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Picture this: A single mother of two has a fast-food job paying $9 per hour. She’ll make about $18,720 this year—probably enough to cover rent, electricity bills, and filling the gas tank on her beat-up Camry with the help of some government assistance, like food stamps. So when her boss offers her a promotion and a raise, why say no? After all, more money is good, right? Wrong. A bump in pay means that she’ll lose food stamps. She might also lose Temporary Assistance for Needy Families (TANF), a monthly cash assistance from the county. And so she’s got a choice to make: Take the better-paying job, or keep food on the table with work support assistance.
This is the “cliff effect” at work, a term used by the Women’s Foundation of Colorado (WFCO) to describe how public support systems create “cliffs” where a small increase in income leads to the total loss of a benefit, sometimes leaving families worse off financially than before. Overcoming these cliffs is part of becoming financially self-sufficient. In Denver County, a single mother will have to earn nearly $20 an hour—almost triple the state’s minimum wage of $7.36 per hour—to meet the state’s self-sufficiency standards. On top of that, people often don’t realize they’re about to careen off a cliff: “The public support system is very confusing. The majority of people who fall off a cliff have no idea why,” says Jody Camp, the WFCO’s director of programs. “Our public support systems really punish women and men who are working their way up the employment ladder.”
While men are also impacted, these cliffs disproportionately affect women: Approximately 90 percent of adult TANF recipients are female. “We need to support families as they increase income and create sliding scales instead of kicking people off welfare as soon as they don’t qualify,” says Tracey Stewart of the Colorado Center on Law and Policy. Businesses, in particular, can take small steps that will make a significant difference. Providing transportation subsidies, funding a childcare facility (solo or in conjunction with other area businesses), and offering flexible scheduling are all measures that allow workers to succeed and maintain their benefits. “No one policy will mitigate this,” Camp says. “We need an entire institutional shift.”