Benefit cliffs discourage work and trap families in long-term financial struggles. A new policy solution offers a way out.

The Supplemental Nutrition Assistance Program (SNAP) is one of the largest anti-poverty programs in the U.S., providing over 41 million Americans with critical food assistance in 2024. But for many recipients, a system designed to support often ends up trapping—with significant barriers known as benefit cliffs.

These cliffs occur when small increases in income result in recipients suddenly losing their SNAP assistance, leaving them in a worse financial position for working more hours or earning an income boost. For example, a single parent’s modest hourly raise might lead to a benefit cut that completely offsets their increased take-home pay.

The negative ripple effects extend far beyond individuals and households. Benefit cliffs reduce workforce participation and make it harder for plenty of small businesses and industries to find the workers they need to grow and serve customers.

A new proposal for reform, developed with research by Erik Randolph at the Ģ����Ƶ Center for Opportunity in collaboration with Angela Rachidi of the American Enterprise Institute (AEI), offers a way to dismantle SNAP benefit cliffs and restore the program’s original mission—helping families achieve financial independence and stability.

SNAP’s design discourages career growth among recipients

SNAP is meant to help low-income families put food on the table. But the system unintentionally penalizes those who pursue better wages or career opportunities.

For many recipients, earning extra income—not just large raises but even modest increases as one gains skills or works more hours—means abruptly losing SNAP benefits altogether. Instead of slowly tapering down, benefits “fall off a cliff” as income rises.

This financial disincentive creates a dilemma for households relying on SNAP. While accepting additional shifts or applying for a higher-paying position could signify career growth, it may financially set them back without SNAP assistance offsetting basic expenses.

The economic impact is widespread. With fewer prime-age workers, employers encounter labor shortages, and their ability to operate efficiently is compromised. Workforce productivity also declines when workers are stuck in part-time, lower-skilled jobs rather than advancing to higher economic opportunities. The result is a cycle that makes it harder for families to break free from reliance on public assistance programs.

New SNAP reform proposals offer a way forward

Research by AEI and GCO outlines actionable steps to eliminate benefit cliffs while maintaining SNAP costs close to historical levels. These recommendations include changes to critical factors within the program’s structure to allow for a smoother, gradual reduction in benefits as income rises.

Key reforms involve adjusting the following elements of SNAP’s benefit system:

• Adjust participants’ cost-sharing responsibilities.��The proposed plan would reduce the benefit reduction rate from 30% to 18%, making it easier for families to transition off benefits.
• Cost-sharing should begin as soon as income increases.��Right now, deductions delay cost-sharing, which creates benefits cliffs when income limits run out. The new plan is a middle ground, starting benefit reductions earlier but at a lower rate. While it might lower benefits for many families, benefit cliffs are eliminated or reduced.

These structural adjustments effectively close the gap between earned income and benefit loss, removing financial penalties for participants who work more hours or accept higher-paying opportunities.

A win for workers, families, small businesses, and taxpayers

Simplifying and improving SNAP’s benefit structure solves major labor market challenges. For recipients, reforms encourage workforce participation and career advancement, empowering them to climb the economic ladder without fear of a financial setback.

For employers, these changes help restore a steady supply of available workers, addressing hiring difficulties in industries that rely on hourly, shift-based, or entry-level staff. Additionally, SNAP reform creates fiscal balance while allowing the government to save money long term—potentially reducing program expenses by 27% or $30 billion annually.

GCO continues to investigate ways to improve safety-net programs to help families escape poverty, and these recommendations for SNAP are an important piece of those efforts. Employment is one of the most reliable ways to break cycles of poverty, yet benefit cliffs trap too many families in stagnant economic conditions. Eliminating these barriers will strengthen the workforce, stabilize families, and create economic momentum that benefits us all.

Download the full report from American Enterprise Institute and Ģ����Ƶ Center for Opportunity here.

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Recent studies are raising concerns about whether the help provided by the Food Stamp program, now known as the Supplemental Nutrition Assistance Program (SNAP), is sufficient. This program, which served 41.2 million people in the Fiscal Year 2022, is the biggest food assistance initiative in the United States.

But before you call your congressperson, let’s take a closer look at the research that suggests SNAP benefits might be too low.

The Research Findings

The Urban Institute has developed a indicating the average cost of a “modestly-priced” meal often exceeds the maximum SNAP benefit allotted for a meal. For instance, in the last quarter of 2022, the average “modestly-priced” meal cost was $3.14, surpassing the calculated maximum SNAP benefit of $2.74 for a meal in the 48 contiguous states.

To make matters more complicated, food prices vary across the country. The tool allows users to see how the maximum food benefit falls short in different counties. According to the Urban Institute, the maximum SNAP benefit covered the cost of a modestly- priced meal in only 27 out of 3,143 counties, or just 1 percent of the total.

Other organizations, such as the Brookings Institute, share similar concerns about the adequacy of SNAP benefits, putting pressure on Congress to consider increasing the program’s maximum benefit.

Are We Comparing Apples and Oranges?

It’s essential to be cautious, though, as the research might be comparing different things. The maximum SNAP benefit is based on the Thrifty Food Plan, intended to be the lowest-cost food budget while still providing necessary nutrition for a family. In fact, it is the lowest cost budget produced by the U.S. Department of Agriculture, which begs the question of how the Urban Institute is defining a modestly priced meal.

The Urban Institute’s calculation of a “modestly priced meal” is based on the spending habits of households at or below 130 percent of the official poverty level, but who were also considered to be “food secure.”

It should be expected The Thrifty Food Plan is lower than the actual expenditures of this demographic group because, as the name suggests (the Supplemental Nutrition Assistance Program), SNAP is meant to supplement, not replace, food purchases. As households earn income, it’s expected they will spend more on food than what the minimum budget allows.

Why Is There Still Food Insecurity?

Food insecurity is determined by using answers to the Current Population Survey, but the determination doesn’t specifically address the adequacy of the SNAP maximum benefit. Other factors, like spending habits, diets, and dealing with the stress of poverty, also play a role. It’s important to note that the U.S. faces an obesity problem, even among SNAP participants, suggesting that the issue may not be too few calories but rather poor eating habits.

However, the obesity problem probably has more to do with more nutrition education, better eating habits, and improved financial literacy for participants rather than the program itself.

The Solution: Congress should reform the Supplemental Nutrition Assistance Program (SNAP) so that more households can easily overcome benefits cliffs through steady work and typical pay raises and achieve self-sufficiency faster.  

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Negatives of Increasing Benefits

While some might think increasing SNAP benefits is harmless, there are negative consequences to consider. It can affect upward economic mobility for participants ready to leave the program, making it more costly with unwanted economic side effects.

A recent study highlighted a benefit cliff problem in SNAP, where households lose more total income than gained from increased earnings. The study identifies the importance of controlling the maximum benefit to solve benefit cliffs and marriage penalties.

Benefit cliffs are a big problem for households trying to stop relying on safety-net assistance programs. They face an unfair choice between being worse off financially and giving up their long-term goals of moving up economically through steady work. After vulnerable people get help from the safety net, government assistance should help them move forward, not hold them back.

Considering the cost of the program is also important. In the fiscal year 2022, the federal government spent $120 billion on the Food Stamp program. However, the government had a $1.4 trillion , increasing the national to over $32 trillion. This financial irresponsibility is a major reason for inflation and higher prices, which impact those on safety-net programs the most.

The Best Strategy Forward

Increasing the maximum SNAP benefit should be approached cautiously to balance adequate nutrition for families while controlling program costs. The Urban Institute’s definition of a reasonably priced meal falls short because they are measuring the wrong aspects when compared to the criteria set for the maximum allotment. There seems to be a methodology problem in their approach.  It’s extremely important to get the number right to ensure adequate nutrition for families but in a way that is thrifty to keep program costs under control and to make it easier to fix benefit cliffs and mitigate marriage penalties.

Those concerned about low SNAP benefits should also consider that other assistance programs help participants, such as free school meals and food banks operated by non-profit organizations. Plus, state agencies that administer SNAP all have nutrition education to help participants know how to budget for nutritious food. The federal government also assists states in those efforts by providing tools, curricula, and a . Ultimately, determining the adequacy of Food Stamp benefits should rely on nutrition science, consumer science, financial education, and thriftiness.

*Erik Randolph is the Director of Research for the Ģ����Ƶ Center for Opportunity.

*Monthly average for the fiscal year per program data tables of the Food and Nutrition Service, U.S. Department of Agriculture.

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Today,��announced that in April the Consumer Price Index (CPI) rose by 0.4%, not seasonally adjusted. Year over year, the CPI has gone up 4.9% in the last 12 months.

The Ģ����Ƶ Center for Opportunity’s (GCO) take: “Not only has the federal government abandoned restoring purchasing power, they do not appear even capable of bringing inflation down to the Federal Reserve’s inflation rate target of 2%,” said��Erik Randolph, GCO’s director of research. “Devaluing the dollar means that Americans must have comparable wage inflation just to keep with prices. That’s worse for Americans living on fixed incomes, the working class, and the poor.”

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Ģ����Ƶ Center for Opportunity is�� the winner of the for Outstanding Policy Achievement. Erik Randolph, Director of Research, lead the charge in undertaking a massive research project which highlights the harms of COVID restrictions which took place around the country. The award specifically recognizes those doing “exceptional work to create and disseminate credible policy research and ideas.”

Ģ����Ƶ Center for Opportunity has been one of the host organizations for the State Policy Network’s Annual Meeting which is being held this week in Atlanta, GA. This is a gathering of organizations working on a state-level to promote realistic solutions to policy. It’s also a time for our team to collaborate with like-minded people and be inspired by new ideas and tactics.

��recognize state think tanks doing exceptional work to help states implement solutions that expand personal freedom and opportunity for all Americans.”

��recognize state think tanks doing exceptional work to help states implement solutions that expand personal freedom and opportunity for all Americans.”

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Media Statement: Number of people working hasn’t caught up to pre-pandemic levels

On Friday, the U.S. Bureau of Labor Statistics����that total non-farm payroll employment rose by 528,000 in July. The result was much higher than expected.

The Ģ����Ƶ Center for Opportunity’s (GCO) take: “Friday’s jobs report is being billed as great news, but peeling back a few layers reveals a worse reality,” said��Erik Randolph, GCO’s director of research. “It’s true the number of jobs in the United States is now at pre-pandemic levels. The difference is that the number of people who are actually working hasn’t caught back up. That implies more people are working two or even three jobs to make ends meet in this highly inflationary environment. Meanwhile, wage growth isn’t keeping pace with inflation, putting poor and working class Americans even further behind.”

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Key Points

• Consumer Price Index (CPI) rose by 1.3
• June CPI exceeded expectations
• Fastest pace for inflation in four decades

Today,��announced that in June the Consumer Price Index (CPI) rose by 1.3, not seasonally adjusted. Year over year, the CPI has gone up 9.1% in the last 12 months. The June CPI exceeded expectations and was the fastest pace for inflation in four decades.

The Ģ����Ƶ Center for Opportunity’s (GCO) take: “This new inflation reading ranks among the worst monthly inflation rates in U.S. history, and��the��worst in recent history,” said��Erik Randolph, GCO’s director of research. “We have to go back to March 1980 — the last year of the Carter administration — to find a higher monthly inflation rate. The bottom line is that we may not have reached peak inflation, and there’s no telling how long the price level crisis will persist. Meanwhile, the rhetoric from the White House and Congress will do little to rectify the situation. There needs to be new thinking within the Washington Beltway.”

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Key Points

• Total nonfarm payrolls for the U.S. rose by 372,000
• Unemployment rate remained at 3.6%.

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Key Points

• Ģ����Ƶ is one of 14 states to fully recover from pandemic-related job loss.
• States with severest lockdown are still struggling.��
• There’s been a decline in labor force participation.��

Ģ����Ƶ’s unemployment rate now stands at a record low of 3.0% in May,����released on Friday.

The Ģ����Ƶ Center for Opportunity’s (GCO) take: “Ģ����Ƶ is now one of only 14 states in the U.S. that have fully recovered from pandemic-related job loss,” said��Erik Randolph, GCO’s director of research. “The states that imposed the severest lockdown measures due to COVID-19 are still struggling, and likely will be for months to come. All told, Ģ����Ƶ is in excellent company as one of the top states in job recovery. That being said, it’s important to remember that unemployment rates can be misleading. Since the pandemic, we’ve witnessed an acceleration of the decline in the labor force participation rate. Particularly concerning is the persistent problem of prime-working-age males being absent from the labor force. The number is estimated to be around 250,000 men in Ģ����Ƶ in 2021. A major policy goal in our state must be efforts to reengage this men in the labor force.”

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Key Points

• May the Consumer Price Index (CPI) set new record for inflation
• Lack of discussion over the price level, which is the new ‘floor’ for prices in the economy
• Leaving the price level elevated means we are leaving the economically disadvantaged further behind, exacerbating the economic divide in our nation

New record for inflation

Today,����announced that in May the Consumer Price Index (CPI) rose by 1%, not seasonally adjusted. Year over year, the CPI has gone up 8.6% in the last 12 months. The May CPI exceeded expectations and set a new recent record for inflation.

The Ģ����Ƶ Center for Opportunity’s (GCO) take: “We now know that the early statements from the Biden Administration and the Federal Reserve that this inflation is transitory was an incorrect assessment. It looks a lot more like it’s becoming embedded into the economy,” said��Erik Randolph, GCO’s director of research. “What’s both remarkable and troubling is the lack of discussion over the price level, which is the new ‘floor’ for prices in the economy. The only discussion is about bringing the inflation rate back down. This means that the federal policymakers are willing to leave the price level elevated. Leaving the price level elevated means we are leaving the economically disadvantaged further behind, exacerbating the economic divide in our nation.”

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Reality is likely to be less rosy…

, after the pace of inflation slowed slightly in April. But��Erik Randolph, director of research for the Ģ����Ƶ (GCO), warns that the reality is likely to be far less rosy.

“What we saw with the April Consumer Price Index was disinflation. That means the rate of inflation decreased but inflation is still occurring and our purchasing power is declining,” Randolph said. “Meanwhile, wage increases are lagging behind price increases. The vast majority of workers will have lower standardsof living because their budgets will not buy as much as in the recent past. Some workers will get handsome pay raises, but they will be the exception rather than the rule.

What’s needed?

“The core problem here is that the price level has risen, setting a new floor for costs. The only way to lower the price level, by definition, is to allow for deflation. But our policymakers are afraid of deflation because of the economic schools of thought that they adhere to. What is needed is new economic thinking in Washington, D.C. from economists who are not afraid of deflation but recognize it’s the only way to bring the price level down that benefits the most people. The mess we’re in now are the signs of stagflation, meaning the rising price level may be soon accompanied with slower economic growth and loss of employment. The only way to mitigate that scenario would be to adopt policies to allow for supply-side growth.”

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