What does the cliff effect pilot program do?
The Massachusetts Legislature passed an economic development package that includes the cliff effect pilot program! (See: Chapter 268 of the Acts of 2022, Line 4403-2001)
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 a cash payment is 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 60% of resources per family* before pilot administrative costs of $5,500 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 this pilot program?
- 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 a cash payment mechanism to remove 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