Benefits Cliffs and Other Issues

Benefits Cliffs can affect Guaranteed Income (Basic Income) Programs as well.

General Guaranteed (Basic) Income Information and Resources

Stanford’s Basic Income Lab has some useful resources to explore, as does the Abundant Birth Project, who published learnings around protecting benefits in guaranteed income pilots.

Guaranteed (Basic) Income Pilots and Exemptions (to avoid benefits cliffs)

Income exemptions by benefit have been a method Guaranteed and Basic Income Programs have pursued, though it can be difficult to secure by benefit, and by state. California has made strides in making it more clear how to apply for an income exemption for some programs. In New York, there is legislation that will make New York the second state in the country, behind Illinois, to pass a bill protecting guaranteed income recipients from losing state benefits.

In Washington DC, the Career Mobility Action Plan (Career MAP) pilot will provide families who are transitioning from homelessness up to $10,000 in cash assistance to families, enabling parents to advance their careers without worrying about the “benefits cliff.” (Says D.C.’s Mayor Bowser, ““We can’t change the federal rules around eligibility for benefits, but we are creating a new program that helps fill that gap.”)

The Benefits Protection Toolkit builds on prior benefits protection work and the expertise of many people working within the guaranteed income field. It was developed by Kimberly Drew and Impact Charitable, and the Thriving Providers Project in partnership with Home Grown. It is a step-by-step guide to develop and integrate a benefits protection strategy into a guaranteed income or direct cash transfer program and is meant for use by pilot implementers or administrators. The toolkit includes a set of customizable templates, letters, and other tools which can be downloaded and modified for new pilots and adapted to the local context. This toolkit is intended to be used alongside consultations with the communities directly impacted, who themselves deeply understand the complexity of navigating the benefits system, and other community stakeholders.

Benefits cliffs should be considered in the Fight for 15.

“…the problem with the benefits cliff is that those who earn the least could be harmed the most. With that in mind, states may need to adjust their program qualifications to meet this need.”

SOURCE: Robert Farrington, “The Benefits Cliff: When A Higher Minimum Wage Results In Lost Benefits, ” Forbes, March 2021

“In the instance when a program doesn’t phase out well, lawmakers can fix the program rules. Lawmakers should not abandon the opportunity to increase the economic security and self-sufficiency...because of instances of poor program design.”

Benefits cliffs have sometimes been used as an argument against raising the minimum wage, but as the Oregon Center for Public Policy found, this argument is "overblown."

SOURCE: Oregon Center for Public Policy

There’s also interesting policy movement around the minimum age as well, like New York State’s bill to establish a wage floor of at least $21 an hour for government contracted human services workers [A9538 and S8749].