Solving the Food Assistance (SNAP) Benefits Cliff
Key Findings
- The Supplemental Nutrition Assistance Program (SNAP), formally known as the food stamp program, suffers from a benefits cliff problem. A benefits cliff is when an individual, family, or household loses more in net income and benefits from government assistance than it gains from additional earnings.
- The SNAP benefits cliff is caused by a design flaw that triggers sudden, steep losses in benefits that a typical increase in income can’t make up for.
- SNAP cliffs are at a 20-year high*, and the situation is only getting worse. As a result, more people are locked into welfare dependency, and SNAP costs are skyrocketing.
- There are six steps Congress can take to restructure SNAP and eliminate benefits cliffs without having to expand program costs.
The Solution: Congress should reform the Supplemental Nutrition Assistance Program (SNAP) so that more households can easily overcome benefits cliffs through steady work and typical pay raises and achieve self-sufficiency faster.
* Factoring in an exemption of the COVID-19 emergency allotment program.
Overview
Many Americans rely on benefits from the Supplemental Nutrition Assistance Program (SNAP) to afford food, but these same individuals and families face a trap that keeps them mired in dependency: the SNAP benefits cliff. A benefits cliff is when an individual, family, or household loses more in benefits from government assistance programs than it gains from additional earned income.
Work requirements and similar policies can encourage more people toward work and independence, but this approach isn’t a full solution. Many people on safety net services are simply responding naturally to the barriers created by the system’s current design. As a result, people end up trapped into dependency on services that should be set up to move them into greater opportunity.
Safety net programs, including SNAP, should be designed to minimize the risk of benefits cliffs for most people. It should be relatively easy for individuals and households to overcome benefits cliffs by earning additional income, thus creating a path for more Americans to experience the dignity, fulfillment, and belonging that comes from social and economic opportunity.
By taking a few specific steps, Congress can restructure SNAP to eliminate benefits cliffs without having to expand program costs.
SNAP Has a Benefit Cliffs Problem
Like most safety net programs, the Food Assistance Program has a benefits cliff where assistance is suddenly cut off for participants once they reach a certain income level. When it comes to benefits cliffs, the most important point for program participants is that they can avoid or overcome a cliff with a typical pay raise. Unfortunately, the current SNAP design creates a barrier for participants seeking greater economic opportunity and self-sufficiency.
Using current eligibility standards, overcoming SNAP benefits cliffs would require pay raises above what most households typically receive. While most people don’t want to depend on government assistance long-term, the system makes it difficult for them to do otherwise when a higher wage can’t offset the vulnerabilities created by a large and immediate loss of benefits.
For example, a family of four would begin experiencing SNAP benefit cliffs when their household income exceeds $36,084. This family would lose around $462.42 in SNAP benefits each month. To overcome those lost benefits, that same family would need to earn $58,280 a year, a 61.5 percent increase in income.
Politics is tricky; it cuts both ways. Every time you make a choice, it has unintended consequences.
SNAP Benefits Cliffs Come from a Design Flaw
In the case of SNAP, there is a starting point for benefits, as well as a tapering point, a benefit reduction rate, and an exit point. But all of these factors are misaligned, triggering sudden losses in benefits that a normal increase in income cannot make up for.
Solving SNAP’s cliffs problem depends on recalibrating these processes so that they work together:
There must be a tapering approach where benefits decrease over time as income goes up.
This benefit reduction process should continue until the exit income.
At the exit point, the loss in benefits must be small enough relative to income that a participant can overcome it easily with a typical pay raise.
This type of program design allows a gradual phase-out of benefits so that participants are not discouraged from self-sufficiency due to sudden, steep losses in assistance for basic needs.
SNAP Benefits Cliffs Are Locking Households into Welfare Dependency
When earnings or pay raises from a normal job can’t keep up with the loss in SNAP benefits, participants feel forced to depend on the program instead of pursuing opportunities that match their skills, aspirations, and desires for financial independence.
It is mathematically possible for some one-member households, where the individual is not disabled or elderly, to overcome a benefits cliff with a pay raise of less than five percent. However, almost all other households will require percentage income increases in the double digits or higher.
Larger families, especially those without elderly or disabled members of the household, fare much worse. A family of four where a single mom is raising three kids, for example, would require a pay raise of between 36.6 and 121 percent, assuming the family doesn’t have housing costs. For larger households with disabled or elderly members, that pay raise ranged from 30.3 to 108.7 percent.
Nearly every household losing a SNAP benefit with a normal increase in income will hit a cliff, and the larger the household size, the greater the severity of the cliff. The rare exceptions are households with just one or two members with little to no expense deductions.
SOLUTIONS
Congress Can Solve These Cliffs—IN A FISCALLY RESPONSIBLE MANNER
By implementing a few updates to SNAP’s program design, federal leaders will be able to:
Help more people achieve self-sufficiency faster.
Eliminating benefits cliffs will give people more incentives to pursue job opportunities and career advancements that lead to higher pay and a greater sense of self-worth.
Simplify the system and make it more transparent.
The solution will make the administration of SNAP easier, reducing the administrative and participant burden while providing a clear exit strategy for the program.
Spend fewer federal funds on SNAP.
Tapering benefits sooner using a properly fixed rate will help control fiscal costs, offset costs from other program changes, and prevent benefits from reaching households at income levels not associated with need.
Recommended Action for States
States who would like to experiment with solutions should submit a federal Section 2026 waiver application for a demonstration project to eliminate SNAP benefit cliffs and reduce marriage penalties. To learn more about this opportunity and how to propose a state-level project.
Key Takeaway
Congress should reform the Supplemental Nutrition Assistance Program (SNAP) so that more households can easily overcome benefits cliffs through steady work and typical pay raises and achieve self-sufficiency faster.
Full Report and Related Resources
For a full analysis of SNAP benefit cliffs and these recommended solutions, see the full research report and related resources:
Resources for Policymakers:
Resources for Research Experts:
About The Report Author
Erik Randolph
Director Of Research
Erik has worked as a budget policy expert for various state organizations and agencies. He regularly testifies before Congress and state legislatures, and works to educate on how policy impacts those in poverty.
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