The second graph I added was one addressing “cliffs”. Cliffs are the point in time that users of the programs are not motivated to earn more because they lose as much in benefits as they gain in outside income. Over the last few decades the federal programs have generally tried to address the problem of cliffs. Most programs are now graduated to income – meaning that benefits drop as income rises. The EITC program went a long way toward softening the cliffs within the federal programs taken as a whole because EITC heightens the earnings from low-income Americans. EITC is a very popular program in part for this reason. However, cliffs are still a problem in the federal safety net when viewed as a whole and are exacerbated even more when Medicaid or Child Care are added to the analysis.
The complexities of multiple programs and the cliffs they create are two areas ripe for improvement. Here is a summary of both ideas from Arkansas Advocates for Children and Families. The excerpt is from the April 2010 report entitled Child Poverty in Arkansas 2010: A Deepening Problem, authored by Kim Reeve.
A comprehensive system allowing families to apply for all public benefit programs in one place (including programs such as TEA, SNAP, ARKids First, etc.) would help more families receive the assistance they need. Arkansas has made some progress in this area through initiatives such as the DHS Access Arkansas online application system. More can be done, including a comprehensive assessment of the potential barriers to enrollment in these programs. That includes asset limits and other eligibility requirements and “cliffs” that make families ineligible for programs with changes in family income or assets. Such cliffs make it more likely that families become ineligible for key programs as they begin to earn more income and climb up the economic ladder.