![]() Then federal agencies promulgate rules and regulations to implement the law. In most cases, federal law establishes program eligibility criteria and benefit levels. The interplay of public benefits policies across agencies and between levels of government can have the unintended consequences of limiting economic opportunity and disincentivizing work. Department of Health and Human Services (HHS), as an effective marginal tax rate on low-income earners because they do not realize the full dollar-for-dollar value of their earnings. This effect is seen by some, including the U.S. To the detriment of all, the workforce shortage is not filled, families do not exit social support systems, and economic growth is stymied. For businesses, it often means perpetually recruiting, hiring and training for the same entry-level positions. They lose more than they gain when they take a job or receive a raise and their safety net is simultaneously weakened or eliminated. Read Moreįor families, the cliff effect can create an anchor into, rather than a ladder out of, poverty. When lost benefits outpace a wage increase, many families “park” or fall off the cliff’s edge, stalling progression in their jobs and careers. Sometimes the cliff effect looks more like a slope or plateau, but it is still a disincentive to work. ![]() Often, wage increases result in a net loss of income or only a small overall increase. These can include the Supplemental Nutrition Assistance Program (SNAP), school nutrition programs, health care, child care assistance, Temporary Assistance for Needy Families (TANF) and housing. When income increases, families sometimes lose some or all economic supports. The cliff effect refers to the sudden and often unexpected decrease in public benefits that can occur with a small increase in earnings. “Benefits cliffs”-or “the cliff effect”-are a hurdle for businesses and workers alike. States are intensifying efforts to connect industry’s workforce needs with available workers to get more people on a sustainable career path, leading to a stronger economy. Business and government leaders face aging demographics, slow population growth, low unemployment rates and industry-specific workforce shortages as they attempt to increase, or at least sustain, economic growth and competitiveness. This is detrimental to their long-term stability and to the business’s stability, who deal with churn and turnover.” -Tricia Canavan, CEO, United PersonnelĪcross the country, businesses striving to fill their workforce needs are turning to hard-to-employ and chronically underemployed parents. People who won’t take the opportunity to work full-time. “We see people who won’t take a promotion or who quit because they lose benefits.
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