Overview

The “Great Resignation” of 2021 brought public awareness to the challenges that employees and employers face when it comes to workforce retention in the modern world. One cause of workforce turnover is when low-wage employees face a benefits cliff. A benefits cliff occurs when “an increase in someone’s pay triggers a greater loss in public assistance” (Goodwill Industries of the Southern Piedmont, n.d.). Often, pay raises are not sufficient to make up for this loss and families are left without the means necessary for their basic needs like housing, food, and childcare.

Fear of losing public benefits (such as subsidized childcare or income-based housing) can trigger a resignation or keep individuals from accepting more work hours, pay raises, or promotions (Roll, 2018; Ruder & Terry, 2024).

In response to the benefits cliffs issue, the Federal Reserve Bank of Atlanta designed the CLIFF tools (Atlanta Fed, n.d.-b; Ruder & Terry, 2024). CLIFF stands for Career Ladder Identifier and Financial Forecaster. The tools provide useful information to low-wage earners and those facing benefits cliffs so that they can make informed financial and career decisions.

The Benefit Cliff Employer Pilot program (the Pilot program) was developed in response to the growing awareness among employers of the detrimental effects of the benefits cliff for low-wage earners, their families, and employers themselves. The Pilot program examines the financial implications of wage increases and seeks innovative solutions to lessen the impact of the benefits cliff on economic growth and mobility for lower-wage earners. The Pilot took place between 2023 and 2024 across four employer sites: Goodwill Industries of the Southern Piedmont (GISP), Goodwill of North Georgia (GNG), Atrium Health (Atrium), and the Federal Reserve Bank of Atlanta (Atlanta Federal Reserve). Participating employers developed activities to implement the CLIFF tools among employees and job seekers. Three sites conducted one-on-one CLIFF coaching sessions with employers and job seekers. These sessions utilized the CLIFF tools most applicable to participants and provided information and resources to lessen the impacts of the benefits cliff.  All Pilot sites used the CLIFF tools developed by the Federal Reserve Bank of Atlanta to guide counseling and education efforts.

The UNC Charlotte Urban Institute conducted a program evaluation to document the pilot activities and outcomes among the four employer sites. The evaluation also highlights the benefit-cliff experience and areas where employers can provide support. The key findings and recommendations from the evaluation are shared below.

Findings

A total of 172 employees and job seekers participated in at least one CLIFF coaching session as part of the Pilot. Most were female without dependents and employed full-time. Participants’ incomes were below the Living Income Standard (NC Budget & Tax Center) (median income was $33,397).

• Around 40% of employees and job seekers had personally experienced the benefits cliff due to annual pay raises, promotions, or employment changes. The benefits most commonly impacted were SNAP/WIC (i.e., food stamps), rental assistance (e.g., housing choice vouchers, income-based public housing), earned income tax credits (EITC), and healthcare assistance (e.g., Medicaid, subsidies).
• Despite losing public assistance benefits and gaining higher expenses, most participants would still accept a promotion or raise. Participants valued self-sufficiency and income over public assistance.
• Certain lower-wage workers are falling through the cracks. The evaluation found that most Pilot participants have incomes that are lower than what they need to meet basic needs yet are often just above the limits to qualify for public assistance programs. In the Pilot, those most often in this circumstance were full-time employees. This implies that benefits cliff interventions are most critical when low-wage employees are considering a pay raise, promotion, or increase in hours.

What support did participants receive from the Pilot?  

• Employed and unemployed participants came to CLIFF coaching sessions with different needs. Most unemployed and low-wage earners were interested in learning about employment opportunities or career changes that would improve their income. In contrast, employees who had recently received a pay raise or knew they would receive a raise soon came to the sessions to better understand how increased income would impact their public assistance benefits and review a long-term financial trajectory.
• CLIFF coaching sessions provided a menu of resources to meet these needs. Ninety percent of participants had a plan or next step at the end of their CLIFF coaching session. Services provided at coaching sessions included financial budgeting, learning about eligible public assistance programs, improved financial literacy and planning, and exploring career opportunities.
• Housing and health insurance are areas where support is most needed for participants experiencing increased income.

Recommendations for Implementing the CLIFF Program in the Workplace

The pilot program evaluation highlights strategies that employers can use to implement the CLIFF tools in the workplace. Some key strategies include:

• Invest in ample training. Training facilitators (i.e. coaches) is important to guarantee efficient use of the CLIFF tools. Employers should ensure that facilitators who will be using the tools with employees are well trained and informed, not only on the CLIFF tools and outputs but also on community resources and ethics (informed consent, confidentiality).
• Establish trust with employees first. To do so, consider implementing programs internally where relationships already exist. It is also important for coaches to share the benefits and to be transparent about how personal information is being used and protected before asking personal questions.
• Provide a self-assessment alternative with optional assistance. This option allows maximum flexibility and confidentiality for employees who are uncomfortable disclosing their personal information to a coach.
• Understand employee needs and goals to know which tool is right. Atlanta Fed provides a suite of CLIFF tools. Employers should use their established relationships with employees to first discuss employees’ needs and goals and then use this information to decide which CLIFF tool(s) are most appropriate and useful for the employee, department, or organization as a whole.
• Use the tools when they are most needed. There are certain situations when employees may be more vulnerable to, or most impacted by, the benefits cliff. These include when a person changes jobs, when a child ages out of benefits, and when an employee gets a raise.

Additional Opportunities for Employers

Beyond the CLIFF Tool, employers can take other actions to eliminate the benefits cliff problem among their workforces. Examples include aligning wages with the Living Income Standard (NC Budget & Tax Center), allowing flexible working times and spaces, providing advance pay for emergencies, and advocating for policies that would mitigate the impact of benefits cliffs on workers. For a list of other alternatives for employer, visit benefitscliffcommunitylab.org.

Get More Information

Read the full evaluation at this link.