WHAT IS THE CLIFF EFFECT?

 

As part of our thier Big View Policy Platform, Circles USA specially assists local chapters in identifying, bridging, and eliminating the Cliff Effect. This phenomenon (also known as a “benefits cliff”) happens when a raise or other income gain triggers the loss of benefits worth more than the wage increase. Our multi-pronged approach supports workers facing the Cliff and offers alternatives to employers and policy makers hoping to mitigate its effects.

 

How is Circles resolving the Cliff Effect?

 

For seven years, Circles USA has been conducting research and developing tools to better inform families and policy makers about this barrier that too often keeps people trapped in poverty. 

​Circles USA recently produced a policy platform that provides local, national, and federal recommendations for mitigating the Cliff Effect.

​In previous years, Circles USA prototyped a planning tool to estimate the income levels that prompt the loss of benefits. Additionally, several states commissioned our researchers to make recommendations. For Michigan, Circles USA produced a field scan of solutions nationwide. For New Mexico, our report included case studies that point to ways to resolve the Cliff Effect. Several Circles chapters also piloted an online calculator developed by Leap Fund. This tool helps recipients of public benefits understand whether they will hit a cliff, when it will happen, and how long it will take them to recover.

 More recently, the Federal Reserve Bank of Atlanta’s Community and Economic Development department created the three tools to uncover the barriers to, and opportunities for, improved economic mobility. These tools make the data easily accessible for community planning and decision-making. Circles chapters piloted these resources to better support those who are facing the benefis cliff.

 

Resources for Understanding and Addressing the Cliff Effect

 

Federal Reserve Bank of Atlanta
Three tools to uncover the barriers to, and opportunities for, improved economic mobility

  • Snapshot—Assists in understanding the potential short-term financial impact of a new job or income change.

  • Dashboard—Assists in long-term career planning and flags potential financial barriers to career advancement.

  • Planner—Assists in detailed career planning while creating a customized budget that helps users navigate potential financial barriers to career advancement.

​Know Your Community’s Wages and Cost of Living

​National Trends