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One person I interviewed for this newsletter was Anne Kandilis, director of Springfield WORKS/Western Massachusetts Economic Development Council. She’s supporting a state bill that would experiment with redirecting the state’s earned-income tax credit to counteract the fall from the benefits cliff, topping up families’ resources so they don’t decline when adults in the household increase their earnings. “We’ve made it really simple,” she said. “We just want to plug a gap.”

Plugging gaps is a great idea, but it’s not enough. If all you do is keep people at the same level of resources when their income rises, meaning they keep none of the extra money they earn, they’re facing an effective marginal “tax rate” of 100 percent. They’re stuck on a plateau. (Contrast that with the current top federal tax rate of 37 percent.)

A plateau is better than a cliff, but it still severely discourages work, says Alexander Ruder, an organizer of the Atlanta Fed’s conference who is a principal adviser on the bank’s community and economic development team.

Ruder mentions another big problem: If you’re a low-paid nursing assistant who’s receiving government benefits, work-force-development people might encourage you to train to become a licensed practical nurse, the next rung on that career ladder. But a licensed practical nurse without benefits may wind up with fewer resources than a nursing assistant with benefits. For many people, the benefits cliff effectively yanks away the career ladder that is presented as the way out of poverty. One answer is to train to become a registered nurse, which is a better-paying job than licensed practical nurse, but that’s more ambition than many people can realistically handle.

Barr, of the South Carolina Center for Fathers and Families, says one way to avoid the poverty trap created by the benefits cliff is earlier intervention: Teach teenagers about their career options so they can get the training and education they need before they have children to take care of. “When you put on weight it’s hard to use wings,” he told me. “Fly while you can.”

Elsewhere

A bit of good news on the labor front: While the number of jobs in the United States in October remained down 2.8 percent from February 2020, the aggregate number of hours worked was down only 1.7 percent, according to data released on Friday by the Bureau of Labor Statistics. That’s because the average number of hours that working people work per week has gone up. Here’s a statistic you don’t see every day: The aggregate number of hours worked per week in October was 49 million hours higher than it would have been if the number of working hours had fallen as much as the number of jobs. “Today’s labor supply may be inadequate,” James Paulsen, chief investment strategist for the Leuthold Group, wrote last month, “but it is also remarkably healthy compared to history!”