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A study done by the Illinois Policy Institute shows how families in Chicago get caught in poverty by what they phrase as the “welfare-cliff.”

Welfare benefits are structured with intent to address the myriad struggles associated with poverty, and even more, to serve as a foundation for upward economic mobility. But a phenomenon known as the “welfare cliff” creates a poverty trap, making pay raises detrimental because they are outweighed by an even greater, simultaneous decline in welfare benefits.

New research from the Illinois Policy Institute details the welfare cliff experienced by single-parent, two-children households and two-parent, two-children households in Cook, Lake and St. Clair counties, and the city of Chicago.

The study looked at the loss of benefits a single-parent would experience with a pay raise to $18 from $12. It showed a loss of up to 1/3 of total income. To get back that income, they would have to get a job paying $38/hour.

Welfare_Chart_10

Illinois Policy Institute

The report states that the gap is caused by programs that taper off too quickly and provide too many benefits to begin with. They did qualify the report by stating that these are federal programs, not state programs.

 

 

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