October 16, 2019
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A more incremental approach can ease the ‘benefits cliff’

Linda Coan O'Kresik | BDN
Linda Coan O'Kresik | BDN
Nettie Kilby, branch manager at Bangor Area Staffing Solutions, joins a panel discussion at the second Bangor Daily Brews event at the Sea Dog. 

Anti-poverty programs provide much more than compassionate support for Maine’s most vulnerable. When structured correctly, they also provide a bridge to stability and opportunity.

In that sense, programs such as Temporary Assistance for Needy Families, the Supplemental Nutrition Assistance Program and Medicaid are all inescapably linked to efforts to grow Maine’s workforce. As Maine confronts an aging population and persistent concerns about the size and skills of our workforce, it’s critical that these programs have both the resources and the framework necessary to help lift people out of poverty and into more gainful employment.

A common challenge with many government assistance programs — and certainly not unique to Maine — is the “benefits cliff.” This term describes the often-inflexible decrease or elimination of public benefits that occur as people’s incomes increase.

As Nettie Kilby, the branch manager at Bangor Area Staffing Solutions, explained at a recent Bangor Daily News workforce event, the potential sudden loss of benefits can dissuade people from seeking jobs or additional employment opportunities.

In some cases, this cliff effect provides a financial incentive for people to work less or not at all in order to preserve their government benefits. It’s an unintended and complicated consequence, but it’s not without potential solutions.

“One doesn’t go from being economically disadvantaged to financially secure overnight,” Ed Cervone of Educate Maine told lawmakers in late May. “This takes time and is incremental. The phasing out of assistance should be incremental as well.”

Kilby, similarly, favored an incremental approach.

“I’d like to see a gradual drop-off,” Kilby said. “As their salary [changes], they see a drop in benefits. But now they’re cut off and they’re stuck.”

Two of Maine’s legislative leaders, encouragingly, have teamed up on complementary anti-poverty legislation that, in a way, also take on a pro-workforce development element for their efforts to address several of these benefit cliffs with more incremental approaches.

LD 1774, from Speaker of the House Sara Gideon, would, among other provisions, ease the transition for families leaving Medicaid when they start to make more money. LD 1772, from House assistant minority leader Trey Stewart, would, in part, ease the fiscal cliffs related to TANF and SNAP benefits.

The complementary bills from Gideon, a Democrat from Freeport, and Stewart, a Republican from Presque Isle, reflect what — based on various testimony — seems to be a widely accepted view among social advocacy groups, the business community and members of both political parties: These programs should provide a leg up without providing a disincentive to work.

“Right now, many parents who start to receive a steady paycheck find themselves on a ‘benefit cliff’ — where they take in too much income to continue to receive critical supports, but too little to afford child care, reliable transportation and stable housing provided by TANF,” Gideon said in her testimony in support of both bills. “That can mean receiving a steady paycheck can actually be a net financial loss for families at first. These parents need gradual transitions off benefits as they work more and their incomes rise, so one crisis doesn’t pull them back into poverty and uncertainty.”

Both Gideon’s and Stewart’s bills earned the approval of the Health and Human Services Committee.

“By putting this formula on a sliding scale, we will be better able to address the phenomenon of the ‘welfare cliff’ that so many folks in Maine are impacted by,” Stewart said in his testimony. “The real world does not often operate in terms of black and white. When our system of public benefits for low-income Mainers does, it leaves many behind, thus literally boxing them out of the workforce.”

Our valuable and well-intended anti-poverty programs shouldn’t be further complicating efforts to grow Maine’s workforce. Working to address these benefits cliffs is a step in the right direction.

 



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