Legislation in Massachusetts To Address The Cliff Effect
What does this legislation do?
S.119/H.208: An act concerning public assistance for working families and the creation of a pilot program to address the impacts of the Cliff Effect. Filed by Senator Eric Lesser and Representatives Patricia Duffy and Carlos Gonzalez.
This bill creates a three-year pilot program for 100 low-income working families or individuals who are receiving any form of public assistance. It offsets the disproportionate impact that the Cliff Effect has on families transitioning out of public assistance, allowing participants to transition off of benefits without facing an income “cliff.” The bill also includes a savings component that would be paid out after the third year of the program.
The pilot will test whether the MA EITC can be enhanced to create an effective tool for the Commonwealth to close the cliff gap, thus ensuring that workers are not worse off financially as they move up the income scale.
What will it cost?
The Commonwealth will save 34% of resources per family* before pilot administrative costs of $5,000 per participant per year. The Commonwealth will experience an immediate revenue surplus when a non-working participant on full benefits enters the workforce.
*Actual savings will vary based on family size and benefits received.
Why pass this bill?
- It’s good for economic development – businesses need workers
- Decreases generational poverty
- Rewards work
- Helps people who are trying to advance in their careers
- Is a hand up, not a handout
- Massachusetts is a leader on this issue – we’d be the first state to leverage the EITC to close the cliff gap
- Is key to our economic recovery in the COVID era – we want everyone who can participate in the workforce to participate
- Includes a savings component up to $10,000 per participant upon successful completion of three-year program
- Model can be replicated throughout the Commonwealth
- Participants achieve economic stability between $25—$31 per hour; research shows higher income increases health and education outcomes