Ernst Helping Workers Climb Higher

WASHINGTON - Today, Senate Committee on Small Business and Entrepreneurship Chair Joni Ernst (R-Iowa) highlighted the harmful effects of federal benefits cliffs on Iowa workers, families, and small businesses. She pointed to the Upward Mobility Act, which she cosponsors, as a solution.

The legislation would initiate a pilot program for five states to consolidate multiple federal anti-poverty programs into a single funding stream and help families achieve financial independence, eliminating benefits cliffs that discourage work and advancement.

Watch Chair Ernst's remarks here.

Ernst's full remarks:

"Over the past 50 years, the national poverty rate has barely moved - and Iowa is no exception.

"For far too many small businesses and their employees, federal bureaucracy stands in the way of economic opportunity.

"Today I am excited to convene this Committee to discuss the important issue of federal benefits cliffs and their impact on America's job creators.

"These cliffs occur when a small increase in income leads to a significant decrease in federal welfare benefits.

"Benefits cliffs create a paradox where the federal government, in effect, penalizes workers and leaves them worse off for pursuing higher income.

"It's clear that there isn't a one-size-fits-all solution.

"The reality is, despite over 80 federal programs and a trillion taxpayer dollars spent annually, the federal government often fails to address the barriers to self-sufficiency faced by those living in poverty.

"To make matters worse, the complex interactions of dozens of different programs create unintended cliffs and inhibit upward mobility.

"As a result, for many Iowans and Americans across the country struggling to make ends meet, taking one step forward often means taking two steps back.

"With misguided incentives, workers are encouraged to put off promotions, turn down full time work, and decline overtime opportunities to maintain eligibility for federal welfare programs.

"Benefits cliffs also create significant workforce challenges for small businesses seeking to grow their operations.

"Small business employers hoping to reward top talent are instead faced with the reality that due to misguided federal policies, rewarding hard workers may actually harm their employees financially.

"A recent Ohio Chamber of Commerce survey found that one in five businesses experienced personnel issues due to workers' concerns about losing public assistance.

"I want to give you one brief example of the cliff effect: Years ago, while serving in the Iowa State Senate, I visited an assisted living center in my district at the time in Lenox, Iowa.

"I had the opportunity to visit with a young woman and single mom, likely in her twenties, who was employed by the assisted living home.

"She began working at the facility as a certified nursing assistant and quickly excelled.

"She was a hard worker and it was clear the residents all adored her, which led to a point where the assisted living home offered her a supervisory role with more responsibility.

"The promotion, the mother explained, would be a really tremendous opportunity.

"However, for those receiving government assistance and having an extra mouth to feed, as she did, the decision can be a bit trickier since a higher income level may put them over the threshold for certain government assistance.

"This young woman, she went home. She calculated what her pay increase would be, along with the government assistance that she would lose and what she figured out that would if she took the promotion, she would lose about $200 a month.

That $200 a month could have gone towards rent a car, a food or food for her family. And there are a lot of basic needs in Iowa at that time that could have been met with that $200.

"She was on a really tight income, and she was already working with challenging numbers.

"To her credit, and I really appreciate this young woman. To her credit, she chose to take the promotion knowing that she would lose that $200 a month.

"It wasn't an easy decision, but she knew if she did not take that promotion, she would never, ever get ahead of where she was at that time for her and her child.

"However, for many, that decision might be much more costly and too risky.

"Today, I am a proud co-sponsor of Senator Husted's Upward Mobility Act.

"The Upward Mobility Act recognizes what most Americans understand: the best solutions often don't come from Washington.

"The legislation creates a pilot authority for five states to combine funding from ten federal anti-poverty programs, including SNAP and TANF, into one single flexible funding stream to eliminate benefits cliffs while remaining deficit neutral.

"This flexible funding stream will encourage states to create a smooth, gradual decrease in overall benefits as incomes increase, ensuring incentives remain for work and economic opportunity.

"Hard working folks shouldn't be punished for doing what is right for themselves and their families.

"By empowering states, the Upward Mobility Act will reduce government imposed barriers to financial independence and streamline the administration of federal welfare programs while taking measures to protect against fraud.

"I know that small business owners across our nation are committed to bettering the lives and future career prospects of their employees.

"The values of hard work and self-sufficiency have defined who we are as a nation. By ending benefits cliffs through common sense solutions, we can ensure that workers across America are rewarded with increased opportunity on the merits of their labor."

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