Exploring the Benefit Cliff in Philadelphia County
7,700+ Philly households risk losing benefits due to income limits
Why The Benefit Cliff Matters
In the United States, individuals and families are often required to verify their need for public benefits through means-tests, typically through verification of income. The benefit cliff is a significant issue in both Philadelphia and across the U.S., where low-income families risk losing critical support, such as TANF, SNAP, or childcare subsidies, as their earnings increase. Often, a small raise in income can lead to a sharp drop-off in benefits, leaving families worse off than before, despite working harder or earning more.
According to the 2022 American Community Service 1 Year estimates, over 198,000 households received cash through public assistance or SNAP in Philadelphia County. Programs such as TANF are aimed at assisting individuals with low income through social services; however, eligibility requirements and benefit amounts often present challenges for those who are eligible to enroll. Individuals may become ineligible with increases in income or changes in occupations and lose access to these needed programs. Utilizing a combination of our generalized benefit cliff model and Census microdata from IPUMS USA, we analyzed the presence of households that have incomes near the benefit cliff. We conclude with a discussion on the limitations of this research, and proposals for future analysis.
So what are TANF and SNAP?
Between a Raise and a Fall
TANF (Temporary Assistance for Needy Families): TANF provides critical cash assistance to families in need, empowering them to meet basic needs like housing, utilities, and childcare. Though intended as a short-term safety net, the program has faced challenges with declining value and accessibility, leaving many families struggling to stay afloat despite its vital purpose.
SNAP (Supplemental Nutrition Assistance Program): SNAP is a federal program that provides essential food assistance to low-income households, helping families put meals on the table. By offering support based on income, SNAP ensures that even as wages fluctuate, vulnerable populations can maintain access to nutritious food, keeping communities healthier and more resilient.
1997
TANF is enacted
2000s
Funding for TANF freezes and participation starts declining.
2020
Only 20% of eligible families receive assistance, with a focus on a broken system.
2021
TANF has lost 47% of its value due to inflation.
Let's explore to understand how TANF and Benefit Cliffs Impact Vulnerable Households in Philadelphia.
Relationship between labor force participation (left) rate and median household income (right) in Philadelphia
According to Census data, Philadelphia's population in 2023 was 1.5 million (1,550,542). According to BLS released data, in August 2024, there was 750,080 individuals in local labor force market.
In Philadelphia, areas with higher labor force participation generally correspond to higher median household incomes, particularly in Northeast and parts of Central Philadelphia. In contrast, North and West Philadelphia show lower participation rates and income levels, highlighting economic disparities and the importance of job access for improving income stability across the city.
In Philadelphia, over 7,700 households face the risk of losing critical support like TANF and SNAP. These benefits help cover basic needs like food and rent. But as families work to improve their situation, even a small income increase can cause them to lose vital assistance—pushing them into the benefit cliff.
An example of a family that exists on the benefits cliff could be a single parent working as a home health care aid with one school-aged and one pre-school child. According to the CWW’s Self Sufficiency Standard, this family’s financial break down of costs and thus required self-sufficient wage in Philadelphia County is presented as follows:
Cost Type | Amount |
|---|---|
Hourly Wage | $28.31 |
Monthly Total | $4,983 |
Annual Total | $59,795 |
Self Sufficiency Standard for 1 Adults, 1 School Age, 1 Pre-School Household
According to the Self Sufficiency Standard, a family of this type would reach wage adequacy at $28.31, which is above the estimated $13.94 average hourly wage of home health aids in Philadelphia County according to the CWIA. A single parent in this household type would thus require strong family or other external support to offset the high cost of childcare and other services.
To construct the cliff model, we utilize information from the Department of Human Services in Philadelphia County to look at the benefit amount and income limits for food, childcare, and health care subsidies:
Benefit | Income Limit | Monthly Amount |
|---|---|---|
SNAP | $4,144/month | Up to $766 |
Childcare | $4,143/month | 50% of childcare cost ($280) |
Health Care | $2,756/month | Standard Part B premium is $174.70, so roughly $470 |
Benefits for 1 Adults, 1 School Age and 1 Pre-Schooler Household (3 Total Members)
For a family in Philadelphia County, reaching 100% wage adequacy is possible when they receive support from food assistance (SNAP), childcare subsidies, and healthcare benefits.
However, the biggest financial challenge comes when they lose both the childcare subsidy and SNAP benefits, which typically happens when their income hits around $4,144 a month, or $23.91 per hour.
For example, if a parent earning $23 an hour gets a raise to $24 an hour, their income would increase by just $173 a month, but they would lose around $1,500 in benefits, dropping their wage adequacy to just 84%. This shows how even a small wage increase can lead to a significant loss in support, leaving families worse off overall.
To simplify the benefit cliff for analysis, we use a general model based on household size rather than specific family types. The cliff typically occurs around the income thresholds for SNAP and childcare benefits. By calculating the monthly SNAP income limit as an annual and hourly wage (assuming a 40-hour workweek), we identify households on the cliff if the head of household's income is within $1 of that threshold. This approach offers a broad understanding of the benefit cliff for households with one full-time worker.
Household Size | Cliff Income Threshold (Annual, Pre-Tax) | Total Households of This Size | Households on Cliff |
|---|---|---|---|
1 | $27,082 - $29,162 | 293,120 | 2,440 |
2 | $37,274 - $39,354 | 188,630 | 2,260 |
3 | $47,653 - $49,733 | 95,960 | 980 |
4 | $57,928 - $60,008 | 63,900 | 1,720 |
5 | $68,216 - $70,296 | 30,300 | 350 |
General Benefit Cliff Model Based on Household Size (Data From Philadelphia Works Inc. Analysis of IPUMS USA, 2021 ACS 5-Year Estimates )
At-Risk Demographics
This updated demographic map shows the predominant racial and ethnic categories across Philadelphia's zip codes.
Black or African American Population (Green areas): These are concentrated in the western and central parts of the city, which correlates with data showing that Black households are disproportionately affected by the benefit cliff. These areas tend to have higher rates of economic vulnerability and are more likely to lose access to benefits as incomes rise slightly.
Non-Hispanic White Population (Blue areas): Northeast and Northwest Philadelphia show predominance of non-Hispanic White populations. These areas generally experience higher labor force participation rates and median incomes, making them less vulnerable to the cliff effect.
Hispanic or Latino Population (Orange areas): The central and southern parts of the city show a significant presence of Hispanic or Latino populations. Like Black households, these communities are more likely to be affected by income-related benefit cliffs due to lower income levels and economic instability.
Let's dive into specifics.
Though households on the general benefit cliff make up a small portion of Philadelphia County, around 7,750 households are affected.
Using Census microdata, we find that those on the cliff are more likely to be Black or African-American, women, and have some college education but no degree.
The chart on right shows that Black or African American households are slightly overrepresented on the cliff (43% of cliff households vs. 40% of total households), while White and Asian households show similar proportions to the overall population. Other racial groups (Some Other Race and Two or More Races) make up smaller percentages of both cliff and county households.
This chart highlights that households on the cliff tend to have lower educational attainment, with a higher share of households having a high school diploma or some college but no degree. Interestingly, cliff households with bachelor’s degrees or higher are slightly more represented compared to the general county population.
While these households generally have slightly better educational outcomes (except for those with advanced degrees), they remain vulnerable to losing critical social services with even a small wage increase.
These findings are based on a small sample size, so margins of error should be considered when interpreting the data.
Call to Action
To enhance TANF’s impact and reduce benefit cliffs, several research and policy avenues should be explored:
Universal Simplified Reporting & Continuous Eligibility
Research should focus on the effectiveness of universal simplified reporting, allowing recipients to report their income annually or semi-annually, and the impact of continuous eligibility for at least six months. These approaches reduce the administrative burden and provide stability for families while helping them transition out of benefits without fear of immediate penalties for income changes.
Increasing TANF Cash Assistance & Adjusting for Inflation
A key recommendation is to raise the TANF cash assistance level to at least 50% of the federal poverty line. Given that TANF has not been adjusted for inflation since 1997, further research should track the effects of indexing TANF to inflation and how such adjustments could reduce deep poverty in Pennsylvania.
Extending Earned Income Disregards
Research into the potential benefits of increasing earned income disregards from 50% to 75% is crucial. Extending the grace periods for disregards would provide families more financial breathing room as they move off assistance and into self-sufficiency.
Permanent Emergency TANF Funds & Stabilization Programs
Investigating the effectiveness of establishing permanent emergency TANF funds, triggered by state-level unemployment metrics, could provide safety nets during economic downturns. Additionally, stabilizing programs, such as subsidized employment with wraparound supports, could be explored to understand their long-term impact on household stability.
Expanding Individual Development Accounts
The use of Individual Development Accounts (IDAs) and ABLE accounts should be further studied to assess how exempting these from asset tests can support TANF recipients. Expanding IDAs beyond disability-related expenses to broader federal benefits could help individuals build financial cushions without losing access to vital services.
Child Tax Credit & Universal Benefits
In the long term, research should consider the effectiveness of permanently expanding the 2021 Child Tax Credit and the provision of universal benefits (housing, healthcare, and childcare) without income restrictions. This would reduce the reliance on TANF and offer families more certainty and stability as they transition to self-sufficiency.
