Daily Times

Forty per cent of all working-age Americans sometimes struggle to pay their monthly bills. There is no place in the country where a family supported by one minimum-wage worker with a full-time job can live and afford a 2-bedroom apartment at the average fair-market rent.

Given the pressure to earn enough to make ends meet, you would think that low-paid workers would be clamouring for raises. But this is not always the case.

Because so many American jobs don’t earn enough to pay for food, housing and other basic needs, many low-wage workers rely on public benefits that are only available to people in need, such as housing vouchers and Medicaid, to pay their bills.

Earning a little more money may not automatically increase their standard of living if it boosts their income to the point where they lose access to some or all of those benefits. That’s because the value of those lost benefits may outweigh their income gains.

Many low-wage workers in the United States who rely on public benefits may lose access to some or all of those benefits if they earn more, says University of Massachusetts Boston’s Susan R Crandall

I have researched this dynamic, which experts often call the “cliff effect,” for years to learn why workers weren’t succeeding at retaining their jobs following job training programmes.

Chief among the one step forward, two steps back problems the cliff effect causes: Low-paid workers can become reluctant to earn more money due to a fear that they will get worse off instead of better.

Trapped

“My supervisor wants to promote me,” a woman who gets housing assistance through the US Department of Housing and Urban Development’s Section 8 housing voucher programme, who I’ll call Josie, told me.

“If my pay goes up, my rent will go up too. I don’t know if I’ll be able to afford my apartment,” Josie, a secretary at a Boston hospital, said.

These vouchers are available to Americans facing economic hardship, based on multiple criteria, including their income. Josie was worried that the bump up in pay that she’d get from the promotion would not make up for the loss of help she gets to pay her rent.

Given the possibility of a downside, many Americans in this situation decide it’s better to decline what on the surface looks like a good opportunity to escape poverty.

This uncertainty leads workers like Josie to forgo raises rather than take the risk of getting poorer while working harder. Having to stress out about potentially losing benefits that keep a roof over their heads and food on their table prolongs their own financial instability.

The pain isn’t just personal. Josie’s whole family misses out if she passes on an opportunity to earn more.

The government loses a chance to stop using taxpayer dollars to cover benefits to someone who might not otherwise need them. The hospital can’t take full advantage of Josie’s proven talents.