The Cliff Effect: A Hidden Barrier Holding Your Organization Back
News April 30, 2026
Have you ever had a high-performing employee turn down a promotion, reduce their hours, or decline overtime? These decisions may be driven by a hidden workforce challenge known as the cliff effect.
How the Cliff Effect Works
The cliff effect (or the benefits cliff) occurs when a worker receiving public assistance, such as food benefits, childcare subsidies, or housing support, earns a small wage increase or works additional hours, only to lose a disproportionate share of those public benefits. Instead of moving ahead financially, this loss can leave employees worse off.
For example, as the graph shows, a single- parent worker with two children in Massachusetts begins to lose overall financial resources once their earnings exceed $20,000 per year due to reductions in public benefits. At about $30,000, they hit a steep benefits cliff that can reduce their net financial resources to zero. In this scenario, the family is not better off financially until their income surpasses $50,000 a year.
Unable to make ends meet, workers may decline raises or advancement opportunities, while employers miss the chance to fully utilize and develop skilled talent to grow their business.
Why It Matters to Employers
If your workforce includes employees earning $50,000 a year or less, and working parents in that salary range, the cliff effect may already be influencing their employment decisions, making it difficult for them to accept a promotion or work additional hours. Research has shown that nearly one in four public benefit recipients have made decisions about their employment specifically to avoid triggering a benefits cliff. This has real implications for your organization.
The cliff effect directly affects employers’ bottom lines by impacting workforce stability, turnover, and staffing pipelines.
- Workforce stability. Employers can face challenges meeting customer demand with their current workforce if workers experiencing the cliff effect are unable to take on additional hours or overtime.
- Turnover costs. The threat of a benefits cliff can cause workers to leave their positions. This turnover causes lost institutional knowledge and higher recruiting, onboarding, and training costs.
- Staffing gaps. Industries, such as healthcare, that rely on internal staffing pipelines can struggle to fill critical roles. Benefits cliffs can prevent entry-level workers from being able to train for that next position, leaving hard to fill staffing gaps.
What You Can Do About It
Forward-thinking employers are beginning to address the cliff effect as part of their workforce strategy. The Bridge to Prosperity Cliff Effect Pilot, led by Springfield WORKS, a workforce initiative of the Western Mass Economic Development Council, partners with employers to help eliminate the cliff effect as a barrier to economic mobility. Through this initiative, Springfield WORKS and its partners are:
- Supporting Massachusetts workers affected by the cliff effect with direct cash financial assistance and financial and career coaching to help them stay on career advancement pathways
- Advocating for policy changes that improve how public benefits support workers as they progress in their careers
- Working with employers to understand how benefit cliffs impact their workforce and to identify practical solutions
Potential employer-driven solutions include: (1) creating earn-to-learn models that enable employees to continue earning a salary while building skills for higher wage roles, (2) offering community-based financial and career coaching to help workers navigate advancement and avoid benefit cliffs, and (3) offering alternative benefits, such as emergency savings programs, that strengthen financial stability and resilience.
Next Steps
If you are interested in learning more about how the cliff effect may be impacting your workforce, exploring possible solutions, or partnering with Springfield WORKS, you can:
- Contact Kristen Joyce, Bridge to Prosperity Program Director: joyce@springfieldworks.net
- Visit the Bridge to Prosperity Cliff Effect website: https://springfieldworks.net/our-work/cliff-effect-pilot/
Addressing the cliff effect is a practical step employers can take to strengthen workforce stability and support employee advancement. By removing hidden barriers to mobility, employers can improve retention, strengthen internal talent pipelines, and help workers fully realize their earning potential while building a more resilient and competitive organization.