Navigating the Benefits Cliff: A Hand Up, Not a Handout

A Hand Up, Not a Handout, to Cross the Benefits Cliff is an article written by Gabriella Chiarenza that highlights the issue of the benefits cliff, which occurs when low-income individuals and families receive government assistance, such as food stamps or housing subsidies, but as their income increases, they lose access to these benefits. This can create a disincentive for individuals to increase their income, as they may end up worse off financially.

Chiarenza suggests that instead of cutting off benefits abruptly as income increases, a more gradual reduction of benefits would be a more effective way to help individuals and families transition from government assistance to self-sufficiency. This would give them a “hand up” rather than a “handout,” as they would still have some support as they work to increase their income and become financially stable.

One example of this type of policy is the gradual reduction of child care subsidies as a family’s income increases. This allows parents to continue working and increasing their income without having to suddenly pay for full-priced child care, which can be prohibitively expensive.

Another potential solution is to provide financial counseling and support services to help individuals and families plan for and manage their finances as they transition off of government assistance. This can help them make the most of their increased income and avoid falling back into poverty.

Overall, Chiarenza’s article highlights the importance of finding ways to support low-income individuals and families as they work to become financially stable, rather than cutting support abruptly. A gradual reduction of benefits and access to financial counseling and support services can help individuals and families successfully transition from government assistance to self-sufficiency.

In this last program year, Arapahoe/Douglas Works! partnered with the Federal Reserve of Atlanta on a CLIFF Effect Pilot with the Employment First Program. The Cliff Effect Pilot helps SNAP recipients prepare for and mitigate the Benefits Cliff Effect. Participants learn how changes in their employment affect their access to benefits, how to anticipate and plan for these changes in advance, what resources are available once they no longer qualify for benefits, how to find jobs that create financial independence, and what career pathways will lead to in-demand jobs. This tool has been utilized with over 20 Employment First participants and will be available to additional program participants in the near future. 

Read the full article to learn more.