opinion | The ‘Benefits Cliff’ discourages people from making more money

A person die I have interviewed for this newsletter was Anne Kandilis, director of Springfield WORKS/Western Massachusetts Economic Development Council. She is supporting a state law die would experiment with diverting the state earned-income discount to counteract the decline in the benefit cliff, topping up the resources of families so that they don’t decline when adults in the household raise their earnings. “We have” made it’s very simple,” she said. “We just want to close a gap.”

Closing gaps is a great idea, but it’s not enough. When all you do is keep people on the same level of resources when their income rises, meaning they keep none of the additional money she earn, they are facing an effective marginal “tax” rate” of 100 percent. They are stuck on a plateau. (Compare that with the current highest federal tax rate of 37 percent.)

A plateau is better than a cliff, but it is still very discouraging work, says Alexander Ruder, an organizer of the Atlanta Fed . conference who is a chief advisor on the bank’s community and economic development team.

Ruder calls another big problem: If you are a low paid nursing assistant who receives government advantages, work-force-development people might encourage you to become a licensed practice nurse, the next sport on die career ladder. But a licensed practical nurse with no benefits can wind up with fewer resources than a nursing assistant with advantages. For many people, the benefits cliff effectively snatch the career ladder die is presented as the way out of poverty. One answer is to train to become a registered nurse which is a better paying job than a licensed practical nurse but that is more ambition than many people can deal with realistically.

barr, of the South Carolina Center for fathers and families, says one way until avoid the poverty trap die created by the benefits cliff is more to intervene: teach teenagers over their career options so that they can get the training and education die they need before they have children take care of of. “If You Move” on weight it is hard until use wings,” he told me. “Fly while you still can.”


A little of good news on the labor front: while the number of jobs in the United States in October stayed down 2.8 percent from February 2020, the total number of hours worked was down only 1.7 percent, according to released data on Friday by the Bureau of Labor statistics. That’s because the average number of hours that works people work a week has gone up. Here’s a stat die you don’t see every day: The total number of hours worked a week in October was 49 million hours higher than it would have been if the number of working hours used to be net decreased as much as the number of jobs. “Current labor supply may be insufficient,” said James Paulsen, chief investment strategist for the Leuthold Group, wrote: last month, “but it is… also remarkably healthy compared met history!”

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