Balancing on the Edge: ACF Convenes Parents, States, and Businesses to Bridge Benefits Cliffs

Last week, the Administration for Children and Families (ACF) Office of External Affairs and Office of Regional Operations hosted the “Less Poverty, More Prosperity: States Tackle Benefit Cliffs” convening, bringing together 17 states that have all taken steps to address the cliff effect in their communities, as well as parents with lived experience, businesses, and non-profit and philanthropic organizations. They met with ACF and leaders from the U.S. Departments of Agriculture, Labor, Housing and Urban Development, and other federal agencies to discuss ways to minimize benefits cliffs.    

Many of us may be unfamiliar with “benefits cliffs” and “the cliff effect,” but ACF and its partners are working hard to shed more light on this issue and how it impacts children, families, and communities. Last September, the Federal Reserve Bank of Atlanta published a discussion paper that analyzes a workforce development program Washington, D.C., has created to help families navigate the loss of government benefits when their employment income increases. The paper frames the discussion around a hypothetical family receiving support from all major federal public assistance programs, including those managed by the Administration for Children and Families (ACF) that help families with income assistance, child care, and utility payments. The findings are troubling: the hypothetical family is equally well-off at $11,000 as at $65,000, and an increase in employment income by $54,000 is fully offset by the loss of public benefits, meaning there is no net gain in financial resources.

This is the cliff effect. While the family in this report may be hypothetical, the experiences described are all too real for families across the country. When families increase their employment income, they may no longer have access to federal supports because they should be able to support themselves. At least theoretically. In reality, an increase in earnings—sometimes as low as an extra 50 cents an hour—can lead to a sudden and unexpected loss of critical supports families have relied on. A person may have a higher-paying job, but paying out of pocket for benefits means they experience a net loss, putting them in an overall worse situation.

This, of course, is an unintended consequence of our existing human services system. At ACF, our goal is to support and uplift families to help them reach their full potential, yet benefits cliffs force families to choose between economic mobility and independence and losing access to supports that have helped them survive. Parents may turn down higher-paying jobs to continue accessing benefits that help their family, which can result in career stagnation and have life-long and intergenerational consequences. And the impacts of benefits cliffs reach far beyond families themselves, affecting businesses and organizations—sometimes hospitals, schools, care facilities—by creating workforce shortages. This, in turn, impacts whole communities by disrupting access to these crucial services.

ACF has made intentional efforts to address the cliff effect as part of our commitment to strengthening economic mobility for families. Similarly, many states, businesses, and philanthropic organizations have implemented policy, budget, and culture changes and/or tools to mitigate the cliff effect, and other federal agencies have issued guidance to help states navigate and remediate challenges for families. But we know that no single state, federal agency, or business can untangle a complicated and challenging knot like this alone. This issue requires dedicated, ongoing collaboration and partnership, and working together will help us ensure families have the support and resources they need to achieve financial independence.  

ACF hosted the two-day convening to ignite this coordination. Day one provided a venue for cross-state learning on ways to diminish the cliff effect and enabled state leaders to engage in peer-to-peer dialogue. Each state brought crucial knowledge and insights into their local contexts and shared innovative strategies they have developed to address benefits cliffs in their communities. Day two brought in parents and businesses to share their experiences and discuss the ways the cliff effect impacts their unique situations. Participants also engaged in smaller learning groups to discuss the cliff effect in the context of specific benefits and services, such as income assistance, housing, food, and child care, and content areas of interest, including how to involve parents, policy pilots, approaching the problem from an economic angle, tools to evaluate the cliff effect, and how to strengthen innovation and flexibility. Throughout the event, participants shared how benefits cliffs impact them, overviewed the steps they are taking to advance economic mobility and reduce household poverty, and recommended changes ACF and other federal partners can make to address the unique needs of families and businesses.

Among the many insights and recommendations that emerged from the convening, an idea that came up over and over was the importance of how we frame and communicate benefits cliffs. Many don’t understand the cliff effect and thus assume a person turning down additional hours at work simply means they don’t want to work when this couldn’t be farther from the truth. To move forward, we must illustrate how complicated this issue is through a combination of person-centered and data-driven storytelling. We must accurately show the realities families experience every day. Doing so will demonstrate how the cliff effect impacts communities, illuminate systemic disparities, and ensure we keep children and families at the forefront of our efforts.

Navigating the complex landscape of benefits cliffs requires striking a delicate balance between incentivizing economic mobility and providing resources for those who need it the most. At ACF, we are committed to addressing this challenge head-on with a renewed sense of urgency. The Benefits Cliffs Convening was a great success, but we cannot stop now. Looking forward, ACF plans to publish a report summarizing key findings from the convening that states can use to strengthen their efforts. We also plan to host a national webinar in March open to all states, including those who have yet to address benefits cliffs, to increase the constituency, bring in more partners, and keep the conversation flowing. Working together, we can help families bridge benefits cliffs and ensure our human services system isn’t a net people get tangled in, but a springboard that helps them soar.