AN OPPORTUNITY FOR RADICAL CHANGE.
The benefits cliff is the single greatest barrier to self-sufficiency for low-income families, estimated to be impacting 22.5% of Americans (Carey, 2018).
The benefits cliff occurs when a family’s increased income triggers an abrupt loss of public benefits that outweighs the increase in income, often substantially. Because the value of the family’s increased income is less than the value of the lost benefit(s), the family is left in a worse financial situation. Many families are aware of this phenomenon but do not know when it will occur. Others do know but still struggle to navigate such an event. In either case, the benefits cliff creates a disincentive for caregivers to pursue increased education and earnings.
“I’ve actually turned down a management job before, because I was going to be working more hours, so my rent was going to go up and I was going to be paying more childcare.” –Middle Tennessee parent
This national problem is felt deeply by vulnerable families across Middle Tennessee, blocking their ability to achieve financial independence, career advancement, and economic security.
The public benefits system is meant to be a mile marker in a family’s journey, not the destination, yet the benefits cliff works against this ideal, trapping families in cycles of generational poverty.
Simply put, public benefits distribution does not currently align with the outcome State officials want: financially stable families with opportunities for upward mobility. Instead, Middle Tennessee families are disincentivized by the benefits cliff to pursue opportunities for increased education and career advancement. Indeed, the benefits cliff has gridlocked Middle Tennessee’s economy, forcing employers to recruit and hire for the same entry-level positions and leaving employees stuck in low-wage jobs.
Working against these trends, Our ChanceTN will demonstrate an innovative and scalable vision for the Tennessee safety net, increasing low-income families’ ability to exhibit self-sufficiency and upward economic mobility through community-driven wrap-around supports, family-centered coaching, equitable access to employment and education pathways, financial counseling, and a temporary transitional benefit that mitigates the impact of the benefits cliff and increases caregivers incentive to earn more. In short, Our ChanceTN will ensure career advancement among low-income Tennesseans, shepherding families beyond life challenges that require the use of state and federal public support systems.
TAEM developed a web-based transitional benefit calculator that maps out the benefits cliff for each family and determines the appropriate transitional benefit based on a family’s income, current benefits, and household composition. While other benefits calculators are available, ours is truly unique in that it not only identifies the problem but also the proposed solution. Benefit Specialists will enroll selected families in the transitional benefit program and utilize TAEM’s transitional benefit calculator (beyondthecliff.com) to determine the appropriate amount for each enrolled family. All families (including those not selected to receive the transitional benefit) will have access to this tool and will also receive financial counseling.