatic goal.
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