Cliff Effect

What is the Cliff Effect?

Example: A head of household with two children under the age of eight, earns $14 per hour which is $24,430 per year after taxes. Additional housing, childcare, and food assistance benefits worth $28,570 brings her net resources to $53,000.

If she takes a new job at $20 per hour her net salary is $34,900, but she loses $8,000 in benefits, making her net resources now $45,000.

The proposed Cliff Effect legislation (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) gives her $8,000 in EITC to make up the difference. She would be able to take the job and advance in her career!