PRESS RELEASE: New Report Examines How Safety Net Benefits Create a Disjointed Relationship Between Work and Income
FOR IMMEDIATE RELEASE
DATE: December 12, 2023
FOR MORE INFORMATION CONTACT
Amanda Kieffer, Communications Director, Cardinal Institute for WV Policy
PHONE: (304)-541-9551| EMAIL: [email protected]
New Report Examines How Safety Net Benefits Create a Disjointed Relationship Between Work and Income
Charleston, W. Va. — The Cardinal Institute for West Virginia Policy released a new policy report examining how safety net benefits decrease sharply as pay increases. This benefit loss creates a distorted relationship between work and pay.
West Virginia’s population is 1,775,156, and almost 318,000 (17.9%) are in poverty. Many West Virginians rely on benefits to meet basic needs including food, healthcare, and childcare. Usually, a typical pay increase is not commensurate with the value of the benefits they are receiving.
The existing social safety net system has led to a distorted relationship between work and income. Once a worker reaches a certain threshold of earnings, the amount they receive in benefits decreases dramatically. This is often referred to as a “benefit cliff.” The “cliff” is a metaphor for the step-down that occurs; when earnings go up benefits go down significantly.
This report highlights how a single mother in West Virginia has a lot to lose should her benefits decrease due to higher pay. Once her gross annual income increases from $45,944 to $46,444 — only $500 — her childcare assistance goes from $12,227 to $0. To recoup the value of her childcare subsidy, her pay would need to increase by $5.88 per hour in post-tax wages. Her standard of material well-being would not be the same until her gross annual earnings were between $63,444 and $63,944.
Dr. Jessi Troyan, the Director of Policy & Research for the Cardinal Institute, noted, “Faced with that sharp of a contrast and that vast of a gap, we must be honest with ourselves, disincentives to work exist in West Virginia. The scope and interactions of the myriad disjointed assistance programs for our fellow Mountaineers facing economic hardship send a message. For the statistically representative individual receiving assistance, that message is essentially, ‘It’s not worth your time and energy to earn more than $30,000.’”
Founded in 2014, the Cardinal Institute for West Virginia Policy, Inc. is a 501c(3) non-profit dedicated to research, develop, and communicate effective free-market public policies for West Virginia.