The public assistance system is supposed to offer a bridge between poverty and self-sufficiency. Families receive benefits such as Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP) to soften the impact of loss of income. The programs are intended to be limited in duration and provide a very modest amount of financial support.
Some families are fortunate to also receive a housing voucher or a child care subsidy to help offset basic expenses. Eligibility for benefits varies by program and is based on different criteria, most of which are linked to personal income. This study asks: what happens when benefits are cut before individuals reach economic stability? This is frequently called the “benefits cliff.”
Average annual earnings of recipients are low, however, many families lose benefits while working. States have attempted to address the “benefits cliff” issue by extending benefits for each individual program. This study reviewed state strategies and found that some states were finding innovative solutions such as extending recertification for benefits eligibility or excluding additional income. A system dynamics model is used to evaluate the potential impact on earnings from employment for TANF recipients under four policy scenarios.