HomePostTopic: Labour economics

Labour economics

Reforming the Supplemental Nutrition Assistance Program can help families get short-term help without discouraging long-term goals for work and financial independence.

Key Points

  • SNAP’s benefit cliffs discourage work and career growth by abruptly cutting off assistance when recipients earn even modest income increases, trapping families in financial instability and reducing workforce participation.
  • Proposed reforms aim to eliminate benefit cliffs through gradual benefit reductions, clear exit points, and adjusted benefit levels, encouraging financial independence without penalizing career advancement.
  • Comprehensive SNAP reform benefits all stakeholders, empowering workers, stabilizing families, addressing labor shortages for businesses, and potentially reducing program costs by $30 billion annually.

Benefit cliffs discourage work and trap families in long-term financial struggles. A new policy solution offers a way out.

The Supplemental Nutrition Assistance Program (SNAP) is one of the largest anti-poverty programs in the U.S., providing over 41 million Americans with critical food assistance in 2024. But for many recipients, a system designed to support often ends up trapping—with significant barriers known as benefit cliffs.

These cliffs occur when small increases in income result in recipients suddenly losing their SNAP assistance, leaving them in a worse financial position for working more hours or earning an income boost. For example, a single parent’s modest hourly raise might lead to a benefit cut that completely offsets their increased take-home pay.

The negative ripple effects extend far beyond individuals and households. Benefit cliffs reduce workforce participation and make it harder for plenty of small businesses and industries to find the workers they need to grow and serve customers.

A new proposal for reform, developed with research by Erik Randolph at the Georgia Center for Opportunity in collaboration with Angela Rachidi of the American Enterprise Institute (AEI), offers a way to dismantle SNAP benefit cliffs and restore the program’s original mission—helping families achieve financial independence and stability.

A new SNAP reform report from American Enterprise Institute and Georgia Center for Opportunity shows how improve access to work and reduce costs to taxpayers.

SNAP’s design discourages career growth among recipients

SNAP is meant to help low-income families put food on the table. But the system unintentionally penalizes those who pursue better wages or career opportunities.

For many recipients, earning extra income—not just large raises but even modest increases as one gains skills or works more hours—means abruptly losing SNAP benefits altogether. Instead of slowly tapering down, benefits “fall off a cliff” as income rises.

This financial disincentive creates a dilemma for households relying on SNAP. While accepting additional shifts or applying for a higher-paying position could signify career growth, it may financially set them back without SNAP assistance offsetting basic expenses.

The economic impact is widespread. With fewer prime-age workers, employers encounter labor shortages, and their ability to operate efficiently is compromised. Workforce productivity also declines when workers are stuck in part-time, lower-skilled jobs rather than advancing to higher economic opportunities. The result is a cycle that makes it harder for families to break free from reliance on public assistance programs.

New SNAP reform proposals offer a way forward

Research by AEI and GCO outlines actionable steps to eliminate benefit cliffs while maintaining SNAP costs close to historical levels. These recommendations include changes to critical factors within the program’s structure to allow for a smoother, gradual reduction in benefits as income rises.

Key reforms involve adjusting the following elements of SNAP’s benefit system:

  • Adjust participants’ cost-sharing responsibilities. The proposed plan would reduce the benefit reduction rate from 30% to 18%, making it easier for families to transition off benefits.
  • Cost-sharing should begin as soon as income increases. Right now, deductions delay cost-sharing, which creates benefits cliffs when income limits run out. The new plan is a middle ground, starting benefit reductions earlier but at a lower rate. While it might lower benefits for many families, benefit cliffs are eliminated or reduced.

These structural adjustments effectively close the gap between earned income and benefit loss, removing financial penalties for participants who work more hours or accept higher-paying opportunities.

A win for workers, families, small businesses, and taxpayers

Simplifying and improving SNAP’s benefit structure solves major labor market challenges. For recipients, reforms encourage workforce participation and career advancement, empowering them to climb the economic ladder without fear of a financial setback.

For employers, these changes help restore a steady supply of available workers, addressing hiring difficulties in industries that rely on hourly, shift-based, or entry-level staff. Additionally, SNAP reform creates fiscal balance while allowing the government to save money long term—potentially reducing program expenses by 27% or $30 billion annually.

GCO continues to investigate ways to improve safety-net programs to help families escape poverty, and these recommendations for SNAP are an important piece of those efforts. Employment is one of the most reliable ways to break cycles of poverty, yet benefit cliffs trap too many families in stagnant economic conditions. Eliminating these barriers will strengthen the workforce, stabilize families, and create economic momentum that benefits us all.

Download the full report from American Enterprise Institute and Georgia Center for Opportunity here.

occupational licensing

Key Points

  • Georgia General Assembly, lawmakers unanimously approved House Bill 155, which creates a pathway for thousands of Georgians who might face roadblocks to getting an occupational license to smooth the path for doing so, provided they held a license
  • One in four workers now need some type of occupational license
  •  H.B. 155 will help to keep our economy prosperous

As our nation continues to face a shortage of skilled and qualified workers in a variety of occupations, it’s important that state policy work to reduce as many barriers as possible to employment. Unfortunately, frequently one of those barriers is occupational licensing, which in many cases tosses up roadblocks that don’t make sense but keep good workers from entering the labor force.

Thankfully, Georgia could soon be taking a step in the right direction on this issue. In the recently concluded session of the Georgia General Assembly, lawmakers unanimously approved House Bill 155, which creates a pathway for thousands of Georgians who might face roadblocks to getting an occupational license to smooth the path for doing so, provided they held a license in good standing in their previous state of residence. By providing these licenses immediately, these new Georgia residents will be able to quickly get a job.

Georgia is still one of the fastest growing states in the country. Estimates show that over 81,000 people moved to our state in 2022—a 1.2% increase in our population. There is no indication this type of growth will slow down any time soon. Additionally, according to the National Conference of State Legislatures, one in four workers now need some type of occupational license. For these reasons, H.B. 155 will help Georgia maintain its status as the nation’s best state in which to do business.

A recent study by Heather Curry and Dr. Vance Ginn looked at the positive impacts of Arizona’s “universal recognition bill – House Bill 2569 passed in 2019. Their study showed that since 2019, 6,500 people benefitted from Arizona’s universal recognition policies. While H.B. 155 is not universal—firefighters, law enforcement, medical and legal professionals are excluded—most licensed occupations are included, so we could expect thousands of new Georgians each year benefitting from the passage of this legislation.

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Reforms to occupational licensing are a key piece of the puzzle to help reinvigorate our workforce. The changes will ultimately help the individuals we are helping through BETTER WORK in Gwinnett County and Columbus—individuals who need training, wrap-around services, and opportunities for easy on-ramps into the workforce. Many of the professions that have unfair occupational licensing practices fall into this category.

The bottom line is that by allowing these Georgians to quickly get to work, H.B. 155 will help to keep our economy prosperous and our families strong. The bill currently sits on Gov. Brian Kemp’s desk, awaiting his signature.

criminal justice josh Crawford media statement header

A new bill has been introduced in the Kentucky Legislature, House Bill 589, that simplifies the process of having criminal records expunged for people who have been convicted of a misdemeanor or class C felony that does not involve violence, sex, a child victim, or public corruption.Under current Kentucky law, such individuals are eligible for expungement after the completion of their sentence and a five-year crime-free period. Unfortunately, a confusing and sometimes burdensome process prevents many people who are eligible from having their records expunged.

The Center for Opportunity’s take: “This bill does not change the crimes for which expungement is eligible nor the requirements of a crime free period once the sentence is completed. Everyone who will benefit from this bill is a non-violent offender who has made it clear their interest is in re-entering civil society,” said Josh Crawford, director of criminal justice initiatives for the Center for Opportunity.

“Importantly, prior convictions can be impediments to finding meaningful work. This matters for two reasons. The first and more important is that meaningful work, in particular the amount of time someone spends working in a job and building a work community, significantly reduce the likelihood that person will recidivate. Reducing recidivism means less crime and fewer victims. Second, Kentucky has one of the worst labor force participation rates in the country. With such a large percentage of our population having a criminal conviction, we cannot afford to exclude from the labor force those who are attempting to turn their lives around and live on the straight and narrow. Kentucky business benefits from an engaged and motivated workforce — those who have earned an expungement under Kentucky law are these exact kind of employees.”

 

Josh media statement

 

 

 

 

 

To learn more about the work we’re doing to increase public safety and assist citizens in getting back to work, click here.

Josh media statement

To learn more about the work we’re doing to increase public safety and assist citizen in getting back to work, click here. 

People working

Key Points

  • Around 454,100 Georgians are missing from the labor force.
  • The labor force participation rate is a better barometer of the labor market than the unemployment rate because it includes workers who have simply given up looking for work and are sitting on the sidelines of the labor market altogether.
  • We need to answer, how to reintegrate these prime-age, work-capable workers back into the labor force?

A new analysis from the Georgia Center for Opportunity shows that around 454,100 Georgians are missing from the labor force. This figure comes even as pundits celebrate a statewide and national unemployment rate that remains at historic lows. 

The startling statistic shows a hidden story behind the unemployment rate that reveals deeper cracks in the labor market that will cause problems for years to come, both in the economy and in individuals’ lives. The reason why this matters is not strictly an economic one — we know that these individuals’ giving up on work has profound social, psychological, and relational impacts that extend well beyond the pocketbook.

When individuals are separated from work, they lose more than just monetary compensation or the food, shelter, clothing, and other basics that money can buy. They also face a loss of social connection, meaningful activity, self-respect, and overall purpose.

 

The numbers

Here’s a quick deep dive into the numbers. The U.S. Bureau of Labor Statistics announced Nov. 4 that the unemployment rate rose to 3.7%, which is a tick higher than the previous low of 3.5% but still at historic lows. Georgia’s unemployment rate stands at 2.7%, 14th best in the nation.

The troubling trend is in the labor force participation rate, however. This rate is a better barometer of the labor market than the unemployment rate because it includes workers who have simply given up looking for work and are sitting on the sidelines of the labor market altogether. The U.S. labor force participation rate was at 62.2% in October, down from a pre-pandemic rate of 63.4% in February 2020.

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Those detached from work

It’s important to note that the 454,100 figure developed by the GCO team does not include those unable to work, those who were retired, those in school or college full-time, and full-time caregivers for minor children in the home. In other words, that nearly half-million figure is people who are able to work but have simply decided to detach from the labor force altogether, for some other reason.

As for reasons why workers have quit, they are widespread and complex. The better question is how to reintegrate these prime-age, work-capable workers back into the labor force. That is a primary goal of the Georgia Center for Opportunity’s BETTER WORK initiative, currently operating in Gwinnett County and the Columbus areas of Georgia but soon to expand into many additional regions across the state. 

We see success stories like that of Eddie, who spent nearly five years on the street, homeless and working odd jobs, before getting connected with BETTER WORK Columbus and partner organizations to find stable housing, food security, and a long-term job. The goal of such programs is to get people into stable, self-supporting work so they can escape poverty and dependency cycles.

The GCO team also works to educate policymakers on the perils of benefits cliffs that keep people trapped in cycles of dependency and prevent them from moving up the economic ladder. People like Frankie, a single mom who turned down a $70,000-a-year job because it would mean losing essential government benefits that she relied on to support her family. The goal here is for policymakers to make wise decisions about the safety net so that we don’t continue to pour funds into a failing system.

In The News

social distancing

Long-term pain for labor market due to the COVID-19 pandemic

New research predicts long-term pain for the labor market due to around 3 million workers who plan to remain permanently sidelined over concerns of physical illness or physical impairment due to the COVID-19 pandemic.

The Georgia Center for Opportunity’s (GCO) take: “The authors of the long social distancing study have produced very helpful data on those no coming back into the labor force, estimating a 3.5 million shortfall in March by comparing the current observed level with a linear trend using the time period of January 2015 to December 2019 as the basis for the forecast,” said Erik Randolph, GCO’s director of research. “Using the current employment statistics survey instead of the current population survey, our own research shows a shortage of 6.6 million employed persons that would include persons holding multiple jobs. We use the same method of comparison by subtracting the forecasted data from the observed data, but instead of using a linear trend as the basis for comparison that can often overestimate the forecasts, or the reverse, we use an ARIMA forecast model, not for five years but starting at the low point after the Great Recession. In addition, our research provides forecasts and analyses for each of the 50 states where there is a wide disparity when it comes to job recovery.”

For more, read Randolph’s research report on the economic impact of the pandemic shutdowns.

 

statement

homeless no job

Is there any reason not to cheer? Georgia’s unemployment rate dropped to 4.1 percent in May. 

Here are three reasons why this looks good for Georgia. 

First, the unemployment rate is declining, giving optimism that the economy is bouncing back from the pandemic.

Second, there were only two periods in recorded history when Georgia’s unemployment rate was this low or lower. Starting from 1976—the extent of available data from the U.S. Bureau of Labor Statistics (BLS) on unemployment rates for the states—the first period was between October 1998 and July 2001 when the rate reached as low as 3.4 percent. This period occurred after the long economic expansion of the 1990s. 

The other period—from April 2018 to the start of the pandemic—just occurred with Donald Trump in the White House. During this period, Georgia broke its best record by achieving 3.3 percent.

Third, Georgia’s rate is the 16th lowest in the country, beating out 34 other states. For comparison, the United States as a whole has a rate of 5.8 percent rate, considerably higher than Georgia’s.

 

 

But wait. Is the unemployment rate artificially low?

While optimism is merited, it is important to put the unemployment numbers in perspective.

Unemployment percentages do not capture those who do not participate in the labor force. According to the BLS, anyone not employed who had not actively looked for a job during the prior four weeks is not part of the labor force. Therefore, any person temporarily not looking for work is not accounted for when the BLS calculates the official unemployment rate. Especially now with all the repercussions of the pandemic, all those potential workers who have been sitting on the sidelines for the last four weeks are simply not counted.

The behavior of labor force participation is a loose link for unemployment numbers. Normally, when economic times are good, sidelined workers and even retirees come back into the labor force, which can push the unemployment rate up. When times are bad, the opposite happens. Workers drop out of the labor force, artificially lowering the unemployment rate.

During the depth of the pandemic, and as expected, the labor force participation rate in Georgia dropped—to 59.4 percent to be precise, compared to 62.9 percent just prior to the pandemic. In terms of real people, there were an estimated 260,575 fewer workers participating in the labor force—who were not counted among the unemployed, to emphasize the point. Participation bounced back some to 61.7 percent, but still there are 40,934 fewer workers in the labor force.

Other ways to measure it

BLS’s U-6 labor underutilization metric is another way to shed light on unemployment. It adds to the unemployed those discouraged and other “marginally attached” workers as well as part-time workers wanting full-time work but cannot find it. 

Nationally, the U-6 rate hit a historic high of 22.9 percent in April 2020 representing 36.3 million people. It has since dropped to 10.2 percent representing 16.5 million people. However, in the months prior to the pandemic, the rate was at historic lows—in fact, as low as 6.8 percent. Obviously, while 10.2 percent is far better than 22.9 percent, it is significantly worse than 6.8 percent, representing a difference of 5.3 million workers.

Unfortunately, monthly U-6 data is not available for the states, making any comparison difficult. The BLS currently publishes only experimental U-6 state data averaged over a year’s time.

More useful for the states is the Nonfarm Employment estimates from BLS’s Current Employment Statistics survey. Only two states—Utah & Idaho—have caught up with employment from where they were in February 2020 before the pandemic hit. In contrast, the U.S as a whole is still 5% behind. Georgia ranks 16th among the states and is 4.0 % behind. Hawaii (-14.8%), New York (-9.6%), and Nevada (-8.6%) are the three states furthest behind. 

If we use standard economic ARIMA Model time-series forecasting to estimate where employment would have been absent the pandemic, no state is back on track. The United States is 6.8% behind, and Georgia ranks near the middle in 27th place at −6.1%. Utah and Idaho lead the pack being the furthest ahead, while Hawaii, Nevada, New York, California, and Massachusetts trail the pack.

Observations on state differences and policies

In viewing the differences in employment among the states, the more rural states appear to be doing better. The states more dependent on tourism appear to be doing worse. State governments that implemented less severe lockdowns appear to be doing better. To test these observations, we will be running regression analyses to tease out any correlations. We will post the results when completed.

In the meantime, it is important for government to adopt policies that will help businesses to rebound and make it easier for startups. The goal should be not to just lower unemployment but also to bring those sidelined workers back into the labor force.


Erik Randolph is the Director of Research at the Georgia Center for Opportunity.

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