Americans are the most generous people on Earth. Yet in Ohio and across the nation, well-intended government programs often trap our fellow citizens in poverty instead of providing a path to upward mobility.
Current federal assistance laws create what’s known as a “benefits cliff.” This occurs when someone receiving public assistance loses a significant amount of support — or all of it — due to just a small increase in income.
This system creates a perverse incentive to say no to a raise, promotion or extra hours, because saying yes could trigger a loss of benefits that can outweigh the additional earnings. Lower-income Americans are forced to make a rational economic choice to work less and take home more.
Don’t blame them — blame the U.S. Our policies create these incentives.
The benefits cliff is poverty by design — and it doesn’t have to be this way.
About one in three Americans receives some form of government assistance. Every year, means-tested benefit payments cost the American taxpayer $1.2 trillion.
Those trapped behind a benefits cliff are unable to move up the economic ladder without a massive loss of federal resources that outweighs the benefits of a bigger paycheck. This causes people’s careers to stagnate and our economy to suffer.
This misguided policy traps people in government dependency. Taxpayers bear the burden, the work ethic is eroded and businesses struggle to fill open jobs.
How is that possible? Some of the most-used federal assistance programs are the Supplemental Nutritional Assistance Program or SNAP, Temporary Assistance for Needy Families, Section 8 tenant-based assistance, and childcare benefits through the Child Care and Development Fund. These programs require enrollees to earn under a certain income to receive benefits.
For instance, SNAP beneficiaries lose food stamps altogether if the gross family income crosses 130 percent of the federal poverty level. Rather than allow aid to decrease on a sliding scale as income increases, the government turns off assistance completely as soon as the individual or household earns one dollar more than the income cap.
Picture a mom raising two kids in Montgomery County, Ohio, receiving SNAP, Section 8 Housing, and childcare benefits. If her income increases from $33,000 to $34,000, she faces a loss of $4,664 in federal resources. What should have been a $1,000 raise becomes a $3,664 pay cut.
The system forces Americans facing such benefits cliffs to reject opportunity, because accepting a pay raise would, ironically, create financial hardship.
We need a new system that meets the needs of low-income families, rewards work and creates a real path out of poverty. That is why I am introducing the Upward Mobility Act.
This initiative would create a pilot program for states to combine funding from multiple federal anti-poverty programs into a single, flexible funding stream. States would use this funding structure to gradually reduce benefits for people so they can say yes to opportunities without fear of abruptly losing all of their federal assistance overnight.
The combined programs include the SNAP, Temporary Assistance for Needy Families, Section 8, Section 521 Rural Rental Assistance Payments, Public Housing Capital and Operating Funds, Child Care and Development Fund, Low Income Home Energy Assistance Program, the Community Development Block Grant, and the Workforce Innovation and Opportunity Act Dislocated Workers Funding.
These programs promote upward mobility by providing basic material needs for low-income Americans, linking assistance to employment opportunities, or supporting local economic development.
Unfortunately, various agencies separately administer these programs with conflicting requirements and overlapping bureaucracy. Combining the funding into one unified stream will eliminate contradictions and barriers.
States may elect to receive funding from all programs in the unified funding stream or only a subset. Additionally, states would still be required to meet the underlying goals of each program.
Under this bill, the Administration for Children and Families would choose states for the pilot program based on how their proposals would reduce benefits cliffs. The agency would prioritize states with program designs that increase job opportunities and higher earnings.
Importantly, the Upward Mobility Act would add nothing to our unsustainable debt burden.
States would receive the same level of grant funding as in the previous year, with annual inflation adjustments. It protects both aid recipients from the benefits cliff and taxpayers who are tired of watching government programs fail to produce results.
In Ohio, for example, we created a pilot program called the Benefits Bridge to support Ohioans while they work toward long-term financial independence. The Benefits Bridge is an 18-month program to support those who find themselves at the edge of the benefits cliff.
The program incentivizes pay raises, working additional hours, completing an education, obtaining a driver’s license, and more. With the Upward Mobility Act, Ohio could integrate this innovative program with the benefits provided under the Upward Mobility Grant, and other states could mimic it.
States would be free from one-size-fits-all bureaucratic rules that limit innovation. They would be encouraged to reinvest savings from reduced bureaucracy, employ the resources of the nonprofit and faith communities, and increase collaboration with local governments.
States would also be free to implement limited scope projects that focus funding on a specific population or geographic area.
Those who want to work to get ahead, and build a more hopeful future, will find hope in the Upward Mobility Act.
Ask anyone who works on family poverty, and they’ll tell you about the burden of the benefits cliff. Ask employers, and they’ll say the same — they have workers who turn down promotions or extra hours because they can’t afford to lose their benefits. We can do better. The Upward Mobility Act will show us the way.
Jon Husted, a Republican, is the junior U.S. senator from Ohio.