Circles USA recently released a study of the impact of the phenomenon known as the “cliff effect” on Michigan families. The study was commissioned by Fremont Area Community Foundation in conjunction with Circles Newaygo County, a program of TrueNorth Community Services.

The cliff effect occurs when even a minor increase in a family’s income causes an abrupt loss of eligibility for social safety net programs like food, housing, and child care assistance. The salary increase is often not enough to cover the resulting gap and families end up falling farther behind. To avoid the cliff effect, individuals may stay out of the workforce or turn down raises, promotions, or better-paying jobs. In addition to keeping workers from advancing, the cliff effect can be a barrier to local workforce development as employers struggle to fill positions and retain and promote talent.

The Circles report combines research on the cliff effect with data from Michigan households utilizing public support. The report summarizes the commonly used public support programs in Michigan and offers an overview of efforts undertaken in other states. For example, many states have implemented policy reforms specifically to reduce the cliff effect as it relates to child care assistance.

In addition to research, the report offers several policy recommendations. Recommendations include restructuring programs, adjusting household income limits, and adjusting child care reimbursement rates to reflect market rates for highly-rated daycare providers.

“Social safety net programs are especially important to the more than 40 percent of local workers who have jobs but still struggle to make ends meet each month,” said Carla Roberts, Community Foundation president and CEO. “There is more month than paycheck and safety net programs are critical for those families. Addressing the cliff effect is also crucial to strengthening our local workforce and economy. As we understand more about how the cliff effect works in Michigan, we’re learning more about how we can work together with the community and policymakers to address these challenges.”

To read the full report, click HERE.

Circles USA is a national organization that seeks to engage communities in addressing and reducing poverty. A local chapter, Circles Newaygo County, is funded in part by grants from the Community Foundation.