Nicole’s story: How a raise meant losing food stamp benefits for this mom of four

Nicole’s story: How a raise meant losing food stamp benefits for this mom of four

Nicole’s story: How a raise meant losing food stamp benefits for this mom of four

correctional officer

Nicole had high hopes when she moved her family from a rural area in south Georgia to Henry County in the Atlanta metro. The cost of living went up, but the job opportunities were more plentiful and paid much better: She went from making $25,000 a year to over $35,000 as a corrections officer.

But that’s when Nicole got an unpleasant surprise. Her new salary level meant that her safety-net benefits from the government went entirely away—not reduced, but entirely eliminated. She ended up getting around a $10,000 raise but losing approximately $12,500 in benefits.

“I ended up getting kicked off social services because I made a couple dollars more than the max I could,” Nicole shared.

Nicole is 32 years-old and the single mother of four boys. “I’m the only income. I don’t get child support payments or anything else,” she said.

Losing her benefits—particularly food stamps—was a severe blow, especially during the pandemic. Although she has gotten help from local church-based food banks to help her make ends meet, her situation is still stressful.

To further bridge the gap, Nicole is working as much overtime as possible. But she would need to earn significantly more—to the tune of $25 an hour—in order to fully make up for the benefits she has lost. Even in an economy where wages are quickly rising for many workers, that raise level is a tough haul.

 

What needs to change?

Nicole encountered what we call the “benefit cliff,” where well-intentioned policies actually prevent people from getting off public services. They make just enough to lose their benefits, but not enough to make up for those lost benefits. The result is a system that keeps people trapped in poverty rather than one that propels them toward self-sufficiency and the dignity that comes with it.

While it is wonderful to see how the community has stepped up to help Nicole fill the gaps left from her losing access to food stamps, not everyone is so fortunate.

So, what’s the best pathway forward? Our goals should be to shore up the safety net for those who truly need it, eliminate these benefit cliffs, and create a system that encourages (rather than discourages) people from climbing the economic ladder. Along these lines, here are three possible ways forward:

 

  • The food stamp program could be fully redesigned to eliminate the benefit cliffs.

 

  • Separate pools of funds (from public, private, and charitable resources) could be set up as temporary stop-gap measures to get people like Nicole beyond the cliff.

 

  • Nicole could work with someone who understands the cliffs to help her strategize a career and pay progression to effectively jump over the cliff.

 

The Success Sequence provides an outline of how to reverse the cycle of poverty in our communities. GCO uses this as a framework for much of our work.

#DareToClimb media campaign

This is why the Georgia Center for Opportunity (GCO) recently launched the #DareToClimb media campaign. The campaign is designed to raise awareness and share stories of those trapped in government assistance programs that, while well-intentioned, are structured in a way that often does more harm than good. GCO believes it is important to share the stories of these courageous men and women who have overcome obstacles in their lives to achieve self-sufficiency.

To learn more, follow the #DareToClimb hashtag.

** The $35,000 income limit is based on Nicole’s interview with us. Although our calculations show it will be somewhat higher, the impact and stress she is experiencing will be the same.

 

DonorsTrust Launches Giving Ventures Podcast | MENAFN

DonorsTrust Launches Giving Ventures Podcast | MENAFN

In The News

DonorsTrust Launches Giving Ventures Podcast | MENAFN

This week the team at DonorsTrust , a donor-advised fund committed to encouraging philanthropic giving and protecting donor intent, launched a new podcast focusing on philanthropy. The Giving Ventures podcast explores innovative projects and problem-solving initiatives made possible by support from DonorsTrust account holders.

“We are excited to provide a forum where donors with a pro-liberty mindset can learn more about great work on exciting projects that may otherwise get missed,” explained Peter Lipsett, Vice President at DonorsTrust and Giving Ventures host.“My colleagues and I regularly engage with groups aiming to limit government, grow personal responsibility, and strengthen free enterprise. The podcast allows us to share insights and ideas from these conversations, ideally leading to even more philanthropic activity

Guests for the inaugural episode include:

  •  Randy Hicks , president, and chief executive officer of the Georgia Center for Opportunity , discusses the ways the organization is combating poverty in the Peach State.
Better Work Access and Encourage Worker Freedoms

Better Work Access and Encourage Worker Freedoms

Better Work Access and Encourage Worker Freedoms

The Manhattan Institute recently released a report arguing that now is a key time to reform our nation’s safety-net system. The goal should be not to offer more income guarantees but to minimize downside risk so that workers are able to move up the economic ladder. The report comes on the heels of new data from the U.S. government showing that inflation continued to run hot in August—the consumer price index rose 5.3% from a year before.

The Georgia Center for Opportunity’s (GCO) take: “The pandemic only heightened our awareness of existing issues, but the issues existed long before the pandemic,” said Erik Randolph, GCO’s director of research. “As such, we can’t let quick-fix solutions based on the current scenario be our only response. We do not need a stop-the-bleeding plan but systemic change that addresses long-standing issues.Policy prescriptions like simply raising the minimum wage ignore the main issue—wages not keeping up with inflation.

 

The need for changes that promote worker freedom and a sense of security that comes in work will drive markets and empower the actions of individuals. We should promote policies that open accessibility to better work access and encourage worker freedoms. We do this by creating a vibrant market where employers incentivize and compete for workers.”

 

Erik - statement

Press Release on the U.S. Senate’s Social Services Expansion

Press Release on the U.S. Senate’s Social Services Expansion

Press Release on the U.S. Senate’s Social Services Expansion

PEACHTREE CORNERS—The U.S. Senate approved an entirely partisan reconciliation bill of at least $3.5 trillion that irresponsibly includes the biggest expansion of social services. In his own words, Senate Budget Commit- tee Chairman Bernie Sanders said the budget reconciliation bill “will be the most consequential piece of legislation for working people, the elderly, the children, the sick and the poor since FDR and the New Deal of the 1930s.”

The Alliance for Opportunity, a three-state coalition to move people from dependence to the dignity of work and a flourishing life, believes we should learn from our history and expand pathways to success and opportunity with– out dictating a burdensome cradle-to-college path that will cost the American people trillions of dollars.

“When many are struggling from the consequences of the pandemic and government-imposed shutdowns, families want a return to normal with job opportunities so they can achieve their hopes and dreams,” said Kevin Roberts, Texas Public Policy Foundation Chief Executive Officer

We know that the governments’ closure of schools and the lack of affordable childcare has placed a huge burden on caretakers–who are largely women–over the last year. However, we should carefully consider options that pro- vide the freedom of sustainable, affordable options for caretakers rather than a costly system that removes choices for their families. Make no mistake, if the federal government funds one form of childcare, then other options are crowded out. Instead, there should be affordable solutions for parental freedom and a better utilization of existing funds for childcare under TANF and other state workforce programs.

“Despite spending trillions on social service programs, generations of Americans have become trapped in a cycle of government dependency leaving them unable to realize the full extent of the American dream. This expansion of social service programs will be no different. Instead of bankrupting future generations, it’s time to give Americans the opportunity to build a better life for themselves and their families,” said Daniel Erspamer, Chief Executive Officer at Pelican Institute for Public Policy.

“When writing public policy, we must carefully weigh the long term effects those policies might have on the very people we are attempting to help. What works in the short term may not help over the long haul,” said Randy Hicks, President and Chief Executive Officer of the Georgia Center for Opportunity

Americans can’t afford Sen. Bernie Sanders’ unprecedented spending and taxing along with continual borrowing against our future, especially at this critical time in the pandemic recovery. The Alliance for Opportunity urges an approach that puts families and local communities at the center of solutions for childcare, education, and middle class job opportunities, not politicians in D.C. or elsewhere.

Inflation’s Growing Problem: A warning shot for Congress

Inflation’s Growing Problem: A warning shot for Congress

Inflation’s Growing Problem: A warning shot for Congress

poor child in America inflation

The inflation rate in July—as measured by the seasonally-adjusted Consumer Price Index (CPI)—abated somewhat from June’s rate, increasing at 0.5% instead of 0.9%. But don’t cheer too much yet.

This is known by economists as disinflation, not deflation. The rate came down, but prices are still continuing to climb.

Annualized, the monthly inflation rates calculate to 5.8% for July and 11.4% for June. Both rates continue to exceed the Federal Reserve’s target of 2% annual inflation. Of course, as I discussed in this blog, the Fed’s 2% target rate is too high and compromises Congress’s original goal of promoting purchasing power that would benefit everyone.

Prices are Ratcheting Upwards

When the CPI inflation rate is viewed by its increase from the same month of the prior year, the trend is not good. 

Although the increase over the prior year held steady for July, prices were also increasing last year. That is, prices are still 5.3% higher than a year ago when prices were also increasing. The problem is compounding, and prices are ratcheting upwards.

Inflation not a problem?

Perhaps not surprisingly but definitely unfortunately, the Fed’s economists appear to have been caught off guard. When Fed Chairman Jerome Powell testified before Congress last month, he admitted as much as inflation has spiked higher than they anticipated. However, he still maintained that the inflation is based on temporary factors that will abate with time.

Mr. Powell’s comments may have been just for the inflation rate, and he may be overly optimistic. In the meantime, we must brace ourselves for an increase in the price level. 

To think that the price level may come down is probably unrealistic. That has not happened ever since we gave the Fed the responsibility to maintain purchasing power in 1946 that was dumbed down in 1978 to the weaker goal of “reasonable price stability.” Of course, this policy change happened during the complete failure of federal policymakers in both the Fed and Congress when the nation was suffering from double-digit inflation combined with stagnant economic growth.

Why does promoting purchasing power matter? 

Inflation hurts practically everyone. If your wages do not keep up, your purchasing power is eroding. 

This is truest for those in poverty, low-income families, and low-skilled labor. They will slip further behind, making income disparity worse and possibly causing Congress and state governments to spend more on safety-net programs that will only fuel inflation higher when Congress funds the increases with even more debt.

Businesses—who need predictability to make good entrepreneurial decisions—generally will also suffer, slowing down economic activity. 

Workers will have a harder time keeping up with rising prices and will demand higher wages, only fueling inflation further.  

More Cautious Approach to Government Spending is Needed

A likely major cause of the climbing price level is all the governmental debt-based spending to address the pandemic. Further debt-based spending will not ameliorate the problem but exacerbate it. 

Congress needs to exercise more restraint and caution now as it considers the expansive spending bills that appear likely to pass. It is very likely that they are setting up the nation for unpleasant economic times, hurting the poorest among us the worst. The growth in the Consumer Price Index is an omen for Congress to take a step back and trim those bills.

 

DonorsTrust Launches Giving Ventures Podcast | MENAFN

Inflation is running wild — poor and low-income Americans will be hurt the most | QUAD CITY TIMES

In The News

Inflation is running wild — poor and low-income Americans will be hurt the most | QUAD CITY TIMES

How can we help working families the most? Raising the minimum wage to $15 an hour is a popular solution, but it’s a short-sighted one given the reality that inflation — the silent assassin of Americans’ livelihoods, particularly for the poor — is now running the hottest it has in decades.

The Consumer Price Index has increased 5.4% since last year, as announced on July 13 by the U.S. Bureau of Labor Statistics. The monthly rate was 0.6% in May but 0.9% in June. If this rate persists, our nation will experience double-digit inflation. A 0.9% monthly rate translates to an 11.4% annual rate, a level not seen since the 1970s….