Op-ed: Benefit cliffing – How the system anchors low-wage workers in poverty

In ordinary circumstances, a raise or new job is cause for celebration and pride. However, for the 14.9% of impoverished Ohioans who live in extraordinary circumstances, increased earnings only bring anxieties of possibly “falling off” the income eligibility guidelines and losing the critical supports provided by public benefits.

In ordinary circumstances, a raise or new job is cause for celebration and pride. However, for the 14.9% of impoverished Ohioans who live in extraordinary circumstances, increased earnings only bring anxieties of possibly “falling off” the income eligibility guidelines and losing the critical supports provided by public benefits.

This effect is known as the “benefit cliffing effect,” in which a household loses public benefits or receives a reduction in those benefits due to a temporary or insubstantial increase in earnings, such as increased hours at work or a pay raise. Millions of Ohio workers rely on public benefits to afford basic needs like baby formula, rent, or daycare. Losing these supports feels like a penalty and results in workers forgoing a pay increase to prevent losing the assistance that makes it possible to make ends meet and protect their family’s welfare. 

Even with a small or temporary increase in earnings, low-wage households are not earning enough to be economically self-sufficient and rely on their benefits to scrape by and feed their families. Balancing on this cliff’s edge results in a disincentive to accept the promotion or job because, at the end of the day, it will leave families worse off. These are tough choices that hit close to home for me, a working graduate student. I rely on Medicaid due to both my work status and unaffordability of an insurance premium that fully covers my individual health needs. I found myself weighing anxieties when approaching new opportunities. Would accepting a graduate assistantship provide me the minimum number of working hours to qualify for Medicaid? If I accept this exciting fellowship, will earning two dollars more an hour disqualify me from the health insurance I rely on? Even after hours on the phone with a case manager from Ohio Job and Family Services, I remained afraid to take this gamble.

To qualify for programs, households must meet a certain income threshold, ranging from 100% to 300% of the federal poverty line, and undergo rigorous reporting and renewals to prove their need for assistance. While at face value this makes sense, the current processes lack space for discretion to handle the complexities of poverty and the impermanence of income in low-wage work. There also is a racial equity component to the issue of benefit cliffing. People of color are more likely to have low-wage positions, rely on assistance, and live in poverty. Where is the justice in this? How can Ohioans break free of the cycle of poverty when the system works against low wage workers? 

Recipients of public benefits are stigmatized and painted as unmotivated, entitled, and looking for opportunities to defraud. Legislators posture self-sufficiency and personal responsibility, but current policy and administration are not compatible with helping families maintain financial independence. Instead, workers are fastened in a dichotomy where keeping benefits is more financially valuable than an increase in earnings. It is urgent that public administrators remove barriers by restructuring eligibility to be more thoughtful and incorporate the outcomes of benefit reduction or removal on families. This is especially relevant due to the rising minimum wage.

The bipartisan H.B. 410: Actionable Help And New Dignity for Upward Progression (A HAND UP) Act aims to minimize the effects of benefit cliffing by legislating necessary reorganization within the widely siloed state agencies that administer the programs, streamlining supportive services to families, augmenting tone-deaf guidelines and expanding eligibility periods. Despite the good that this policy would bring to minimizing benefit cliffing, public assistance reform remains a political football among legislators, especially in this hyper-partisan election year. Opponents are averse to making humane and common-sense policy changes due to rigid values of agency and personal responsibility.

Our state assembly is ruled by legislators who have demonstrated a reluctance to enact any equitable safety net reform. Whether it’s strategically pushing this legislation down on the calendar or adding verbiage to force a reassignment, H.B. 410’s progression remains stymied by procedural shenanigans. It is crucial that we hold our representatives accountable for this “inaction by design”. At the end of the day, political self-interest comes at a cost to the welfare of Ohio families, makes the conservative gospel of economic freedom through self-reliance elusive, and continues to anchor low-wage workers into poverty. 

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