Voice of Business Blog

The benefits cliff is not a new issue. It has not only impacted New York State but numerous other states nationwide for decades. Unfortunately, it has remained an impediment, with little to no action taken, for those reliant on public assistance.

The benefits cliff occurs when individuals receiving public assistance are faced with the prospect of losing almost all of their benefits immediately upon being offered full-time employment or even a minimal increase in pay. These benefits include childcare, transportation, healthcare, housing and other crucial supports. For individuals struggling to make ends meet on public assistance, losing these benefits is something they cannot afford.

I’ve been engaged in discussions dating back to around 2011, where Wegmans chairman Danny Wegman emerged as a true leader, addressing the impact of the benefits cliff and its role in keeping people out of the workforce and below the level of poverty. Wegmans has been a longstanding advocate in this regard. Regrettably, little progress has been made since that time.

Recently, I had the privilege of meeting with Colleen Wegman, who reaffirmed Wegmans’ commitment to addressing the benefits cliff. They are focusing on part-time Wegmans employees who are hesitant to transition to full-time employment or accept pay raises due to fear of losing essential benefits.

I commend Danny, Colleen and the entire Wegmans team for tackling this issue head-on. Few companies anywhere across the U.S. can compete with Wegmans in terms of creativity, business systems and measurable success. If anyone can show us a path forward with the benefits cliff, it will be the Wegmans team.

Greater Rochester Chamber of Commerce recently launched an information campaign aimed at raising awareness about the benefits cliff and its associated issues. When you examine the concept of the benefits cliff, it is clearly a system that has the unintentional consequence of creating a disincentive to seek employment opportunities that can enhance quality of life and provide a much-needed boost to our workforce.

The current focus on migrants and immigration revolves around expediting the certification of those entering our country for employment. This emphasis arises from the urgent need to fill job vacancies within our companies, both locally and nationwide. Our nation is currently allocating billions of dollars to accommodate, clothe and support the millions of migrants crossing our borders. However, little attention is given to addressing those being affected by the benefits cliff and creating opportunities for these individuals to enter our workforce, thereby improving their own lives and contributing positively to society. It is time to shift our focus towards finding long-term solutions to this issue that keeps so many people, who want to work and get off of public assistance, out of the workforce.

I find it difficult to believe that, despite the abundance of brainpower and technology across our state and nation, there has been no appreciable change in addressing this issue. It’s evident that a solution exists to establish a sliding scale for individuals on public assistance who desire to work. This could involve adjusting benefits in correlation with full-time employment or pay increases, either gradually reducing benefits over time or maintaining them for a period before gradually tapering off as income rises. Unlike the current system, which leads to an almost immediate loss of benefits, this approach would provide stability and incentive for individuals transitioning into the workforce.

Rectifying the benefits cliff would not only benefit families striving for employment but also yield significant savings in public assistance funding for both federal and state governments. Properly executed, this initiative could save millions, if not billions, while simultaneously facilitating the transition of individuals from public assistance to gainful employment.

The war on poverty, initiated in the 1960s, has yielded limited progress, particularly evident when examining the data in Rochester and other Upstate sister cities. It’s evident that poverty levels have not decreased; in fact, they have grown. A simple drive around our neighborhoods, both urban and rural, highlights the profound impact of poverty in our community.

The effort from Wegmans stems from frustration with the lack of government progress on this issue. We firmly believe that solutions exist and are necessary, primarily at the federal level, followed by state-level implementation, given the flow of funding for public assistance and social welfare programs across the United States. While counties manage social services locally, they cannot unilaterally change this program. It necessitates action and coordination across all levels of government.

Reflecting on Rochester’s history, I struggle to identify a single program that has significantly impacted poverty in our community. Since the 1960s, I estimate that billions of dollars have been invested in various anti-poverty initiatives. In the business community and beyond, leaders consistently assess the return on investment (ROI) for their expenditures. However, when it comes to anti-poverty spending in Rochester, I challenge anyone to provide a genuine ROI assessment.

While funds may have been allocated to organizations and specific programs, I have yet to witness any initiative hailed as a resounding and long-term success. I do acknowledge that many individual success stories do exist and should be celebrated. The fact remains that with the countless billions of dollars that have been invested in poverty reduction initiatives over several decades, no one can point to any significant large scale and measurable results.

Elon Musk and his SpaceX organization have already demonstrated that they can build successful rockets at a fraction of the cost of what NASA has spent on similar efforts. They have shown so much success that NASA has partnered with SpaceX on building rockets that have transported supplies to our U.S. Space Station. I use this as an example that we should look to the private sector for their leadership and expertise in taking on something as important as poverty reduction.  Wegmans may well demonstrate measurable success with their employees in a cost-effective manner that both saves government tax dollars and lifts families out of poverty.

Elected officials often find it difficult to cut funding, even for programs that haven’t demonstrated the expected success. I believe it’s imperative to conduct thorough audits of these programs and evaluate whether they are truly making a positive impact on the lives of those in poverty. It is clearly time for a comprehensive reassessment of our approach to poverty.

The Governor’s Office has generously allocated $25 million to address poverty in Rochester. In a recent meeting with the Governor, Mayor and County Executive, the Governor emphasized the importance of achieving tangible results with this funding. While the Governor did not specifically earmark the funds to address the benefits cliff, she expressed a desire for investments that would positively impact Rochester’s child poverty rate.

While achieving this goal requires time, effort and courage, it also necessitates addressing the negative perceptions surrounding families on public assistance. While not everyone may be open to change, a significant proportion of these families would welcome the chance to transition from the constraints of public assistance to employment opportunities that enhance their quality of life. Poverty often becomes a difficult cycle to break, but it’s evident from the benefits cliff issue that viable pathways exist to help individuals break free from reliance on public assistance.

Before making significant investments, it’s essential to analyze data and results meticulously. I want to emphasize that my remarks are not a critique of the efforts of organizations like our local anti-poverty programs. They’re undoubtedly doing their best with the resources and strategies available to them. However, addressing this issue requires a higher level of strategic thinking and action at both the national and state levels. We must critically assess the current systems in place, many of which are outdated and ineffective.

Critically examining the legislation proposed this year by State Senator Persaud of Queens could serve as an excellent initial step in addressing this issue. If we genuinely tackle the benefits cliff, it won’t necessarily require additional expenditure. In fact, it has the potential to result in cost savings. Any initial investment in technology or systems can be offset by future savings from reduced public assistance funding, should it no longer be required. I applaud Senator Persaud for her leadership on this issue.

To learn more about the benefits cliff, please visit GreaterRochesterChamber.com for additional information. If you have stories or testimonials to share, we encourage you to reach out to us. We are eager to publicize these experiences and illustrate how addressing the system can positively impact many families who are struggling.

I would like to extend my gratitude to Colleen Wegman and the Wegmans team for their courage in addressing this issue. Their efforts will undoubtedly provide valuable insights into what works, what doesn’t and how we can best move forward in the future. As the saying goes, the definition of insanity is doing the same thing repeatedly and expecting different results. Unfortunately, we have too many examples of this occurring in our region.

Buffalo, Rochester and Syracuse have received an initial designation as a Federal Technology Hub and we recently submitted our plan to be considered in the final group of five to seven designees, who will receive federal funding to further support Upstate New York’s national recognition as a tech hub.

Our three cities/regions have some of the highest poverty rates in the nation. This can present us with an even greater opportunity to collaborate on strategies, collaborations and technology to drive down our collective poverty numbers.

It’s time for a change. The goal is to get people out of poverty, not create walls that keep them locked in.

Let’s get to work, Rochester.

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This column originally appeared in the Rochester Business Journal.