CT Voices Report: Benefits CliffS Undermine Economic Security for Working Families
Updated: Apr 13, 2021
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February 22, 2021 Ashlee Niedospial
New Haven, CT – Connecticut Voices for Children today released a report that analyzes where increases in minimum wage may have unanticipated effects on some families’ receipt of benefits and hinder families with children from gaining economic mobility, despite increases in their income. The report entitled, “Impact of Connecticut’s Minimum Wage Increase on Access to Benefits for Working Families” outlines 10 policy solutions to mitigate the impacts of benefits cliffs—when a small wage increase leads to a significant reduction in public benefits—which worsen a family’s economic security, hinder upward mobility for low-income families, stifle economic growth by keeping individuals from participating in the workforce, and disproportionately impact people of color and women. “The decision to increase the minimum wage was a long overdue edict for many of the hardworking families in our state,” said Emily Byrne, Executive Director, Connecticut Voices for Children. “But intentional action must be taken to prevent unintended economic adversity from falling on families due to the loss of crucial public benefits. Legislators have the opportunity this session to address these potential negative impacts before a policy meant to support working families causes them harm.” Supporting family economic security can be achieved through a combination of public policies ensuring fair wages and public programs to help ensure families’ basic needs are met. While existing state and federal programs help support parents who are currently in or are entering the workforce, these programs need to be more responsive to the evolving landscape of low-wage work and the needs of the low-wage workers they seek to serve. Connecticut’s minimum wage is set to increase fully to $15.00 an hour by June of 2023. This will result in raised wages for more than half a million workers by 2024, which will in turn decrease the poverty rate, and reduce or slow the growth of income disparities in the state. As the purpose of raising the minimum wage is to increase the purchasing power of low-wage workers and to allow families working full-time increased economic security, the unintended negative consequences of a wage increase—benefits cliffs—must be addressed. Otherwise, increases in the minimum wage could result in minimum wage workers getting net decreases in income or falling into economic hardship. To analyze this, the report models the interaction between Connecticut’s rising minimum wage and eligibility limits for:
Food assistance (SNAP),
Healthcare (HUSKY health),
Child care (Care 4 Kids),
Housing (focusing on the Housing Choice Voucher Program [HCVP] and Project-Based Section 8 apartments.)
[These aforementioned benefits were selected based on issues of import to hardworking families and CT Voices; however, this list is not exhaustive. As such, it is important to note that other benefits and agencies—at the state and federal levels—should be explored for potential impact.] “Our current systems for assessing need and determining benefits eligibility can be inadequate,” said Lauren Ruth, Research & Policy Director, Connecticut Voices for Children. “The system [the federal poverty measure] is based exclusively on a typical family’s food budget and does not factor in other necessities such as housing, child care or health care, which is especially concerning for families in Connecticut as our state has the fifth-most expensive child care in the nation.” Connecticut is a high-cost state, especially for parents. Low wages can pose serious harm to family security and impact children's development. Raising the minimum wage is critical to help stabilize families and so is addressing cliff-like effects within public benefits. Lawmakers should view this legislative session as an opportunity to make needed adjustments to program eligibility criteria and phase-out schedules to ensure that workers and their families will continue to access public benefits. CT Voices offers the following policy recommendations to ensure that families with minimum wage workers can continue to access crucial public benefits until they can smoothly transition out of them without significant financial repercussions: Help parents smoothly transition out of benefits programs.
Consider public benefit programs holistically to align eligibility levels, and implement more gradual phase-outs for benefits.
Increase time for reporting requirements and/or loss of benefits through income disregards when redetermining benefits or through guaranteeing continuous eligibility for a six- to twelve-month period.
Increase access to affordable healthcare for parents and children.
Raise HUSKY A eligibility for parents back to 201 percent of the Federal Poverty Level and adjust cost-sharing options on the Health Insurance Marketplace accordingly.
Restore and expand continuous enrollment for HUSKY.
Improve access to affordable early child care assistance.
Increase eligibility beyond 50 percent of the State Median Income and reduce co-payments for Care 4 Kids to a maximum of seven percent of gross income.
Expand access to Care 4 Kids to parents seeking work or enrolled in educational and career advancement pathways.
Offer universal access to early child care.
Expand SNAP eligibility to improve food security.
Raise gross income limits for SNAP to 200 percent of the Federal Poverty Level.
Redress Connecticut’s regressive tax system to improve family economic security.
Raise Connecticut’s Earned Income Tax Credit (EITC) to 30-50 percent of the federal EITC.
Create a Connecticut Child Tax Credit (CTC) that is at least 15 percent of the federal CTC, and is fully-refundable with no phase-in.
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About Connecticut Voices for Children: Connecticut Voices for Children is a “think and do” tank working to ensure that Connecticut is a thriving and equitable state, and where all children achieve their full potential. In furtherance of its vision, Connecticut Voices for Children produces high-quality research and analysis, promotes citizen education, advocates for policy change at the state and local level, and works to develop the next generation of leaders.