For most people, getting a raise at work is cause for celebration. Beyond the pride in recognition of a job well done, there is the financial gain, whether it’s from a higher pay rate or more hours per pay period, or both.
But for thousands of hardworking families, a raise can trigger something unexpected – and dangerous – called the benefits cliff.
Instead of moving forward, they suddenly find themselves falling behind.
What Is the Benefits Cliff?
The benefits cliff happens when a small increase in income causes a household to lose access to critical public benefits – such as housing assistance, childcare subsidies, food support, or healthcare – all at once.
The pay raise is real, but the math doesn’t work.
A worker might earn an extra $200 a month but lose $600 worth of essential support. The result is a net loss that makes it harder, not easier, to stay housed and financially stable.
At Crisis Assistance Ministry, we meet people every day who are working, budgeting, and doing everything they can to move forward, but they still face impossible choices.
- A parent might have to turn down a slightly higher-paying job because it would mean losing childcare support. Or, perhaps worse, they find out after the fact that the 50-cent raise they were so excited about has left them with no childcare and at risk of losing their job.
- Another worker might need to decline extra work shifts because that bump in pay would push their income just over an eligibility threshold for food support at a time when grocery prices are skyrocketing.
These are not choices made lightly. They are survival calculations.
And these aren’t families trying to stay dependent. They are trying to stay housed.
Local Families Impacted
Our partners at Goodwill Industries of the Southern Piedmont are helping demonstrate with hard data what families in our community experience every day. Through their Benefits Cliff Employer Pilot Program, in partnership with the Federal Reserve Bank of Atlanta and others, Goodwill documented the cliff’s real effects among workers and job seekers:
- 172 employees and job seekers participated in specialized benefits cliff exploration and coaching.
- About 40% of those participants had already experienced the benefits cliff due to a pay raise, promotion, or employment change.
- The most commonly affected benefits are food support programs including Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), housing assistance, Earned Income Tax Credit (EITC), and healthcare assistance like Medicaid.
- Even when income increased, participants often still couldn’t afford basics like food and housing because of higher expenses and benefit losses – a real illustration of the steep cost of the cliff.
This research reveals a structural barrier that discourages the very upward mobility public policy aims to encourage.
Of course, behind the data are real people experiencing these hardships – people like Sally, whose story is highlighted on Goodwill Industries of the Southern Piedmont’s website:
Sally’s Story
Sally just got a new job and went from making $16/hour to $21/hour. With her new income, her daughter can no longer receive Medicaid, and Sally is no longer eligible for healthcare subsidies. She can’t afford to pay the premium of adding a dependent to her employer-provided health insurance, especially on top of her rent, which increased by $500 due to her higher income. After weighing her options and considering the needs of her family, Sally decides to reduce her hours to part-time to ensure her daughter’s access to affordable healthcare and quality housing. Her goal is to use the extra time to further her education at the community college with the help of state and federal financial aid.
Excerpted from “The Benefits Cliff Community Lab Project”, Goodwill Industries of the Southern Piedmont
What Does the Benefits Cliff Look Like?
The numbers and stories point to the same pattern, and it becomes even clearer when you see it visually.
The graph below illustrates one example of a family experiencing the benefits cliff. Each dip in the graph indicates a benefits cliff that leaves the family in poorer financial shape despite their increased earnings.
Explaining the graph on their website, the Beyond the Cliff coalition says, “Every household’s experience will look somewhat different (due to the unique mix of benefits a family might access and the complex rules associated with each benefit); however, all families’ experiences of the benefits cliff will follow these trends.”
For a more in-depth analysis of the causes, realities, and potential solutions, including real-life examples of families across the country who are navigating the cliff, see “A hand up, not a handout, to cross the benefits cliff”, by Gabriella Chiarenza for Fed Communities, a collaboration among the 12 Reserve Banks of the Federal Reserve System.
So, What Can Be Done?
The extensive research and data provided by Goodwill and the Federal Reserve, among others, reinforce what we at Crisis Assistance Ministry hear from our customers every day – hard work and careful planning matter, but the system shouldn’t punish progress.
Here are three ways to begin chipping away at the cliff and creating smoother pathways to prosperity:
1. Educate and Empower
Tools like the CLIFF (Career Ladder Identifier and Financial Forecaster) dashboard, developed by the Federal Reserve Bank of Atlanta, help workers and employers understand trade-offs before they happen – instead of reacting after the fact.
Take three minutes to learn more about this powerful tool through this video: Cliff Tools Explained.
2. Support Through Transition
Emergency assistance programs like rent, utility, and food support should act as bridges over the cliff, not long-term crutches.
This has been the core mission of Crisis Assistance Ministry for the past fifty years – providing housing stability for people struggling with limited financial resources. Emergency support is critical, but the longer-term solution lies beyond our doors.
3. Advocate for Policy Change
At Crisis Assistance Ministry, we know firsthand that everyone, regardless of background, strives for prosperity, not just subsistence, for themselves and their family.
We need public benefits policies that phase out gradually so that small earnings growth doesn’t create large losses in stability. Meaningful public policy reform is the path to ensuring that work leads to progress, not hardship.
Building Bridges, Not Barriers
The benefits cliff exposes a painful truth: the very systems designed to support upward mobility can, at times, hold people back.
At Crisis Assistance Ministry, we see daily the determination and courage it takes to keep moving forward in the face of systemic barriers. Every family we meet wants the same things we all do – security, dignity, and the chance to thrive through their own hard work.
It will take all of us – employers, policymakers, advocates, and community members – to ensure that no one has to choose between a raise and stability, between opportunity and survival.
Together, we can create a community where success is not punished but celebrated – where a better job truly means a better life.
Learn more. Share this story. Get involved. Help us build a future where progress never costs too much.