Greg Nash The U.S. Capitol in Washington, D.C., is seen on Thursday, July 9, 2026. A U.S. Senate committee recently discussed a decades-old federal policy trap that punishes poor families for getting a raise: social safety net-benefit cliffs. These cliffs hamper upward mobility and harm small businesses dealing with workforce challenges. To fix this, Congress should take the next step towards innovative reform and enlist states as part of the solution.
A benefit cliff occurs for families on government assistance programs when new earnings trigger a loss of benefits that can outpace their additional income. This leaves them stuck in the same place or even financially worse off.
The fear of such cliffs discourages low-income families across the country from taking steps that would otherwise help them gradually move out of poverty. Nationwide, 22 percent of low-wage workers on government assistance have reacted to benefit cliff incentives — for example, refusing additional work hours, turning down raises, promotions or new job offers — for fear of losing benefits that are more valuable. Theirs is a clear, and rational, response to a benefits system that lacks a cohesive programmatic goal.
In its June 3 hearing, the U.S. Senate Committee on Small Business and Entrepreneurship focused on benefit cliffs’ harms to workers’ desire for opportunity and businesses’ need to hire, retain, and promote talent. During committee discussion, Sen. Jon Husted (R-Ohio) pointed out that in Dayton, a single parent of two children who earns $33,000 a year could lose more than $4,600 in benefits by accepting a $1,000 raise.
This matches what we see on the ground. Many families that Goodwill Kentucky works with are juggling work, childcare, and unstable housing situations. For many of them, even a small increase in income can jeopardize the very programs that are helping them achieve stability, setting them back months on the path to self-sufficiency and extending the time they are on those benefits.
Goodwill’s programs assist people to achieve self-sufficiency. But the prospect of suddenly losing a benefit — especially in a way that leaves them no better off or even worse off — often forces people to pass up a better paying job or more hours to avoid the cliff.
Bella Johnson, team lead for Goodwill, has experienced this cliff. She shared that “It gets to a point where you are juggling food or getting to work. I didn’t get into a better financial state until I got promoted again.”
Fortunately, some states aren’t waiting for Washington to act. Utah legislators funded a pilot program in 2025 to help families navigate the cliff through financial coaching and stronger mentoring. They then passed — and Gov. Spencer Cox (R) signed — a formal resolution this year calling on Congress for more state innovation authority. Kentucky’s House of Representatives passed a similar resolution this year. Delaware, Georgia, and New England states have seen similar efforts to address benefit cliffs. The message from state capitals is clear: We want to fix this with more comprehensive reform, but federal program rules currently won’t let us.
To fix this, Congress should pass the Upward Mobility Act. The act would create a pilot program allowing five states to consolidate funding from up to 10 anti-poverty programs, and then test new and better ways to provide temporary help oriented towards work-based independence.
Critically, this act would include important guardrails that distinguish it from past programs or block-grant efforts. The legislation requires federal oversight from the Administration for Children and Families, including detailed plans and evaluation metrics for any states wishing to opt-in to the pilot program. It would also require independent third-party evaluation of state pilots, outcome metrics tracking whether pilots actually reduce benefit cliffs and increase earnings, and funding to remain consistent — tied to prior-year levels to start and then indexed to inflation.
Far from being an open-ended block grant — a concern raised in the June 3 hearing — the Upward Mobility Act is a structured accountability framework that leverages state innovation, with clear guardrails, to test new ideas to solving benefit cliffs and increasing upward mobility.
America’s social safety-net was well-intentioned, but it is in dire need of reform to clear the path for hardworking families and employers alike who value work, independence, and the full promise of the American Dream. States are already taking action to accomplish this reform, but Congress is now the bottleneck.
Amy Luttrell is president and CEO of Goodwill Kentucky. Nic Dunn is vice president of strategy and senior fellow for Sutherland Institute.
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