The Pennsylvania House Health Committee approved a bill aiming to revise the state’s child care benefits so they gradually taper off as a family earns more income on Wednesday.
Pennsylvanians stop receiving child care benefits once their income reaches 200 percent of the poverty level, or $48,500 for a family of four. This “benefits cliff” causes a conflict for the worker, who is now more financially motivated to reject pay-raises and additional hours, according to state Reps. Stephen Bloom (R-Cumberland) and Tom Murt (R-Montgomery/Philadelphia), who co-sponsored House Bill 1164.
“This all-or-nothing system forces a parent to make a choice between the best of two bad situations,” Bloom said.
Tens of thousands of families in Pennsylvania are affected by this problem, according to Bloom. He says a mother on the program is currently incentivized to make less money.
“She gets a small raise just, you know, 6 cents a day, whatever it is, that happens to take her over the threshold,” he said. “She could lose hundreds and hundreds or even thousands of dollars in childcare subsidies for going slightly over the maximum income level for that program all at once.”
The gradual decrease of benefits would make it financially rewarding to always earn more money, Bloom said.
“The person who is seeking this childcare subsidy still has to meet the original criteria,” Bloom said, “but gradually, as they reach what now is the upper level of the income scale in the program, instead of hitting that cliff and going right off, they can keep earning more and still stay on the program all the way up to 300 percent of poverty-level income.”
That would cap at $72,750 for a family of four.
He said the legislation is an innovative solution to a problem that exists everywhere, and as far as he knows, no other states have attempted to smooth out benefits cliffs in this way.
“It’s not forcing them off,” he said, “but it’s simply using basic economics that any person’s going to respond to, that they would be better off if they can earn more money, rather than staying on the subsidy.”
The full House is expected to vote on the bill this week.
