New Missouri law will help residents escape safety-net cliffs

Missouri lawmakers took an important step forward for working-class and impoverished residents this year by enacting Senate Bill 82. This new law will help more Missourians escape from an entrapping safety-net system and experience the dignity and opportunity of work.

On paper, our safety-net programs in Missouri are intended to help people avoid abject poverty and meet their basic needs. These programs should be temporary whenever possible and encourage work and independence, because ultimately what we want for people is stability and mobility. The sad reality, however, is that many of the programs include a hidden time bomb that threatens the very individuals they are intended to help.

For those receiving safety-net benefits -- especially SNAP, child care assistance, and Medicaid -- there can be a sudden, steep loss of government assistance as a worker's income increases. This often results in a loss in benefits that far exceeds the additional pay from a raise a worker receives. These unintended consequences of the benefits cliff can be devastating, trapping individuals and families in a perpetual cycle of poverty. It is high time we address this issue and strive for a more sustainable and supportive system.

Based on results from the Benefits Cliffs calculator -- a tool created to show where cliffs exist in our state -- a poor, working single mother in Missouri with two young children and receiving safety-net benefits will lose roughly $8,000 in Medicaid benefits the moment her annual earned income exceeds $32,000 -- even if by a penny. This same mom will also experience similar, though smaller, losses in SNAP benefits and child care assistance as she earns additional income (see chart below). Each loss in benefits is more than she would earn in additional income from a typical pay raise. In most cases, it would take many more typical pay increases (and, often, a lot more) to ever make up for the loss.

The incentive this creates to avoid a benefit cliff is so significant that Dr. Craig Richardson, a researcher at Winston-Salem State University who studies the cliff phenomenon, has pointed out that many safety-net beneficiaries intentionally earn significantly less than they otherwise could out of fear of falling off a benefit cliff and because the financial return on additional work is marginal. He calls these areas where earned income remains relatively flat "disincentive deserts." He blames them for much of the lack of social mobility we see in individuals receiving safety-net benefits.

The consequences of the benefits cliffs are far-reaching and affect individuals, families, and society as a whole. First and foremost, benefits cliffs perpetuate cycles of poverty by discouraging recipients from pursuing better-paying jobs or career advancement opportunities. Why should someone take on more responsibilities and hard work if it only leads to a decline in overall financial stability?

Moreover, the benefits cliff hinders upward mobility and economic progress. By penalizing individuals who strive to better themselves, we stifle their potential contributions to society. We deny them the opportunity to become self-sufficient and limit their ability to invest in education and skills development, perpetuating a vicious cycle that can span generations.

To address this issue, we must re-imagine the social safety net. To eliminate benefit cliffs, Missouri should seek federal waivers or use current legal authority to reform the worst-offending programs (like SNAP, Medicaid, and child care assistance) by creating a gradual reduction in benefits that slowly weans participants off the programs as they earn additional income from work. The key is to ensure that each hour of additional work and each raise translates into additional income for the household. S.B. 82 passed and signed into law this year, presents an opportunity to address the benefits cliffs in a significant way if implemented prudently.

The state should also take a page from the state of Utah and move to integrate its safety-net programs as "work supports" for its workforce development efforts, many supported by the federal Workforce Innovation and Opportunity Act (WIOA). This approach makes it more likely that individuals seeking safety-net assistance will receive training, find employment, and avoid joining the ranks of those receiving benefits. Utah's unique economic resilience during COVID and the rapid recovery of its workforce after COVID-era restrictions were lifted is compelling evidence that a "work-supports" approach is much better suited to help people weather tough economic times and avoid safety-net programs entirely.

If we care for people, we should want a system that treats them the way we would want our loved ones to be treated -- by providing needed support, fostering independence, and rewarding effort. Safety-net reforms that focus on promoting work, prepare recipients for better-paying jobs, and reward the initiative to earn additional income will free many thousands from dependence, end generational cycles of poverty, and pave the way for flourishing lives for many more Missourians.

Dr. Melissa Stickel is executive director of Community Partnership of Southeast Missouri, a local nonprofit organization in the Cape Girardeau, Missouri community. Eric Cochling is chief program officer and general counsel for the Georgia Center for Opportunity.