Ohio bill would help some workers circumvent the 'benefits cliff'
Columbus Daily Reporter (OH)
Legislation introduced last week would transform what's known as a benefits cliff into a bridge to prosperity and self-reliance for many of the state's working poor as they seek to improve their economic circumstances, according to the bill's sponsors.
The measure, House Bill 410, calls for creation of a three-year pilot program in which participants would be provided stipends to cover either the costs of health insurance premiums or child care. The Ohio Department of Job and Family Services would be charged with administering the program.
"Working parents often have to choose what is best for their families in terms of income and, given their knowledge of their finances, may decide to forego a pay raise or promotion to maintain benefits that put them further ahead," said Rep. Dontavius Jarrells, a Columbus Democrat and joint sponsor of the bill. "A study by the Ohio Chamber of Commerce Research Foundation estimated that 1 in 5 businesses experienced issues with hiring, promoting, or increasing wages because employees were worried extra income would result in drops in public assistance."
During the Families, Aging and Human Services Committee hearing at the Ohio House of Representatives, Jarrells detailed the circumstances of a northwest Ohio woman and mother of two school-aged children.
The woman worked a retail job, earning $11.50 an hour, and received food assistance, Medicaid and support for child care, he said. When the woman was offered a promotion and a pay increase of $3 per hour, she realized she would lose the assistance and have to pay a co-payment for child care.
Perhaps more importantly, Jarrells noted, the woman would be able to contribute only $70 a month to savings, as opposed to $192 each month before the promotion.
The lawmaker identified the woman's predicament as the benefits cliff — the point at which the value of public benefits is greater than a pay increase.
The bill's other joint sponsor, Rep. Gary Click, R-Vickery, characterized the circumstance as "one of the great tragedies in our current economic climate.
"Not only do we have people who find it difficult to take a job, we also have working poor who are forced to limit the number of hours they work and required to refuse raises and promotions. Earning just $10 too much will disqualify them from certain benefits," Click said. "By showing initiative, working longer and harder and meeting their employer's needs, they suffer loss."
He added that the practice penalizes productivity.
"As a result, many never take that next step, which will lead to another and another until they can reach that point of complete independence while simultaneously meeting the needs of the workforce," Click said.
In addition to providing stipends to program participants, Job and Family Services would provide subsidies to participating employers for employing program participants, according to a summary of the legislation.
Additionally, the program would develop in partnership with InnovateOhio, a digital application to assist with its administration and operation.
HB 410 includes appropriations of $10 million to ODJFS for each of the next two fiscal years.
"Work provides the best opportunities for individuals to get out of poverty," said Ohio Department of Job and Family Services Directors' Association Executive Director Joel Potts. "Increased wages mean less dependency on government programs and better opportunities for Ohioans. Increases in income lead to more reliable transportation, safer and more stable housing, and better educational opportunities for individuals and families."
Potts said the program would establish performance reviews to follow participants during and post-benefit bridge participation to determine which ideas are the most effective and provide the best opportunity to achieve the goals of the program.