The American Dream is predicated on the idea that hard work makes your family better off. But for millions of Americans striving to escape poverty, that often isn’t true. Our nation’s broken welfare system discourages work, leaving families hindered by the social safety net. We must empower states to once again lead a welfare reform movement that restores upward mobility, and passing the Upward Mobility Act is an essential first step.
Families stuck in the safety net who want to work hard, earn more and escape poverty face benefit cliffs, where earning more makes you financially worse or no better off — ultimately disincentivizing work.
The Federal Reserve Bank of Atlanta found that if a single parent with one child living on public assistance in Washington, D.C., saw their annual earnings rise from $11,000 to $65,000, they would receive no financial benefit. Due to benefit cliffs, the lost financial assistance outpaces the increased earnings.
Sutherland Institute research found that 43% of Utah’s safety net population had taken some action to limit their earnings, such as turning down a pay raise, refusing additional hours or stopping a job search out of fear of triggering a benefit cliff. A social safety net designed to help families escape poverty but that penalizes their efforts to do so is a moral and systematic failure that policymakers have a responsibility to address.
In recent years, there’s been a surge of reform efforts, such as the recent American Enterprise Institute-led coalition of scholars offering a roadmap for comprehensive reform. But poor federal policy stands in the way of such action.
Our nation’s 80-plus safety net programs come with an annual federal price tag of $1.2 trillion along with $341 billion in state spending. They are overseen by multiple federal agencies that report to various congressional committees and lack a streamlined administration system. Comprehensive reform that allows experimentation with innovative solutions faces too many bureaucratic hurdles in Washington, which is why the solution actually lies with the states.
One of the greatest policy achievements of the past 40 years was the 1990s era of pro-family, pro-work welfare reform. Prior to passage, states played an essential leadership role by testing different approaches through pilot programs designed to increase work and reduce government dependency. American families striving to escape poverty need that kind of state-led innovation today.
That’s why Congress should pass Congressman Blake Moore and Senator Jon Husted’s Upward Mobility Act.
The Upward Mobility Act takes an essential step toward eliminating benefit cliffs, thus reducing government dependence and promoting self-reliance.
The bill creates a new pilot program allowing five states to opt in and experiment with new and creative solutions to poverty and benefit cliffs. Participating states could combine funding from up to 10 different federal programs — including SNAP, TANF, Section 8 Housing Vouchers, the Child Care and Development Fund, and more — into a single, flexible funding stream. This could then be used to design and test innovative new solutions to help families move up the economic ladder, providing temporary, targeted assistance while prioritizing work free from the disincentives of benefit cliffs.
The Upward Mobility Act is pro-work and pro-innovation, embracing the constitutional principle of federalism while remaining deficit neutral to ensure taxpayer dollars are targeted to those who need it most.
America can still be the land of opportunity, but it will require significant improvements to our social welfare system to promote work and independence. Enlisting the states — our 50 laboratories of innovation — will help remove work disincentives, promote upward mobility and bring the American Dream within reach.