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[Watch] Understanding Benefits Cliffs: Evidence, Insights, and Open Questions

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Fed Communities Staff

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Benefits cliffs are increasingly recognized as a critical barrier to economic mobility in communities across the country. When a raise, promotion, or new job pushes an individual or family above eligibility thresholds for public benefits, the result can be a net financial loss. This creates difficult choices for workers, employers, and policymakers.

As awareness of benefits cliffs grows, so does momentum around research, policy innovation, and community-driven solutions. This Connecting Communities webinar brought together researchers and practitioners to explore the latest evidence on how benefits cliffs affect workforce participation and economic opportunity, highlight promising strategies emerging from innovative pilots, and identify  priorities for future research.

During this event, participants learned more about

  • key research findings on how benefits cliffs affect employment and advancement decisions for workers and job seekers,
  • learnings from innovative pilot programs designed to reduce the impact of benefits cliffs, and
  • a research agenda that can inform more effective, equitable solutions for policymakers, community-based organizations, and employers.

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Speakers:

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Connecting Communities: Understanding Benefits Cliffs Evidence Insights (video, 1:00:10)
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Transcript

Sergio Galeano

Good afternoon everyone, and welcome to Connecting Communities. This engaging webinar series brought together by Fed Communities, the Federal Reserve’s community development platform that brings together researchers, practitioners, policymakers, and community leaders to share knowledge and explore strategies to promote economic opportunity and together strengthen our communities.

Thank you for joining us for today’s webinar, Understanding Benefits Cliffs: Evidence, Insights, and Open Questions. My name is Sergio Galeano, a community and economic development advisor with the Federal Reserve Bank of Atlanta, and it’s my pleasure to serve as today’s moderator.

Today’s discussion focuses on benefits cliffs, a challenge that can arise when, whether by a promotion, change of job, or otherwise increase in earnings, that someone loses their public benefits, leaving many workers and families around the country financially worse off despite making actual progress in the labor market. These cliffs, as you can imagine, can create difficult trade-offs for workers and their families who are pursuing higher wages, additional hours, or general career advancement, and they present really important questions to solve on behalf of policymakers, employers, and workforce organizations.

Throughout recent years, speakers throughout the country have worked towards finding solutions and implementing approaches that encourage solutions to this problem, encouraging upward mobility, helping individuals and their families move toward overall greater economic and financial stability. Today, it’s our pleasure to hear from experts and organizations who are working on these issues from different perspectives, including research, program design, and implementation. They’ll share their experiences and insights with us through their presentations followed by a panel discussion.

We have with us today the following four speakers. Dr. John Olson is an economist specializing in macroeconomics and public finance. As an assistant professor of instruction, John helps develop, lecture, and advise for the master’s in social and economic policy program at Northwestern University School of Education and Social Policy. His work primarily focuses on tax and transfer systems, international education, and their interactions with economic opportunity, the business cycle, and growth.

From the Maxwell X Lab at Syracuse University, we have Anna Hill who serves as their associate director. With a focus on health and disability policy, she’s worked on projects funded by multiple government agencies, including the Centers for Medicare and Medicaid Services, the Social Security Administration, the Administration for Community Living, the Department of Defense, and the Department of Labor. Prior to joining the X Lab, Anna worked as a researcher at Mathematica in Washington DC for 11 years.

Anna Fogel is Vice President with Social Finance’s Impact Advisory and Workforce and Education Investment Teams. She supports government and cross-sector partnerships to deliver effective, equitable services and to advance economic mobility. She has extensive experience across local and federal government. Prior to returning to Social Finance where she first worked on building and growing its impact advisory practice, she served in roles across local and federal government, first in DC’s Department of Human Services as the first ever deputy administrator for permanent housing, and then as deputy chief of staff where she played a central role in the agency’s COVID-19 response. Then she was senior advisor to assistant secretary on technology and delivery with the US Department of Health and Human Services.

And finally with us, we have Keith Barnes, Senior Director of Beyond the Cliff, an initiative of the nonprofit Martha O’Bryan Center, focused on eliminating benefit cliffs through policy and innovative solutions. With extensive experience in public benefits, policy and advocacy, he has worked to improve public benefits access through data, technology, and policy solutions, launching and leading a nutrition assistance advocacy network in Tennessee and serving as the state of Tennessee’s Meals on Wheels administrator where he built interdepartmental and national partnerships, reduced administrative burden, and promoted client-centered service.

To the four of you, thank you so much for sharing your expertise and time with us today. Now, before we go on, just a few housekeeping items.

Views expressed during the session are those of the speakers and are intended for informational purposes only. They do not necessarily represent the views of Fed Communities or the Federal Reserve system.

Microphones have been muted, but please make your voice be heard. Make ample use of the Q&A feature, and if you actually came to this webinar with a question in mind, feel free to answer it now. We’ll try to answer as many as we can live during the Q&A and throughout the session in the chat.

To keep the conversation going, you can engage with us wherever you get your social media. Please use the hashtag #ConnectedCommunities and visit fedcommunities.org for a variety of community development articles, resources, and data across the Federal Reserve system.

And finally, this session will be recorded and the presentation, video, and the podcast from it will all be available on fedcommunities.org within two weeks of today’s event.

For today’s presentations, John Olson and Anna Hill will first present on innovations and research followed by Anna Fogel and Keith Barnes, who will focus on innovations in practice in the field with partners.

Now, before I turn it over to Dr. Olson, who will kick us off, I’d first like to ask you, members of the audience around the country, a question. You should see the prompt come up in your window at any moment. The question is, what is the highest priority for future benefits cliffs research? So when you think about this field from a niche problem to something really well understood to hearing today, what do you think should be the priority for research in the coming years? Put your answer in the prompt and we’ll get to the results after the presentations. With that said, everyone, thank you for joining us for this Connecting Communities webinar. Dr. Olson, the floor is yours.

John Olson

Hello. It’s great to join you all this afternoon. It is my pleasure to walk you through what the current research says about the impact of benefits cliffs on markets and labor markets specifically. Next slide, please.

So in my view, the current research on labor market impacts of benefits cliffs primarily falls into four main camps. The first are simulations of our tax and transfer system. These often look for evidence of the existence of benefits cliffs. There are also surveys of households potentially impacted by cliffs, which try to figure out if people are aware of them and what they may do in response.

Second, there’s a growing body of empirical studies of individual programs that may feature a cliff in their design. These include programs like social security, disability insurance, and childcare subsidies. These studies investigate if people are changing their incomes and/or their labor supply in response to cliffs in these individual programs.

Third, and perhaps most rare, are studies of all benefits cliffs at once and across all programs. These studies try to quantify their impact across the whole economy, including how they may affect aggregates like GDP, as well as households across the entire income distribution.

Finally, and perhaps most promising, there are ongoing pilot studies investigating potential ways to solve our benefits cliffs problem. These experiments are probing how households are responding to different potential solutions, and if these solutions are effective. Next slide, please.

So what do each of these strands of the literature tell us? First, the simulations prove that benefits cliffs are a very real feature of our tax and transfer system. They most certainly exist and are pervasive in the United States.

Second, surveys reveal that 22% to 43% of individuals affected by benefits cliffs take actions to mitigate those effects. Personally, I like the rule of thumb that about one third of individuals affected by cliffs react to them. These include behaviors such as deciding not to look for or pursue a new job, refusing raises or promotions, working fewer hours, turning down job offers, keeping savings below a program’s limit, transitioning from a higher paying to a lower paying job, creating a job to avoid losing benefits, or even deciding not to get married. The empirical studies of individual programs also show that some households affected by cliffs indeed reduce their incomes in the data.

For example, a 2021 paper in the Journal of Health Economics found that households around the cutoff for health insurance subsidies reduce their incomes over $1,000 annually to maintain their eligibility. Another example is a 2022 paper that found a 13 percentage point increase in part-time relative to full-time work just below the earnings threshold at which the Medicaid program ends. I will defer discussion of pilot studies to my fellow panelists, and I want to turn to some of my own research. Next slide, please.

In some of my own work, I studied how individuals in the economy react to all benefit cliffs in general. I find that workers near cliffs apparently reduce their labor supply by about 43 to 65 hours annually on average. This is equivalent to about $1,000 to $1,500 annually, or 3% to over 5% of household income of the affected households. I also find that the larger the cliffs, the more that households respond. That is the more at stake, the more likely someone is to avoid that cliff. As the cliff size grows, I find that households on average reduce their labor supply further by around two full-time weeks worth of work. I would note that these results from the data may be an understatement compared to surveyed households’ reported experiences. Some of the aforementioned survey evidence shows households self-reporting hundreds of lost hours annually, or thousands of dollars annually in income losses.

In my own work, I go on to measure the impact of benefit cliffs on the economy as a whole, as well as on people’s wellbeing throughout the income distribution. I find that output gains such as with GDP are modest. Eliminating cliffs increases output gains by about 1.6%. Measurements of wellbeing are more substantially impacted. On average, measures of wellbeing increase about 9% with cliff elimination. Of course, households originally constrained by cliffs have the greatest impact on the wellbeing. The wellbeing more than doubles on average with cliff elimination. What I find most fascinating from this work is that households never on cliffs in the first place have their wellbeing improve on average about 6%. To put it another way, a rising tide lifts all boats, even boats never near cliffs. Next slide, please.

I will conclude with important implications from this research. First, benefits cliffs have economy-wide effects beyond the individual household hardship that we see in the surveys and the data. Although labor supply reductions primarily affect those near benefits cliffs, my research shows that eliminating benefits cliffs would help productivity gains flow through to everyone throughout the income distribution. I will also note that although I focused on labor supply impacts today, consequences to wellbeing are not just limited to labor supply. Households around cliffs suffer additional administrative burden when trying to comply with all these program rules to maintain their benefits. They may still face income losses and volatility even if they do not reduce labor supply. Finally, I’ll also note that benefits cliffs do not just affect households, but also businesses. Workers may turn down additional shifts and promotions, putting artificial constraints on businesses’ labor force, capacity utilization, and productivity.

This can also reduce returns to workforce training, so businesses may have less incentive to invest in training their workforce. Thank you for your time, and I look forward to our discussion. I will now pass it to my fellow panelist, Anna Hill, from the Maxwell X Lab at Syracuse University.

Anna Hill

Hello. Thank you, John. Hi everybody. Today I’m going to be talking about the 2Gen Onondaga pilot. The Maxwell X Lab has been working closely with the Onondaga County Department of Social Services to evaluate the program, which aims to help single mothers caught in an intergenerational poverty cycle. Next slide, please. So what is the 2Gen program? DSS launched 2Gen in 2022 with the goal of helping young parents receiving temporary assistance (TA) to achieve economic self-sufficiency by providing wraparound services and intensive case management to young mothers on TA who also received TA program benefits when they were children. That’s the 2Gen aspect of the program. 2Gen is a comprehensive program with multiple components intended to support both parents and children. Caseworkers work closely with parents on goals within the domains of health and wellbeing, early education, children’s development, post-secondary education and employment pathways, economic assets, and social capital.

They also work to identify services and supports across all of these domains. Finally, and specific to today’s panel, the program provides transitional benefit or cliff payments for participants whose wage earnings will cause them to lose TA and SNAP benefits. Through the collaboration with us, DSS is working to evaluate the impact of the program. The evaluation is part of the 2Gen pilot program. That evaluation is still very much in progress and in its very early stages. Next slide, please.

Okay, so what is the transitional benefits piece of this program? Participant finds a new job and the 2Gen team determines that the benefit cliff will be triggered. The participant gets a benefits cliff meeting with 2Gen program staff, including an eligibility worker, their caseworker, a financial empowerment counselor, and a supportive employment specialist. And this group will explain the benefits cliff to the participant. They will explain the 2Gen support that’s available to help them through this transition.

And then they also describe the expectations for participants who receive transitional benefit payments, and those expectations are largely around job retention. Once the temporary assistance grant is closed, New York State provides the last month’s temporary assistance and SNAP waiver amount for six months. After that, the 2Gen program takes over and continues to provide temporary assistance and SNAP payments at the same amount for an additional six months. Once this period ends for one year, the program gradually reduces the amount of the transitional benefit provided to help participants transition off the support, providing something that looks more like a benefit ramp rather than a benefit cliff. Next slide, please.

So far, 246 families have participated in the 2Gen program. 164 of them are currently active in the program. 41 have completed the program and 41 have dropped out or were unenrolled due to things like lack of engagement, moving away from the area, or any number of other issues. For the purposes of our evaluation and progress, 2Gen staff regularly extract and share administrative data on families’ income, debt, social program utilization, and housing costs. And then as well, all families in the study receive a survey assessment every three months through their time in the program. They’re asked about their savings, debt, food security, and self-reported outcomes on the self-sufficiency matrix, which captures progress on domains like healthcare, adult education, social capital, childcare, et cetera. Next slide, please.

Okay, so we have had relatively few families so far who have ever received a cliff payment or a transitional benefit payment. It’s currently 40 families. There have been challenges so far in implementing the transitional benefit component of the program. The person we work most closely with at DSS has said that the most difficult part of implementing the benefits assistant piece is not necessarily awareness or knowledge on the part of the program participants, but rather just that few people really become eligible for it. And those who do become eligible by finding jobs often experience difficulties with job retention and end up needing to reapply for temporary assistance. These are single parents who are getting jobs and then often losing them when something goes wrong that causes them to need flexibility in their work hours to take care of a sick child or if their childcare falls through or if their mode of transportation breaks down or for whatever reason.

The caseworkers that we’ve been in contact with cite a lack of social capital available to provide backup help to program participants in these situations. This is one of the main reasons that the program seems to be seeing a lot of churn in employment and low job retention. Many of the parents are in really precarious circumstances. Finally, the wages that 2Gen participants are earning through the jobs that they get when they’re part of the program tend to fall well below what would be considered a living or livable wage in Onondaga County, making it really difficult to get by on earnings alone, even when participants are able to keep their jobs and complete their time in the program. This problem has been particularly acute recently as prices for necessities like groceries and utilities have been high. Next slide, please.

Finally, I just want to point out that despite the challenges that the 2Gen staff have experienced in implementing the transitional benefit, 2Gen participants report that the payments are helpful. So while the number of eligible families remains low, it’s important to keep in mind that families are reporting that they’re truly benefiting from a transitional benefit support. I’m going to end with a direct quote from a participant here. So this participant says, “When they lowered all that stuff and they gave me the $500 in the Cliff money, it was more so like a substitute that helped me over to get me to where I needed to get. So if I wouldn’t have had that, I’m honestly, I don’t know what I would’ve done without having it.” I think that this kind of input from program participants is really impactful. So thank you very much. I’m going to turn the floor over to Anna Fogel.

Anna Fogel

Thank you, Anna, and so glad to be here with you all. At Social Finance, we have worked on benefits access and mitigating benefits cliffs with states across the country from Maine to California. And in particular, we work closely with state and local government partners to help design and implement pilots, programs, and policies that better support economic mobility. So we’re currently working with LA County to design a benefits cliff pilot. And so if you go to the next slide, I’m going to share some of the key decisions and design choices we’ve been wrestling with, what we’ve learned from working on this pilot and many others, really in terms of what it looks like to translate the research and policies into practice. But in LA, keep in mind this is all a work in progress, so you’re really getting to hear about some of the conversations we’re having in the midst of designing this pilot.

Just at a high level to set the stage, we’re partnering with the Department of Public Social Services, which is the agency that manages and administers many of the social safety net programs in LA County, the Chief Executive Office, which is the County Administrator’s Office, and the Chief Information Officer’s Office, which is really key for accessing data to manage the performance and understand the impact of the pilot. And we’re having regular ongoing working group meetings with staff from across these agencies that are the ones really deciding on program design questions. The county is planning to support about 60 families over two years, really focused on families that are hitting the benefits cliff as their earnings rise. So in particular, these are families who are exiting the CalWORKs, which is California’s TANF program. And we started with a detailed theory of change, which really led our working group to identify two primary components of the program and program benefits.

The first is supportive services. So that includes case management, career coaching, peer mentors, and the second is cash aid, so direct cash support. So that’s the overall picture of what we’re working on. And I’m just going to spend the next few minutes diving deeper into the design decisions related to the cash aid program element to give you a feel for what we’ve been thinking through. So on the next slide, you can see that we started by identifying priorities in Los Angeles, those raised by our county partners, and importantly through the United Parents and Students Nonprofit, which is an organization that we’re working with to raise up the voices of people with lived experience in CalWORKs and facing benefits cliffs in LA County to ensure that their priorities and their voices are heard throughout the design phase and informing how we’re making design decisions. And so with all of that input, we decided on three core goals for the cash disbursement piece.

The first is that it’s effective. And by that, what we mean is that it’s providing what participants tell us they need in terms of ongoing support as well as emergency support. The second is that it’s feasible. And the way we’ve defined this is that it’s easy to understand from a participant’s perspective and also easy to administer from the county’s perspective. And then the third is that it’s sustainable, that it’s really supporting participants in advancing their economic mobility and not creating any additional cliffs with this part of the program.

On the next slide, once we defined local priorities, we then looked to the national landscape of pilots to better understand what others had learned and are learning now. And we were able to speak with a number of other pilots and contacts, including folks on this call like Keith, who you’ll hear from next in Tennessee. We spoke to folks in Onondaga, in Ohio, in DC, and elsewhere. And this slide just shows a summary of some of what we learned, what types of models others are using to disperse cash, like a flat monthly payment where every person in the program is getting the same amount, regardless of where they are in terms of benefits cliffs, or in contrast, a tailored amount that really fills any gaps created by a loss of a particular amount of benefits, or another approach. And we discussed all of these options with our LA County working group to assess what might work best in LA given our project-specific goals.

And on the next slide, you can see where we’re landing. And while we’re still finalizing the design, here is how we are at least starting to think through how to combine what’s needed in LA with building on learnings from national experience. So our plan so far is to disperse cash to participants in three different ways. First, with stabilization payments. So there are likely going to be monthly recurring payments of equal amount for every participant. We think this adds simplicity and predictability for clients, both of which are missing in our current safety net programs, and also just makes it easier to administer. The second is milestone payments. So these are payments that are tied to particular achievements like getting an interview or a job or completing a training program. And these milestones will be defined by the participant. So these will be tailored to each participant.

And then the third is that there will be available emergency cash assistance for one-time or unexpected expenses like cost to fix a car or get medical treatment. On the next slide, I’ll just say that as I wrap up, while I used our ongoing work in LA County to do a deeper dive into some of the elements we considered in designing the cash aid disbursement piece of our pilot design, I wanted to just pull back and talk about some of the broader themes across the pilots and projects we’ve worked on and that others are seeing across the country. And some of these have come up already in my remarks and Anna’s remarks and also in Dr. Olson’s. The first is that it’s important to mitigate benefits cliffs, not just with cash, though certainly with cash, that can help fill in the resource gaps households are facing, but also support in navigating career choices, the benefits system, managing emergencies. And so the wraparound support services are really critical in supporting families at this transitional point.

The second, and I’ve said this a few times, but is to make services simpler and not more complicated. It’s really tempting to make these programs as specific to the benefits cliff and benefits loss as possible, but there’s a real trade-off in how well participants and their caseworkers understand how a really specific complex program will work and how they can predict what resources they’ll have in future months, which is something all of us want. The third that Anna and I have both said is to make sure that people who will participate in the pilot have a voice in how it’s designed. And relatedly, for elements such as career pathways, it can be really helpful to define potential pathways, provide meaningful navigation towards good jobs and good careers, but you have to do this while also respecting the choice of individuals and what they want for their own career.

And just lastly, the last two, five and six on the slide, is because these programs combine direct cash with supportive services over multiple years, they really require a significant investment per participant. And so there’s really clear trade-offs in terms of the level of support, the length of support, and how many people you can serve. I’m going to stop there and pass to Keith Barnes to talk more about the national landscape of pilots.

Keith Barnes

Thank you, Anna, and thank you to Fed Communities and the Federal Reserve Bank of Atlanta for hosting this webinar. I will say briefly, when I came into this role two years ago, I was told to go out and find 12 benefits cliff-focused interventions. I wasn’t entirely sure that I would be able to accomplish that, so it’s very exciting to hear about the great work here. It’s very exciting to see the literally hundreds of people who are tuned in right now. So just a little context on Beyond the Cliff, and you can go ahead and go to the next slide. We launched this initiative in 2024. As mentioned, this is an initiative of the nonprofit Martha O’Bryan Center. But importantly, we have brought together over 70 organizations across more than 25 states, DC and Puerto Rico. Those partners include Onondaga County and Los Angeles counties that you just heard about, as well as the states.

So we have state agency partners highlighted on the map here, and county governments, workforce development providers, and social service agencies that are represented by the dots that you can see across the map. The common thread among this broad network is that each of our partners has identified benefits cliffs as a barrier to economic opportunity, and they are actively taking action to address those cliffs either through policy change or approaches to how they’re delivering services, or as we just heard about testing innovative solutions. Our goal with Beyond the Cliff is to bring together these practitioners to support better practice in mitigating benefits cliffs and to build evidence to support better policymaking so that we can fix this issue at its root. Next slide.

So together we’ve developed a framework of promising practices to mitigate benefits cliffs based on the evidence that we built across those 70-plus partners. While we don’t have time to go through each one of these elements in depth, you’ll note strong parallels with what our previous speakers have shared. So a lot of common elements have emerged. I’ll also flag, I’m excited to share that we just released a paper in collaboration with the Federal Reserve Bank of Atlanta, and we’ll be sure if it’s right hot off the presses, so we’ll be sure to get that out to you, but it provides a landscape overview of many of these practices in an action.

I will add to what’s already been discussed in first reemphasizing, as both Anna’s pointed out, the importance of engaging in person-centered design. The system that we have developed, the public benefit system that we’ve developed is a bit of a misnomer. What we really have is a patchwork of programs with different eligibility rules and compliance requirements that families and individuals are left to navigate essentially on their own. Ideal interventions require that we stop approaching the problem through the lens of this misaligned patchwork, trying to fix things program by program, and instead exploring how these systems are experienced in totality and focus on ways to design a more seamless system aligned to economic stabilization and mobility rather than just participant compliance. From participants’ perspectives, we can identify better solutions that promote economic opportunity. I’ll also emphasize the importance of coaching and benefits counseling. There’s a growing body of evidence that supports strengths-based goal-oriented coaching.

We see it in models such as circles, empaths, mobility mentoring got mentioned previously, and family-centered coaching is another model. And from the perspective of program participants, what we have heard consistently is that that coaching component is one of the most meaningful and impactful in supporting, not just addressing navigating benefits cliffs, but also in moving forward economically in general. And on that benefits counseling piece, I would highlight resources such as the Atlanta Feds Cliffs tools. What those do is help clarify when Cliffs might actually be experienced. So they illustrate a household’s current financial situation with their current income and earnings along with any public benefits they might be receiving. And then they’re able to illustrate if you take a raise, what will it look like if you pick up an extra shift or if you go back to school and pursue a better career? What implications does that have for your benefits?

Will your family be worse off or can you do this safely? The reality is that not everyone taking actions, as John mentioned before, to avoid those benefits cliffs would’ve actually experienced one if they had increased their earnings. Because of the complexity of the system we built, this can be difficult to understand without a clear and accurate resource such as the Atlanta Feds Cliff tools to assist. And then lastly, I’ll also turn back to transitional assistance, which we’ve heard quite a bit about today. At the end of the day, the problem we’re trying to solve is that families are trying to make ends meet. And because of these benefits cliffs effects, sometimes those increased earnings do leave a family worse off financially rather than what we would intuit is you work hard, you should get ahead. And so the concept behind transitional assistance in whatever form it may take, whether that’s the versions we just heard or another approach, is that we’re trying to offset that effect.

We’re trying to keep the family whole so that they can focus on employment, improving their financial situation without having to worry about that loss in benefits. So we’ve already heard some really great examples from our previous speakers of innovative transitional assistance approaches, but I’ll also highlight that states have a number of existing policy levers within federally-funded public benefit programs that they can implement to mitigate benefits cliffs. So just as a couple of examples, first in SNAP, it’s called broad-based categorical eligibility. So by default, the income cutoff for SNAP benefits is 130% of poverty. And it is essentially almost guaranteed that if you cross that threshold, you will experience a pretty significant loss in benefits, essentially triggering a cliff. With that policy, states can increase eligibility to 200% of poverty. And while it doesn’t eliminate benefits cliffs effects in all cases, it does eliminate it in most cases. And that’s something most states have adopted some form of that policy, any state could. States can also adopt policies using local or general revenue dollars as one example of that.

Florida, just in the last couple of years, increased the income limits for its childcare subsidy program. So it took state dollars to fill in the gap where previously a household, if they crossed that income threshold, they would lose eligibility entirely, they would face a cliff. So they were able to use those state dollars to fill in that gap and to mitigate the cliff. So just in closing, one final point is the importance of that rigorous evaluation. That is part of what catalyzed the convening that we had a few months ago that led to the webinar we’re doing today. What I’ve shared are promising practices, but we’re really looking to the research field to help us refine what practices are most effective, how we can deliver them more cost-effectively, and how we can ensure that they are targeted to those who can benefit most so that every family in the country has the opportunity to achieve their own version of the American dream.

And with that, I will turn it back to you, Sergio.

Sergio Galeano

Keith, thank you so much. And thank you to our four presenters, the combination of research, family-driven work, field work. It’s all really exciting to hear how we’re finding solutions together for this issue.

Before we dive into our discussion, I would like to review the results from our polling question that we asked right before you all started. If we can please prompt that up on the screen. All right. So I don’t know if everyone can see it, but number one, it looks like people are agreeing that the highest priority for future benefits cliffs, 56% are evidence of what interventions work, short and long-term impacts. Second, better analysis of how these policy changes like SNAP that Keith was just closing his talk on, work at the state and federal level. Evidence on employer practices. They’re a key partner in this, and they’re also impacted by benefits cliffs, of course.

And then on improved ROI metrics, everything that speaks to what you all presented on. All right, thank you everyone in the audience. Everyone, this is really great, a really great set of complimentary research. I wanted to start with you, John, our first presenter. So you said it yourself in one of your slides that this really started as a niche problem that I know was understood by folks as far-ranging as policymakers, but also folks who work directly with workers at workforce sports, for example, education folks knew this was an issue, but it almost seemed like an open secret. How do we solve something like this? And now it’s really exciting to see a macroeconomist like you work to distill what the aggregate impact is. And I took notes while you were speaking on economic output, its impact on wealth, time worked up to two weeks a year.

And also in a time when many folks talk about workforce challenges, whether in urban or rural regions or industry structural changes, this is a concrete argument in favor of why we should solve benefit cliffs. And I love it because it also presents a similar argument to different audiences to understand the whole problem. So as you’ve seen this evidence-based mature, you’ve been one of the few that have really pushed this frontier on aggregate impacts of benefit cliffs. And if you could reiterate for us in the audience, how important is it to understand benefit cliffs, not just from an individual or family perspective, from a programmatic lens, but to really see the whole, how something like this really impacts things like labor force participation, productivity, and the broader economy that Keith ourself reminded us that everyone should be able to participate in.

John Olson

Thank you. Well, I may be biased, but I think it’s a vastly important issue. If benefit cliffs were just holding low-income households back, that would be a big problem. There’s no denying that. But by influencing the broader economy, that means benefit cliffs are holding us all back. It means we all have skin in the game when it comes to alleviating the issue of benefit cliffs. And I think this can be particularly important when raising awareness about the issue and marshaling the political support necessary for combating the issue of benefit cliffs. This isn’t just something that affects some of us, it affects all of us.

Sergio Galeano

I can’t agree more. Now, in terms of your research, you mentioned how everything from simulations, surveys, different kind of methods have been used to elevate this work, let alone on the evaluation side like Anna Hill will get to. But as you think about this several years from now with your research, what kind of new data sources or research partnerships would you really think would push the fold on what’s capable in showing the broader impacts?

John Olson

Sure. There was a great question put in the chat about more maybe industry-specific research. I think that’s something that’s worth exploring. I also would like to know more about what economists call the non-pecuniary, that is the non-monetary values of benefits. So for example, how participants weigh a dollar of Medicaid versus a dollar of food stamps, depending on their household situations, for example. And this could lead to different implications for the salience of cliffs and how people respond to them, and also the welfare gains from fixing them. In terms of data sources and partnerships, I really wish there were more public use administrative microdata available so we don’t have to rely quite so much on surveys where people sometimes have to guess or round or fudge numbers. SNAP already has some great public use microdata, and so does the Childcare and Development Fund. The public use files for the Social Security Administration and a lot of their welfare programs are about 20 years old, and there isn’t really great publicly available data for most other welfare programs.

And I think you could bring a lot more researchers in if there were more public use administrative microdata.

Sergio Galeano

Yes, we’ve seen this too at the Atlanta Fed and can’t agree more that more data would absolutely allow more impact, more studies. John, thank you. And I also liked your point about really valuing the non-pecuniary side of benefit cliffs, that it’s not just a number or one set of indicators. And that’s why I really love and want to turn to Anna Hill’s work, the Maxwell Lab with 2Gen in my home state of New York Onondaga, because it’s a 2Gen approach. It’s about the worker who has the job, but it isn’t just about punching in and out and the impact on the salary. The work is also focusing on the children, who often inherit some of those financial circumstances, who if the parents are benefiting, they’ll benefit in their future and we make the economy both in the present and the future much better. So you have this program, you mentioned about 246 families that have gone through it, and this is great.

And even if you were to migrate this program to a similar county with similar economic conditions and the same amount, there are other factors at play, economic, social, political, educational, all that might lead to different results. So as an evaluator, when you see some of the challenges and you iterate, but then you see the good side, the things that are working really well, and you get excited to put that out into the world and say, “We can continue to scale this.” Well, what lessons do you have for folks like Keith and Anna Fogel in the field that want to explore partnerships to fund some of these and get them off the ground? What are opportunities and challenges to scale this kind of approach, but also keep that same level of effectiveness?

Anna Hill

Sure. I think I’ll start with a somewhat self-serving response. And I think the biggest opportunity for scaling a program like this up is being able to generate high quality causal impact estimates of the program on outcomes that people are interested in. And so that is something that we are working hard to do with 2Gen. I think I’ll also say that what makes 2Gen a great program is also what makes it a challenging program to implement. So I think it is truly a very resource-intensive program, requires a large investment in staff and other resources to support and help workers as they transition away from receiving public assistance beyond simply providing a financial assistance program. So I think this holistic approach that includes intensive case management along with transitional benefits definitely seems promising. So it’s clear from at least the implementation challenges that we are seeing, that it’s likely that a program that provides a larger suite of services is more likely to be effective than a program that simply provides transitional benefits.

But the other side of that is that it’s a huge logistical undertaking. So I think that it’s difficult for municipalities to come up with the funding and the resources to embark on something like this. And so I think 2Gen has started because of an influx of anti-poverty funding that came from the state. So I think that opportunities to expand the program will need to follow funding.

Sergio Galeano

So I’m thinking about when you try to activate partners in the field, in a municipality, there’s a set of leaders, there’s some institutions, nonprofits, and they have limited resources and a limited bandwidth to enact change. And I can see many methods of approaching how do you pitch a pilot, a program around benefits cliffs? Of the many ways, Keith mentioned finding 12 solutions, 12 ways of doing this. So there are many ways of approaching this problem, but the 2Gen, does it make it more feasible, palatable in terms of time and resource for a community to try something new? Because they might see it in terms of here’s one issue, but I’ve got many others to solve. Does the 2Gen model help couch that in a wider universe of economic mobility challenges?

Anna Hill

I think that it does. I think that bringing in the whole family into the program opens up more options for finding funding as well as opens up more opportunities for partnerships within the community. I think that as people grow up, the suite of services available to them becomes more and more fragmented. And so I think that it is useful to create a more holistic program that incorporates people of all ages. And what you said is exactly right, that addressing some of these problems within these families when children are young could really help them become economically self-sufficient themselves later in life. So I do think that having a broader focus like 2Gen does is favorable for getting buy-in from multiple organizations. Again, it does make it a much more complicated program to administer logistically, but I think that’s absolutely right.

Sergio Galeano

If we could work harder across communities from Onondaga to LA County, we’ll go to Anna Fogel so that we can turn a benefit cliff into a benefit ramp to higher opportunity. And this could help everyone, the families involved, the employers and the economy. Anna, you’re doing some great work in LA County, and you’ve had yourself individually tremendous experience in the public sector and system delivery design, and it fits within social finance’s broader network. They’re a key partner with the Atlanta Fed. When you look at benefit cliffs today, what do you think is the biggest challenge to scaling this from a systems point of view? Thinking about a question in the audience from SNAP, a latest policy change. So you’re doing all this work and then one key variable out of many changes or whether it’s partnerships or making this easy to digest feasible and sustainable, like you said.

Is it about policy, program design, funding and incentives? What have you found to be the strongest and most impactful levers that need to be pushed and pressed to really have the most impact?

Anna Fogel

Yeah, thank you for that. And thank you for all of the questions from folks around big federal policy changes that have just happened, like H.R.1 or the One Big Beautiful Bill Act, which are absolutely impacting what states and counties can do to address and respond to benefits cliffs. I think that is what I would say is really one of the biggest challenges to scaling at a systems level is the lack of alignment across federal policies and programs. And I think Keith described our safety net as a patchwork, which I think is a generous description, but it really makes it really difficult for folks on the ground, which means that when you think about programs at USDA, like SNAP, don’t define income the same way as programs that are run at the Center for Medicaid and Medicare Services or the programs run under the Administration for Children and Families like TANF or Social Security Administration.

And so really all of these benefits cliffs are created, I would say, because of a real misalignment and lack of coordination at the federal policy level. So that I would say is just the primary challenge that everyone is really facing. The other thing I’ll just say briefly though is that it also requires alignment because of the sort of patchwork approach we take to our safety net. It really requires alignment across federal players, like I said, but also local agencies. So in LA County, for example, we have DPSS and CEO and CIO, and you have a whole range of local actors that are needed. And then the last piece is that it also requires meaningful partnership with employers. So you have various levels of the public sector and you also need the private sector at the table. And so it just creates a lot of complexity for systematizing and also designing a pilot in the first place.

Sergio Galeano

Yeah, I’m hearing as you answer that by nature, some of these policies come from different agencies and they’re not always aligned already from the federal level, that it creates a challenge on the field for all of you to really align across partnerships. And that’s where the biggest fruit is, the biggest benefit that we can have in the future. Keith, you had tremendous experience throughout your career on coalition building, and it feels like benefits cliffs is just one of many areas you’ve worked on, including nutrition assistance and now leading as senior director of the Benefit to Cliff program with the Martha O’Bryan Center. So as you’ve watched this issue evolve over the years with Martha O’Bryan and before, and you’ve seen the increased access, it always helps to have more awareness. That means capacity, political will, it means funding, it means so much from different players in the system.

What have you learned about what it takes to build a coalition and to sustain it that can identify, hey, here’s a really good solution, but what’s the action necessary to really bring people together and scale something locally across states and regions?

Keith Barnes

Yeah, that’s a great question. I would begin with first and foremost that problem-setting. So John shared some really great national statistics. We have some partners that have done more localized analysis to really problem set for the context that let’s say you’re looking at a particular state or a county government, start with understanding what that issue looks like for your community, and then bring together partners. I will say one of the more heartening things about the issue of the benefits cliff is this really is a bipartisan issue. Folks from across the aisle don’t want government getting in the way of economic opportunity. We want to see families thrive. So this is an opportunity where you can potentially find “strange bedfellows.” Even just looking with and Beyond the Cliffs network, we have folks that are squarely on both sides of the aisle, so don’t discount that opportunity to collaborate.

And I would say looking ahead, so we have policy recommendations that we put out. I saw our website was shared, so you can view those there. I saw a question in the chat about engaging with Senator Husted’s bill, the Upward Mobility Act. There’s a lot of other legislation. We’re just in a really interesting moment where some of the harder work is being done for us or has been done, I guess, by us to really elevate this issue and raise that awareness. I think looking ahead, it is the opportunity to continue to build on the great evidence and evaluation efforts, some of which have been shared here to really identify, okay, we have promising practices, we can do the analytical work, but we really want to see more gold standard RCTs evaluations that can help us really advance the most effective solutions for solving these problems.

Sergio Galeano

That’s really helpful, especially to understand how folks in the audience can partner with you all, social finance, everyone else, but also start their own local partnerships. I did want to ask a question that someone in the audience actually asked too about employers. So we know from an economic output that a perspective that benefit cliffs might really confuse employers who are looking to advance their own staff or promote people, and they might be confused about why that’s not working out, job equals someone coming in. And when they see that restraint or that denial or rejection, it can be confusing and it could also mean lost time in looking for candidates, hard to fill positions. So when it comes to. Whoa, question just moved. But when it comes to including employers, is there anything in these programs that we can do with them? Or have you included employers in the process and what have you learned about better engaging them on benefit cliffs?

Keith Barnes

No, it’s a great question. I’ll say locally under the umbrella of Beyond the Cliff, we’ve done a lot of work to engage employers all the way up from multi-state or essentially national corporations down to local folks. What I will say is just education and awareness is key. We’ve yet to sit down in front of an employer and their jaw doesn’t drop. And oftentimes there is that light bulb of, “Oh, that’s why so-and-so turned down that raise or quit without saying anything.” So we’ve seen a lot of light bulbs go off. I think looking more towards how employers can be part of the solution, that first step is the awareness, making sure that they understand the issue, that they can communicate it effectively within their own operations, that they can identify it. And importantly, we need to build the infrastructure in partnership with them. They can do it for themselves, whatever that looks like, whether it’s within the company, within a nonprofit partner, but having services and supports that can be referred to to help individuals navigate these things.

And that’s particularly true, I think, for anchor institutions. So just as a couple quick for examples, we have partners in Springfield, Massachusetts. Well, it’s actually a statewide pilot in Massachusetts being led by Springfield Works. So they’re partnering with anchor health institutions essentially to build career pathways and to help workers that are pursuing those pathways to navigate benefits cliffs. We’ve also seen that through partners like Goodwill of the Southern Piedmont. And just one last piece I would highlight, and I believe it’s employertoolkit.org. So that’s our partners with the Women’s Fund of the Greater Cincinnati Foundation. So they’ve built essentially a publicly available toolkit that can help employers identify things that they can implement to better support workers who are navigating benefits cliffs and other sort of economic mobility barriers.

Sergio Galeano

Thank you, Keith. And with our remaining time, I just wanted to ask a question possibly for Anna Fogel or Anna Hill. There are a number of different questions I’m trying to tie together. Someone’s asking on the intersection of child support issues with benefit cliffs. And I’d even say broader to that, benefit cliffs is one of many challenges that are often compounded and that in everyday practical life, someone is dealing with a benefit cliff and maybe other issues. So when it comes to understanding those challenges, but then also someone’s asking about how do you encourage families who might be hesitant to work with the government or a pilot program, don’t know how that works, and what it means at the end when you want to have success, success being they’ve had career advancement. I saw on both of your slides what it looks like towards the end, the sort of metrics you’re looking for in success, how much it costs per family.

But when it comes to that broader convincing families, not just municipalities and governments to join in, but families watching their experience that it’s positive, and then having a comfortable handoff where they’re comfortable now back on their own and that that solution is more or less soft or ameliorated at the moment. Do you have any last words on that today?

Anna Fogel

I’m happy to start and then I’ll pass to you, Anna. And I would say that broadly, this is one of the reasons we think the career coaching, and that’s borne out in the research, and Keith mentioned this too, but that the coaching, the wraparound supports is really helpful. There are a lot of complicated factors and programs that are interacting in different ways, including salary from employers. And so having support and expertise and tools like the ones that the Atlanta Fed has created and others that support caseworkers and understanding how different programs or streams of income interact is really helpful. And it’s a full-time job, which is a statement on how our system works and how hard it is for people to navigate on their own.

Sergio Galeano

I hear that. Anna, thank you so much. With our limited time, I’d like to close now, and I want to take a moment and pause and say thank you to each of you for your unique and powerful contributions to this field. The Federal Reserve system cares a lot about making sure that people can fully participate in the economy, and this is a unique issue with unique challenges, and we thank you all for sharing your expertise and time. A lot of folks have asked about follow-up resources. I want to remind everyone the recording from today will be shared, and we’ll also share resources from the different organizations and speakers that we have today so that you can stay up to date on the latest research and practice and also add to the conversation. On behalf of Connecting Communities, I want to thank Keith Barnes, John Olson, Anna Fogel, and Anna Hill for your time.

But for everyone in the audience, just a few last comments. Please complete the post-event survey. The Connecting Communities platform is always looking for ways to improve, and your survey and responses helps us do that. Also, visit fedcommunities.org to access not just the resources from today, but additional resources, and you’ll see on-demand webinars and content from years ago for evergreen research and qualitative insights for a host of public policy issues that impact the communities we live and work in. Follow us on social media. We are on LinkedIn, X, Instagram, and Facebook. Don’t forget to subscribe so you can have this straight to your inbox and stay up to date on the latest conversations. And again, everything will be available, including resources from our speakers about two weeks from now. And everyone, please mark your calendars. Thursday, September 3rd, next month is going to be our next Connecting Communities webinar titled When Every Dollar Counts: Worker Perspectives on the Economy.

This session will examine how workers who earn low- to moderate-incomes, like the populations we were talking about today, are navigating rising costs, limited opportunities, and a challenging job market. Attendees will gain insights on the effects financial distress of low- and moderate-income communities have on labor market dynamics and economic mobility and resilience. Everyone across the country and to our speakers, thank you so much for your time. We’ll see you next time. Thank you.