The Benefits Cliff
in Forsyth County, North Carolina
It will take everyone in our community working together to stop the harmful effects of the benefits cliff.
What can you do?
I am a…
The Benefits Cliff is a condition in which a pay increase results in an overall loss of combined income and benefits. When a person experiences the Benefits Cliff, they suddenly have less money in their monthly budget to meet their household’s essential needs like food, healthcare, child care, and transportation, as examples.
This threatens their household’s financial stability, which can have a major, long-term, negative impact on their wellbeing.
Many people in our community are exposed to harm from benefit cliffs and the Asset Building Coalition of Forsyth County (ABC) is committed to working to change these conditions. This microsite is designed to be a tool to advance our local work.
What is it like to Experience a Benefit Cliff?
Quick facts about Benefit Cliffs
Some benefit programs are designed in ways that create barriers against upward mobility.
Benefit Slope
When benefits taper off slowly as income increases, this is called a ‘slope’ and it is characterized by a gradual change.
Example: Housing Choice Voucher
Benefit Cliff
On the other hand, a ‘cliff’ happens when a benefit decreases rapidly or is eliminated altogether once a recipient’s income increases beyond a specified amount.
Example: North Carolina Child Care Subsidy
The North Carolina Child Care Subsidy has the largest benefit cliff.
Of the benefits examined in this microsite, the North Carolina Child Care Subsidy has the largest cliff. In 2023, the Asset Building Coalition published a report that goes into depth about this benefit program and its associated benefit cliff titled, NC Child Care Subsidy Program Recipients Threatened by Benefit Cliff Complications.
Learn more about the benefit programs that are available in Forsyth County and the support they provide.
About 1 in 5 People in Forsyth County are Enrolled in Food and Nutrition Services (FNS)
With 72,474 people in Forsyth County receiving this benefit, its associated benefit cliff may have a large detrimental impact on our community.
What is the Benefits Cliff?
The Benefits Cliff threatens the financial stability of households with working people who receive public benefits. It is experienced when a person who receives public benefits gets a pay increase, and as a result, experiences an overall loss of combined income and benefits.
Income is money earned by working for a wage or a salary.
A Benefit is financial support received from a public program.
Such programs are designed as a social safety net to protect people against experiencing poverty.
A household’s monthly budget is their combined income and benefits.
Sustaining a monthly budget is key to sustaining financial stability. If a household’s monthly budget is thrown off, they risk not being able to afford basic needs like food, rent, child care, or transportation.
Sometimes, a pay raise earned at work can cause a decrease in the benefits a person receives. If this decrease is severe enough to cause a net loss in income and benefits, this is known as the Benefits Cliff.
What Can You Do?
What Can Employers Do?
The first step for employers in helping their employees navigate the benefits cliff is to learn more:
- Learn about Benefit Programs that employees might be enrolled in and the income thresholds at which benefits are terminated.
- Learn about the relationship between benefits and wages and the Impact on Take Home Pay.
- Share the Benefits Cliff Calculator with employees as a tool to understand in greater detail how a specific pay increase would impact their financial situation.
There are many ways that employers can work with employees to navigate the benefits cliff, beyond pay increases. The most important priority for employees is their overall take-home pay.
Incremental wage increases can cause a net loss in overall take-home pay. Employers should consider alternative ways to work with them as they grow in their careers, without impacting take-home pay. It’s important that employers work with employees to make sure they understand the approach being taken and give their consent.
Contribute to Employee's FSA/HSA
An employer could offer an employee a contribution to a health or dependent care FSA instead of a slight raise. In such a case, the employee’s income for benefits purposes would not rise.
Alternative Schedule
Consider schedule flexibility, reduced hours (keeping overall pay the same), or an increase in paid time off.
Additional Benefits
In the event of an overall net loss, alternatively, employers could provide lunches, child care or grocery stipends, connect to community resources (United Way 211), or bring resources (food bank, after-school care) to the workplace.
What Can Benefit Recipients Do?
- Learn more about the Benefit Programs — how and when a benefit cliff might impact you.
- Use the Benefits Cliff Calculator to better understand how a specific pay raise might impact your family’s financial situation and its Impact on Take-Home Pay.
Tips and Resources
The benefits cliff impacts everyone differently. Use the tips and tools below to help you navigate your experience with the benefits cliff.
Already working and nervous about how it will impact your benefits?
If you are currently working, don’t be afraid to take the next step in your career…Consider working with your employer to consider your hours, wage and benefits work together to determine the best path for advancement while working to get over the cliff.
Receiving benefits and exploring employment opportunities?
Upfront and open communication is always best! Talk with your caseworker.
Call 211
If you need new resources to help you handle a loss in any of your benefits, give 211 a call to help you learn about the resources available to you. Additionally, some organizations have emergency financial assistance
What Can Change Makers Do?
Elected officials, organizational and institutional leaders, nonprofits and foundations, grassroots organizers, and others can help mitigate the benefits cliff in Forsyth County.
The first step to creating change is to learn more:
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- Learn more about the Benefit Programs that people are participating in.
- Use the Benefits Cliff Simulator to visualize the impact of program-specific benefit cliffs.
- Learn more about Impact on Take-Home Pay and how pay increases might impact benefit recipients’ overall financial situations.
- Research local, state, and national Opportunities for Action and get involved.
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