December 20, 2012 / 12:11 PM / in 5 years

The Unequal State of America: A Hoosier falls off the "benefits cliff"

INDIANAPOLIS (Reuters) - The U.S. welfare overhaul was designed to incentivize people like Juanita Isom to work. For 13 years, she has had a full-time clerical job at an Indianapolis insurance firm. For 11 of those years, she has been on some kind of public assistance.

The 33-year-old divorced mother of five said she makes roughly $25,000 a year and gets child support from her ex-husband. But she can only get by with help from five federal government programs - food stamps, Medicaid for her kids, childcare vouchers, subsidized school lunches and the earned income tax credit.

“By the end of the month, I‘m out,” she said. “I usually have to get help with food from my parents.”

Reform advocates argue that cases like Isom’s represent a success, even if they aren’t happily-ever-after stories. One goal was for recipients to begin supporting themselves as much as possible: partial reliance on government is better than full dependency. Today, 41 percent of people who receive food stamps live in households in which at least one person works.

Isom said she’d love to get off public assistance. But she walks such a financial tightrope that she fears taking risks that could eventually make her self-sufficient. She dreams of becoming a dental hygienist, a better paying profession. But getting the training, she said, would require quitting her job, which is beyond her means.

Last year, Isom’s boss offered her a 23-cent-an-hour raise, but she turned it down. Isom calculated that if she accepted the raise it would make her ineligible for the federal programs her family depends on. Overall, she’d lose money.

“I feel kind of stuck,” she said.

The sudden cut-off in benefits imposed when one’s income rises to a certain threshold is known as the “benefits cliff.” It’s one aspect of the system that many conservatives and liberals in Indiana agree should change. There’s no immediate prospect of addressing it yet, however.

Reporting By David Rohde and Kristina Cooke; Edited by Michael Williams

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