We’re sitting on the ground level, next to tall glass windows, but to her, we might as well be on the 26th floor of a skyscraper.
She’s wearing bright colors, emblematic of her good mood from when she arrived. Now, however, her expression drops, her eyes dart back and forth, and I can tell she’s nauseous.
Vertigo. I recognize it right away, because I’ve seen it before. It’s the cliff effect.
The cliff effect happens when a low-income individual begins moving up the career ladder, earning more money. That’s why my client was in such a good mood that day: she’d received a hefty raise. The problem was, it made her ineligible for the state benefits she used to feed her kids.
It’s a cruel twist of public assistance, born from completely good intentions. It goes something like this:
Say you’re a single mother with two children, like my client, who’s making $12 an hour, part time. Based on your income, you qualify for five types of benefits to support your kids. As you earn more money, however, you phase out of those programs because of income limits.
The first thing to go is SNAP or food stamps, which nose dives at $14 an hour, so you’re getting less on your EBT card each month. Next is the value of your health insurance plan, which, if you live in Boston, means Masshealth covers fewer costs following $15 an hour.
If you start earning $18 an hour, you lose WIC, for baby formula, and your child refundable tax credit drops away. It’s worth noting that the EIC tax credit, the most important instrument of financial aid in the entire US, has been decreasing in value the whole time. By $23 an hour, there’s nothing left but half the insurance value you once had.
“Cry me a river,” a voice snarks in my head, “the fact that this woman is earning more money, means she can support these costs without the government’s help.”
But my client’s shaking her head, leaning away from the glass windows, and trying not to look at the numbers on the paper. I’m allowing her to digest this for a moment, letting out a heavy sigh, and pinching the bridge of my nose as I hear the voice in my mind.
It’s not that simple.
You see, all of those things – food, rental assistance, baby formula – they are all income before they’re resources. Therefore, on net, the higher her hourly wage is, the less money she makes.
In other words, when you include public assistance, my client making $14 an hour will make the same amount of money as her future self who makes $24 an hour. Everything in the middle involves her bank account falling over a cliff every year – hence, the cliff effect.
I’m desperate for her to take it on, and I know the costs are real. I’ve seen clients tackle insurmountable odds, live on shoestrings for years, and even hack through the complex immigration system. The cliff effect is the only one that stops people dead in their tracks, like trying to inch closer to the edge of a precipice.
In every training I attend, the answer is always the same: we don’t know how to fix it. It’s simply the way the system functions. Welfare is trying to help, but it does a poor job of weaning people off.
As cost of living rises faster than wage growth, and each cliff hits a pain-point of food or housing, it’s no wonder some people are afraid of leaving entitlements behind to strike out on their own.
This is what I hope my client is strong enough to face. I encourage her to the best of my ability, laying out strategies, silver linings, and reassurances. Yet she can sense my undertone: the days of shoe-string-budgets are not over. In fact, life with higher wages might be harder than when she received the welfare.
She thanks me and stands up to leave. The next familiar feeling washes over me, and I see it play out in a movie before it even happens.
She dons a look of anxious resolution and heads for the door. As she approaches the glass, I wonder if she’ll step out – take the plunge – and come out the other side.