Children’s advocates say too many hard-working New México families struggle with the “cliff effect” when trying to pay for child care and move up the income ladder.
The “cliff effect” can force parents to decline a pay increase, if it would push their income over 200 percent of the federal poverty level and end their childcare assistance. A new report from New México Voices for Children says it generally means a single parent with two children would need about 20 percent more pay to be able to give up the assistance and still cover childcare.
Sharon Kayne, communications director with the group, says public benefits should help a family reach financial security.
“So that once they go off of the public benefits, they’re doing much better,” says Kayne. “But in this case, there’s actually a disincentive, because if you do just a little bit better, it throws you back into poverty.”
The state’s Children, Youth and Families Department held public hearings last week on how to spend $20 million from a federal block grant. Voices for Children says it should be used to “fix the cliff” and expand eligibility for childcare assistance. The CYFD has said it plans to spend the money on outreach.
Kayne says New México has set its eligibility level at 200 percent of the federal poverty level for childcare assistance, while other states do more to help families advance.
“You know, it’s surprising that as one of the poorest states in the nation, that we are not supporting our working families as well as many of the other states,” says Kayne.
According to Kayne, parents faced with the “cliff effect” who want a raise from the boss to propel their career forward, sometimes have to choose lower-quality childcare.
“Childcare is very expensive; it is more expensive than tuition at UNM [University of New Mexico],” says Kayne. “So, you know, these are generally young parents who are starting out, and they simply don’t have the kind of income that allows them to either have high-quality childcare, or have one parent stay home and take care of kids.”
The report shows a typical family of three can receive childcare assistance when they’re earning about $40,000 a year, with childcare co-pays taking about 18 percent of their income. But if they earned one dollar more, all assistance would end, and childcare would require 38 percent of their paycheck.
by Roz Brown
Public News Service – NM