About 10 years ago, Amir Hamad happily informed an entry-level hospital employee he supervised that they had earned a promotion. The employee thanked Hamad but declined the offer.
“I thought they would be thrilled about it,” said Hamad, now vice president and chief nursing officer at a different organization, Ascension Saint Thomas West Hospital in Nashville, Tennessee. “I could not understand why they turned the position down.”
“I asked and they said, ‘If I take this, I’ll get a raise. I’m appreciative of that, but it will exclude me from these public assistance benefits that I get,’” Hamad said. “That’s the first time someone opened my eyes to the benefits cliff.”
Benefits cliffs can occur when people earn raises or take on more work hours and lose eligibility for benefits like food or housing assistance because of the increased income. The additional earnings may not fully cover the lost benefit value, creating a financial resources gap.
One Nashville restaurant worker, for example, shared that the roughly $200 per month raise she earned would cause her to lose more than $800 in monthly public assistance benefits.
Many factors go into retention metrics and workers’ decisions about whether to stay in a given job or advance in their careers. But particularly for employees seeking to move from lower-wage or entry-level positions along a career path, fear of a benefits cliff can limit economic mobility.
“It makes me think, and it should make every company leader think, ‘Do you really want to give this person a raise?’” Hamad said. “You think you’re helping, but in reality, it’s causing challenges.”
Increasingly, employers across industries are discovering the issues benefits cliffs raise for both the financial stability of their employees and the effective operation of their businesses. Recent pilot programs, partnerships, and conversations offer employers new guidance on how they might best address the issue.
“Employers are always mentioned as one of the big players in the solution to the benefits cliff,” said Alex Ruder, director and principal adviser at the Federal Reserve Bank of Atlanta. “But there’s never been a clear guide on what employers can actually do.”
Based on his team’s significant research on benefits cliffs, Ruder said that raising workplace awareness of the issue and securing executive leadership buy-in to act are vital first steps.
“Employers should first know how the benefits cliff can affect their employees. The evidence shows that the majority of people want to advance and earn more. But some workers could turn down opportunities. Or they could advance but become financially destabilized or end up quitting because they can no longer afford something they need.”
– Alex Ruder, director and principal adviser, Federal Reserve Bank of Atlanta
The exact point where benefits cliffs might start affecting workers varies across job functions, regional wage levels, and career trajectories. In large companies with a wide range of job functions, leadership can first identify which segments of the business’s positions and career paths fall into these compensation ranges.
Understanding which employees may be more likely to encounter cliffs during job transitions helps employers know who may need related career advancement support.
At Goodwill Industries of the Southern Piedmont in Charlotte, North Carolina, 124 employees recently participated in a Benefits Cliff Employer Pilot. The pilot showed Goodwill staff earning $15 to $18 per hour were most likely to encounter benefits cliffs, particularly involving SNAP (the Supplemental Nutrition Assistance Program), housing assistance, and Medicaid, said Justin Taylor, the organization’s stakeholder engagement manager. More than 40 percent of pilot participants learned they either had already or could in the future experience a benefits cliff.
The Atlanta Fed, one of three other employers participating in the same pilot, conducted its own organizational assessment with a surprising result.
“Benefits cliffs could actually affect employees beyond an entry-level salary,” Ruder said. “That’s mainly due to the relatively high income-eligibility threshold for subsidized child care, which is about $76,000 per year for a family of three in Georgia.”
Employers trying to address benefits cliffs say it can be awkward and overwhelming dealing with what they see as a human services problem. Even in companies that pride themselves on having a compassionate corporate culture, supervisors may be reluctant to ask employees to share details of their personal finances.
There’s also the cost of potentially replacing the value of lost benefits for every applicable employee across a large company.
Joe Wesley, director of government relations and strategic initiatives at Wegmans Food Markets, learned about benefits cliffs while participating in an antipoverty effort in Rochester, the company’s headquarters city in Monroe County, New York. In discussions with leadership back at the office, he heard from human resources staff that it wasn’t uncommon for employees to decline additional work hours over benefits concerns.
“We didn’t understand why people were turning down pay increases,” Wesley said. “Our employees knew the math way better than we did.”
Wesley scanned the company to determine where Wegmans employees moving along a career path might be vulnerable to cliffs. For example, a hypothetical employee receiving benefits could face several cliffs as she advanced toward becoming an assistant manager.
If Wegmans covered the cost of the employee’s lost benefits over time, Wesley said, “all of that gap we were filling would still just break her even. We’re basically doing the job of the government’s public assistance programs, but she’s still no further along after four years.” She would be just one of many employees in the same situation.
“We were trying to be creative initially, but as an employer with 54,000 employees, the math just doesn’t work,” Wesley said. “Recognizing the percentage of employees who are in some level of those circumstances with benefits cliffs, we would lose our shirts.”
“There really is no easy answer,” he said. “We realized this is too big, and we’re not experts in all the intricacies of human services.”
Wesley reached out to leaders in Monroe County to talk about helping employees navigate benefits cliffs and learned that other area employers also had run into the issue. Recognizing the problem, Monroe County sought state support for a pilot program.
In May 2025, New York state lawmakers allocated $3 million for the Monroe Ladder Demonstration Program to better understand and address cliffs for regional workers through a combination of public and employer resources and financial counseling. Wesley said Wegmans may be involved as a business representative as the program takes shape.
Wegmans isn’t alone in considering how to play an effective but manageable role as an employer interested in helping to solve the complex benefits cliff problem.
“We are not saying to employers that the benefits cliff is their fault or their issue alone to solve. We’re saying that they should be at the table.”
– Timberley Russell, director of training and employer engagement, Beyond the Cliff
Many emerging strategies often involve companies working within coalitions. Each partner fills an important role in identifying and testing cliff mitigation strategies.
Community organizations specializing in workforce development bring vital trust built over time with affected community members. In some cases, organizations employ experienced coaches to help people navigate cliffs using specialized tools.
Government and philanthropic partners often provide funding for coaching and cliff mitigation payments, and they know the ins and outs of state and local benefits programs. Researchers evaluate cliff mitigation strategies and design and adjust the tools coaches and participants use.
Employers can assume several vital roles as part of these coalitions, according to experts. They help expand awareness of the issue among employees, policymakers, and the business community. Businesses also serve as laboratories to test cliff mitigation strategies in real workplaces.
Employers also can look internally at their benefits and compensation structures. They may identify opportunities to prevent benefits cliffs within company career paths and potentially offer assistance to those experiencing cliffs.
Goodwill Industries of the Southern Piedmont is uniquely equipped to help both its clients and employees with benefits cliffs. The organization implemented the Benefits Cliff Employer Pilot through Pathways, its in-house employee career development program. Coaches and participants used the Atlanta Fed’s CLIFF Snapshot tool, mapping out different career paths participants might follow to see where cliffs could occur along the way.
“Using the tool helped us visualize and quantify the benefits cliff problem and allowed our Pathways participants to have more strategic conversations with their coaches around next steps,” said Taylor at Goodwill.
The organization’s established culture around coaching-based workforce development also helped reduce the stigma employees might feel discussing their personal finances with a manager. “One of the biggest factors for success with the pilot program was trust,” Taylor said.
“We don’t really expect our employers to get down into the nitty gritty of our lives, and sometimes that trust isn’t there because it hasn’t been established. I would encourage employers to find those ways that you’re already connecting with your employees so you can build and demonstrate that trust to have those more open conversations.”
– Justin Taylor, stakeholder engagement manager, Goodwill Industries of the Southern Piedmont
Ninety percent of pilot participants left their coaching sessions with a clear plan and next steps to navigate their particular benefits cliff situations. The experience was so successful at Goodwill Industries of the Southern Piedmont, Ruder said, that Goodwill Industries of Kentucky is adopting the CLIFF tools in coaching sessions with its employees as well.
Employers who don’t have in-house coaches can instead connect with community organizations to help employees address the cliffs they face. That kind of partnership is at work between Ascension Saint Thomas West Hospital and Beyond the Cliff, a collaborative based in Nashville’s Martha O’Bryan Center.
Hamad said Timberley Russell, Beyond the Cliff’s director of training and employer engagement, frequently participates in hospital events and career fairs. Employees recognize and connect with her to learn more about the coaching options available through the Martha O’Bryan Center and other community resources.
“We want to create an environment where an employee won’t just leave their job once they get that letter informing them that their benefits reduced because their income went up,” Russell said. “Instead, they’ll go to that trusted person within their work environment for help.” For employees at Ascension and other companies partnering with Beyond the Cliff, that trusted resource may be Russell herself.
Ascension Saint Thomas West also focuses on educating staff about the benefits cliff in neutral ways to avoid stigmatizing those who then realize they might be in a benefits cliff situation. The hospital provides information through partner organization brochures placed around the facility and handed out during career conversations.
Russell said this practice reflects the advice she regularly offers to area employers who want to help but are concerned about invading their employees’ privacy. “It’s great if you can put what employees need in front of them without any pressure or requiring them to identify themselves,” she said.
Russell suggests that human resources staff and managers actively talk about the benefits cliff at new hire orientations and when they review benefits and career plans each year with employees. These are moments when people may be considering a change in position or may be offered a raise, potentially triggering cliffs.
“Employers can help their employees deal with benefits cliff issues once they fully understand them, and once there’s a mechanism for honest conversation around what would work for both employee and employer.”
– Anne Kandilis, director, Springfield WORKS
Employers can also try to identify opportunities within their own benefits and compensation structures to include elements that can mitigate cliffs. Human resources or career development teams can train their staff on using the CLIFF tools. Or, Taylor suggested, employers could consider offering tiered benefits systems or aligning their wages with a living income standard. Employer toolkits available through Goodwill and Beyond the Cliff share strategies along these lines applicable to different business types.
Advocates for policy change around benefits cliffs emphasize what they see as the unique importance of employers speaking out to shed light on the situation. Hamad, Taylor, and Wesley each have presented to other employers and policymakers what they’ve learned about benefits cliffs’ workforce impact.
“While we nonprofits are working on a national agenda and making recommendations for change, we understand that our voices aren’t enough to move the issue,” Russell said. “We need the employers—the businesses that fuel our economy.”
The Department of Education processed 186,731 IDR applications in June, down sharply from 285,694 in May. More than 1.5 million...
I grew up with a solidly middle class upbringing. My parents owned our home, my dad worked full-time and my...
Articles Driven by high construction costs, land constraints, and rental affordability, developers are increasingly prioritizing smaller...
