The “Cliff Effect” Thwarts the Working Poor

Last Updated by Jim Trotter on

One stated goal of the welfare reforms of 1996 was to encourage people to enter the workforce. Once there, new work support programs would enable low-income families to rise toward self-sufficiency.

But in many instances, those programs have an unintended impact, an I-News at Rocky Mountain PBS inquiry has found. Working families can fall prey to the “cliff effect,” in which even a modest rise in family income can lead to termination of a government benefit, including subsidized child-care, worth thousands of dollars a year. The family can suffer a big net loss by earning a little more.

Rich Jones, Director of policy and research, of the Bell Policy Center

“A fraction of these folks can actually make it work,” said Susan Roll, a California professor who did her doctoral thesis at the University of Denver on the cliff effect. “It is very difficult to be on these programs and it is certainly next to impossible to escape the programs.”

Advocates of new reforms say the benefits should be phased out incrementally, allowing the family to adjust gradually to the loss of support as their income rises.

“The reason the cliff effect matters, and the reason it matters to all of us in society, is that we want to provide the opportunity for these families to get into the workforce, to stay working, to reach self-sufficiency, to get ahead,” said Rich Jones, director of research at Bell Policy Center in Denver, a self-described progressive think tank. “That’s the whole design. By keeping the cliff effect, by keeping the barriers in place, we’re actually providing a disincentive to continue working.”

To read the I-News report and to see profiles of those facing the cliff effect, please go tohttp://www.inewsnetwork.org/losing-ground-cliff-effect/ To watch the Rocky Mountain PBS documentary on the cliff effect please go to http://video.rmpbs.org/video/2365025315/

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