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Richmond Fed Educates on Benefits Cliffs

man opening his empty wallet

The Federal Reserve Bank of Richmond’s Community Development team continues to educate civic and government leaders throughout the Fifth District about opportunities to help low-wage workers overcome benefit cliffs.

Benefit cliffs can occur when workers who receive public assistance from the government earn a raise, which causes them to make too much money to continue receiving help. The Richmond Fed has hosted two webinars to offer insight and potential solutions for resolving this economic mobility issue, including providing access to an online tool designed by the Atlanta Fed called the Career Ladder Identifier and Financial Forecaster (CLIFF) dashboard. This resource helps users predict and mitigate potential earnings barriers for workers and informs whether workers’ current career paths will be beneficial in the long-term.

“We’ve sought to help community leaders throughout Virginia and North Carolina understand where the gaps are and how those gaps vary by geography and demographics,” said Christy Cleare, assistant vice president of Community Development for the Richmond Fed.

The Community Development team’s efforts are paying off. In October 2020, the Richmond Fed and Atlanta Fed partnered with the City of Richmond Office of Community Wealth Building and the Robins Foundation to use the CLIFF tool to evaluate how the city’s Guaranteed Income Pilot program interacts with the social safety net, reduces barriers to career investment and supports families on their career path to economic security. Through the program, Robins and the city provide $500 per month for 24 months to 18 working parents experiencing the “cliff effect.” The pilot received national attention last year, and an additional $500,000 investment from Jack Dorsey, CEO of Twitter and Square, enabled up to 37 more Richmond families to enroll.

“Ultimately, we hope people and communities across our District experience a positive return on their investment in education and career development training,” said Tiffany Hollin-Wright, the Richmond Fed’s Community Development manager for Virginia and West Virginia.

Hollin-Wright is currently working with other localities across Virginia to firm up agreements for their use of the CLIFF tool, as is Erika Bell, the Richmond Fed’s Community Development manager for North Carolina and South Carolina. The Atlanta Fed serves as a model, as it partners with a variety of entities such as  governors’ offices, state workforce investment boards, colleges and local nonprofit service providers to customize the CLIFF Dashboard for specific needs.

“This tool can inform working parents of when child care subsidies may be lost and emphasizes the importance of building savings for these kinds of events – two important factors of becoming economically secure and sufficient,” Bell said.

The Bank’s Community Development team looks forward to increasing the knowledge about the CLIFF tool and to implementing more partnerships. The Richmond Fed also is participating on a task force with the Atlanta Fed and other organizations across the nation to help the Center for Guaranteed Income Research at the University of Pennsylvania determine the success of efforts to prevent Benefit Cliffs.

More information about Benefit Cliffs is available in this recent Richmond Fed Speaking of the Economy podcast episode featuring Bell and Hollin-Wright.

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Jim Strader (804) 697-8956 (804) 332-0207 (mobile)