Public assistance eligibility requirements such as income caps can force families to choose between feeding their kids and earning more money—even if the extra money still isn’t enough to make ends meet, experts say.
“I think we can all agree that we would like our social safety nets to support vulnerable groups while not creating labor supply disincentives that create barriers to hiring or decreasing economic growth,” Ellie Terry, a doctoral candidate at the University of Washington, told an NCSL Base Camp 2024 session.
The social safety net is a group of public assistance programs designed to “provide critical support to people during times of economic hardship,” according to Office of the Assistant Secretary for Planning and Evaluation, which is part of the Department of Health and Human Services.
“In all states in the U.S., between one-third and one-half of households earn less than what is needed to pay for just a basic set of expenses.”
Ellie Terry, University of Washington
If a family stops receiving its benefits and the household can no longer sustain itself, it has fallen off a so-called benefits cliff, says Walker Stevens, policy associate in NCSL’s Children and Families Program.
“In all states in the U.S., between one-third and one-half of households earn less than what is needed to pay for just a basic set of expenses,” Terry says.
The current social safety net is large, complex and has phaseouts with income gains. In most states, those phaseouts are sudden and result in a total loss of benefits. There are multiple public assistance programs at the federal level providing a variety of services to meet needs such as nutrition, income support and employment training, child care and housing. It can be confusing to determine who is eligible for what, she says.
“The eligibility rules for these programs and tax credits are not only highly complex within each program, [but] they also interact with each other, and that makes the whole system extremely difficult for anyone to figure out,” Terry says.
Two tools available to help state legislators determine what their districts need are the Policy Rules Database Dashboard and the CLIFF Snapshot tool. The PRD Dashboard shows where benefits plateaus and benefits cliffs occur in example households. The CLIFF Snapshot Tool shows how a change in income could affect public assistance eligibility.
When considering making changes to the social safety net, state lawmakers should consider economic mobility, resource floors and psychological harm, distributional effects, the business hiring pool and costs to state government, along with the fact that large benefit phaseouts affect a small portion of those who received them, Terry says.
“An estimated 6% of families in the U.S. in 2023 faced benefit phaseouts equal to or greater than $900, given a $2,000 earnings increase,” she says.
The administrative burden is large for some programs and that can include a multistep application for families, Terry says. “In particular, you know, barriers to applying are high in some states; in-person interviews, extensive paperwork and documentation all reduce enrollment in programs.”
Other states have already remedied some of the issues that affect families. For example, Arkansas, Indiana and Missouri have more flexible income limits attached to their public assistance eligibility policies, Stevens says.
Income limits are not the only eligibility qualification for these programs. There are also asset limits, which are limits on the wealth or resources a family can have. This can force families to liquidate savings or sell their houses or cars to stay eligible for public assistance, Stevens says.
“And this is separate from the income limit,” he says. “A family can fully meet the income limit by having a lower income, but if their savings are over the asset limit, they are ineligible.”
Hannah Edelheit was a 2024 intern in NCSL’s Communications Division.