Workforce training programs can have positive effects on the wages and employment of people experiencing poverty. But workers who face “benefits cliffs” as their incomes increase may be discouraged from seeking new skills through such programs. Often, as supports such as child care and housing subsidies phase out with increased income, that increased income does not translate to more resources.
Meanwhile, a growing body of evidence suggests that cash assistance for people struggling to make ends meet can alleviate poverty, improve mental health, and help families better absorb unexpected shocks, such as medical emergencies. Research also shows that cash transfers coupled with employment coaching, supports, and incentives can promote economic mobility and increase long-term employment for people experiencing poverty.
For this project, the Colorado Evaluation and Action Lab will evaluate programs through which three training and career development nonprofits in Colorado are offering their clients different cash supports, such as stipends and no-interest loans. At each site, researchers will use a randomized controlled trial or quasi-experimental design to understand how cash supports influence clients’ employment and earnings and whether stabilizing financial supports can prevent benefits cliffs that undermine financial stability. This research will add another dimension to current evidence on the employment effects of other income supports such as the earned income tax credit and the child tax credit.