Examining How Raises Affect Public Benefits Access for Lower Wage Workers in the Era of the Fight for $15

Background and Purpose: As the U.S. engages in a movement toward a higher minimum wage, advocates and researchers are concerned about working families’ access to needed public benefits. One unintended effect of increasing wages may be a benefits cliff, whereby increased wages reduce eligibility for means-tested public supports and thus increase material and financial hardships. Concern about the benefits cliff has sometimes attenuated enthusiasm for increasing wages among workers, and some policy makers are concerned that a benefits cliff may create a disincentive to work. Additional research is needed to understand how wage increases affect public benefits use and eligibility and the resulting impact on family well-being.

Methods: The current study uses semi-structured life history calendars and in-depth interviews to gain a holistic, long-term understanding of how lower-income parents’ life circumstances, choices, and eligibility characteristics interact with their work histories and experiences to affect eligibility for and use of public benefits and, relatedly, financial and material hardships. Two interviews each were completed with 25 parents of children under 12 whose families received the Earned Income Tax Credit in their 2019 tax return and had earned at least one raise in the last three years. Participants were predominantly Black single mothers and earned an average of $22,000 annually. Data collection centered on the lived experiences of working parents to understand their use of public benefits since becoming a parent.

Results: Findings suggest that though a benefits cliff may occur, most people experienced it before reaching $15 per hour, at approximately $11-13/hour depending on family size. Moreover, parents demonstrated need for public benefits up to the cut-off wage for this study ($18/hour). Still, workers were more concerned about losing a benefit altogether than experiencing smaller reductions caused by incremental raises. Workers varied in their responses to such experiences. Rarely did workers choose not to get a better job, though a few chose to work fewer hours to maintain needed benefits. More commonly, workers coped as best they could with the resulting financial and material hardships, creatively navigating informal and formal supports. Most workers wished that there were more benefits available for working parents to alleviate hardships, particularly since they felt they had held up their end of the social contract because they were working and attempting to be financially self-sufficient.

Conclusions and Implications: The findings suggest that the conversation about wages and access to public benefits may be somewhat disconnected from working parents’ lived experiences. Participants advocated simplifying and expanding access to public benefits based on hardships, not arbitrary wage or income levels. Overall, they felt that wages either needed to be much higher (more than $20/hour) or public benefits needed to be expanded to encompass all working families making less than a living wage. This study suggests caution against using the public benefits cliff as a counterargument to raising wages. Rather, the results suggest a both/and strategy advocating both higher wages and expansion in public benefits access.