The continued high levels of poverty and working poor in our area, despite the availability of an abundance of quality jobs, is a point of frustration for many in our community. Jobs that should be easy to fill, many of which involve minimal training and only a high school education, too often remain vacant.
Why is this happening and how we can fix it? This problem is not unique to the Rochester region. The disconnect between the supply and demand for labor is a reality for most communities in our nation. To remedy it, we must improve the overall effectiveness and efficiency of our local workforce system—from cradle to career. We must also acknowledge the practical reasons why so many in our community are not a part of the workforce and look for ways to reduce and remove the barriers that prevent them from becoming a successful part of it.
Some of these barriers that can prevent an individual from entering employment or a career training program can be the product of the circumstances in an individual’s personal life, such as lack of childcare availability, a disability or a history of incarceration that imposes challenges to re-enter the work force. However, there are also systemic barriers, such as a lack of public transportation options to travel to a particular workplace. Or even the unintended consequences of programs that exist to help those in poverty.
One such unintended consequence of safety net programs is something commonly known as the “benefits cliff.” The benefits cliff is the gradual or sudden loss of public assistance, which is often above the value of the wage increase itself.
Because of how we historically have determined eligibility for public financial assistance, those in poverty are often forced to confront a paradox: Do I seek employment or a better job, if it will put me at a financial disadvantage? Too often, society places all its hope that an individual in this scenario consider the long-term and endure the benefits cliff. However, on a practical level, the short-term destabilization that a reduction in public assistance may cause can dig an individual and their family into an even larger hole.
The bottom line is that this systemic disincentive is likely preventing tens of thousands of working-age New Yorkers from either seeking employment or obtaining higher wages.
It isn’t fair. This barrier unintentionally forces thousands of members of our community to make a conscious decision not to enter the labor force. And, for the tens of thousands employed Monroe County residents who still live in poverty or are unable to meet basic needs, it serves as a deterrent towards seeking training to upskill to a higher paying opportunity that is often right before them, and attainable. In some cases, an hourly wage increase of a single dollar has eliminated a worker’s public assistance. We need to seek out change.
Hidden among the headline-grabbing items in the recently adopted state budget is one such change. This new policy change will address the paradox created by the benefits cliff. Specifically, a budget proposal advanced by the Governor and adopted by the legislature will create a six-month, 100% income disregard for New Yorkers receiving public assistance, while participating in qualified work activities or paid training opportunities such as an apprenticeship, up to 200% of the Federal poverty level. We join the state’s workforce development community in supporting this and believe it will ultimately increase the number of people receiving public benefits who pursue employment or training opportunities. This will likely increase economic independence overall and reduce the number of households receiving public assistance.
The income disregard will benefit not only the unemployed, but the underemployed, as well. This could include many of the 78,665 households in Monroe County who, as of 2021, were living above the poverty line, but still were unable to afford basic living needs such as housing and transportation. The working poor make up much of this population, many of whom thus rely on public assistance for basic needs and have confronted the same benefits cliff that has deterred them from seeking higher wages.
Some might question the prudence or fairness of providing public assistance to someone who is earning an income. However, our economy cannot grow without the participation of populations who have been historically marginalized and underrepresented in our workforce. So, yes, a shock to the system is warranted. A pilot program in New York City connected public assistance recipients to paid work experience opportunities and applied a similar six-month income disregard thus allowing participants to maintain their welfare benefits. Nearly half of those participants have been connected to unsubsidized work and are on a pathway out of public assistance.
Indeed, New York has taken large steps towards removing a structural impediment that has suppressed overall participation in the labor force. We applaud the Governor and our local state legislative delegation for taking this bold action. It will help provide a light at the end of the tunnel for many struggling to make ends meet, while addressing chronic workforce shortages in priority industries.
We must stop dis-incentivizing work when the benefits of not being employed outweigh the rewards of a job by creating a balanced approach where men and women who currently receive social service benefits can work hard on upward mobility without losing income and benefits. As they progress and hopefully earn pay increases and promotions, they then can be removed from public assistance and be on their way to gaining financial strength and stability for themselves and their families.
Removing the benefits cliff will be a positive step forward to both reduce government spending and ease our labor shortage while also providing greater financial stability and self-respect to those caught in this conundrum.
Robert J. Duffy is president and CEO of Greater Rochester Chamber of Commerce. Dave Seeley is executive director at RochesterWorks.e