What is the Cliff Effect?
The Cliff Effect occurs when misalignment within the public benefits system traps individuals, preventing them from being able to gain positive economic security—and it disproportionately affects women.
Public benefits programs generally have income-based assessments, where one’s income is related to the value of the benefits received. Benefits decrease as income increases under the theory that a person needs less assistance the more she or he makes. Unfortunately, it has become increasingly apparent that this system does not create a path to economic self-sufficiency. Often, a marginal increase in a woman’s income (sometimes as little as $0.50 per hour) will cause her to lose eligibility for a given benefit. However, this loss of aid is not equal to the increase in income that prompted the loss, thereby resulting in a net economic loss to the woman and her family.
This is the “cliff:” when women gain a raise but lose critical assistance and find themselves in a worse position than before. The Cliff Effect places wage earners in the position of having to choose between taking a raise and no longer being able to afford something such as childcare, or staying in a low-earning position and limiting the economic security of her or his family.
Under The Cliff Effect, women are penalized as they make progress towards economic self-sufficiency. We know that we must create a more viable path toward economic self-sufficiency.
What we’re doing about it:
WOMEN’S WAY is working with the Bucks County Women’s Advocacy Coalition and other partners to develop recommendations to ameliorate the impacts of the Cliff Effect in Pennsylvania. See the “Files” section below for our recent press statement regarding the Pennsylvania House Majority Caucus’ Policy Committee’s Report, “Beyond Poverty.”