Economic Impacts

Economic Impacts of Benefits Cliffs

For most workers, a raise or promotion is a significant milestone, celebrated by both employees and employers. However, for workers on public assistance, even a small wage increase can result in the complete loss of public benefits, leaving them worse off financially. Facing this conundrum, many workers decline opportunities for advancement because they simply cannot afford the financial setback.

Why Is This Important?

The benefits cliff discourages individuals from increasing their work hours, accepting job promotions, or taking raises. More broadly, it stifles the potential for individuals to improve their circumstances and meet their family’s needs. Under the current structure, public assistance programs create economic disincentives for individuals to strive toward career advancement and rise out of poverty.

The public benefit system is meant to be a temporary safety net for individuals and families experiencing economic hardship. However, its current structure hinders transitioning off public benefits, making the journey to economic stability longer without significant financial gain.

Why Address This Issue?

By addressing benefit cliffs and facilitating a smoother pathway to economic stability, Ohio workers will be unfettered in the decision to accept raises and promotions and pursue career advancement. Employers will benefit from a more skilled and motivated workforce with higher job satisfaction, lower turnover, and reduced hiring and training costs. Encouraging upward mobility also reduces poverty and would allow Ohioans to more easily move on from public assistance, improving residents' quality of life and transforming Ohio’s public benefits system.

Ohio is stronger when everyone has the opportunity to work, support their families, and contribute to their communities. To achieve this, we need a public benefit system that provides a clear pathway to economic stability.