cliff hanger

Hike in Minimum Wage Is Net Loss for Those Whose Public Benefits Collapse

Iris Dionicio with her 5-year-old son, Riley, in The Bronx.
Iris Dionicio with her 5-year-old son, Riley, in The Bronx. Photo: Ben Fractenberg/THE CITY

After years of alternating between public assistance, night school and part-time work, Iris Dionicio got a full-time job in December as an executive assistant for a Bronx nonprofit.

The timing seemed perfect, coming just as the city’s minimum wage was set to increase from $13 to $15 an hour this year.

But her higher pay also triggered the loss of most of her public benefits — including a generous rent subsidy and monthly cash assistance payments that had been keeping her and her three kids stable.

And this is where my worries started,” said the 28-year-old Bronx woman.

Dionicio is one of thousands of New Yorkers who could be impacted by unintended consequences of the city’s higher minimum wage, which is knocking some workers out of eligibility for benefits that are worth more than the pay hike.

Nonprofit officials have sounded the alarm in recent months about the phenomenon, known as a “benefits cliff” — which is expected to grow as more people renew throughout the year.

Albany Tries to Help

Last week, the state Senate and Assembly passed a bill at the end of a busy session that calls on the state Department of Labor to study the complex issue.

“The point of the bill is to take what we kind of understand as a conceptual matter and try to pin it down,” said State Sen. Andrew Gounardes (D-Brooklyn), sponsor of the Senate bill. “We really want to figure it out and see if there’s things we can do to help mitigate this cliff.”

Dionicio had been working part-time as a medical assistant from November 2016 to March 2018, clocking in about 25 hours a week at an hourly rate of $10.50.

The lower pay and fewer hours made her eligible for public assistance, including approximately $340 per month in SNAP benefits, also known as food stamps, as well as $1,410 in rent payments under a program called CityFEPS, and Medicaid for her and her kids.

She stopped working in March 2018 when she was five months pregnant, and her benefits increased while she remained out of work.

On Jan. 19, 2019, just weeks after she landed a job at Banana Kelly Community Improvement Association, she got a letter from the city Human Resources Administration saying she no longer qualified for the rent subsidy — this time under a state program — because her monthly earnings were now $211 over the federal income limit.

The letter also said her SNAP allowance — temporarily raised to $642 per month because of the loss of public assistance — would end on June 30.

Dionicio has since been forced to appear in Housing Court twice because of her struggles to meet the $1,532.24 monthly rent for her two-bedroom apartment in Kingsbridge.

She received a one-shot cash payment of $3,061.15 from the HRA on April 10 to avoid eviction, but has been told she needs to pay back $1,711.15 of it.

“I’m holding onto dear life by my teeth. It’s been a challenge,” Dionicio told THE CITY. “I have to hold on. I have three kids that depend on me so I have to make it work.”

In April 2019 about 1.5 million people in New York City received SNAP benefits and roughly 335,000 got cash assistance — but the impacted universe is expected to be a fraction of that.

City HRA officials said they’ve seen a small uptick in SNAP cases — which are determined by the federal government — closed because a recipient’s earnings went up. But they said only 1% of rental voucher recipients typically become ineligible as a result of higher earnings, and that people earning the new minimum wage shouldn’t be losing their vouchers.

“Because every case is unique, with many impacting factors, we cannot specifically determine if a household is no longer eligible for benefits due to one particular factor, like the minimum wage increase but, generally speaking, we have not seen notable changes in benefits utilization as a result of increased earnings,” said HRA spokesman Isaac McGinn

The state Department of Labor did not respond to requests for comment.

A Common Problem

Nonprofit leaders and elected officials say they’ve heard of dozens of cases of severe benefit losses under the new minimum wage, including of child care and housing vouchers.

Earlier this month, union officials at 32BJ sought a legislative remedy for airport workers who now find health insurance unaffordable in part because of wage increases.

Officials at the nonprofit Met Council on Jewish Poverty say they’ve been trying to help a green card-holding woman who is a home care worker, whose salary was recently raised from $13.65 to $15 an hour.

The single mom’s income gain of $235 per month was offset by a steeper loss of $505 in SNAP benefits, the group says.

“We’ve seen dozens of clients who are losing all sorts of benefits simply because they’re making a couple of dollars more an hour — and they’re losing more in benefits than they’re making in wages,” said David Greenfield, CEO of the Met Council. “We’re cautiously optimistic that this can be addressed strategically and quickly.”

Jennifer Jones Austin, president of the nonprofit Federation of Protestant Welfare Agencies, noted that a family with two people making $15 an hour — for a combined annual salary of roughly $62,000 — can still find it challenging to pay for a New York rent, child care and other necessities without some type of subsidy.

“We’ve seen instances where people have actually said, ‘Don’t give me that raise — I don’t want that increased wage, because it can cut off these income supports,’ ” she said.

The issue is hitting New York City before the rest of the state because the minimum wage has been raised sooner within the five boroughs.

It’s currently at $11.10 in most of the state, $12.00 in Long Island and Westchester and $13.50 for businesses in New York City with fewer than 11 employees.

The minimum wage is set to increase to $15 per hour for all New York City workers on December 31.

A Broader Issue

Heather Hill, an associate professor at the Evans School of Public Policy & Government at the University of Washington, has been studying the impact of the $15 minimum wage on workers in Seattle, which hit that rate in 2017.

She said that families or single parents with kids are among the most vulnerable to the benefits cliff.

“This is not at all specific to minimum wage increases,” said Hill. “It’s a broader issue of how we’ve set up programs that help low-income families.”

This year’s legislative session in Albany has already addressed one related quirk that arose from work development programs targeted at teenagers and young adults over the summer.

Assemblymember Simcha Eichenstein (D-Brooklyn) found that a number of participants in the city’s Summer Youth Employment Program were inadvertently pushing their families over the benefits eligibility limits with their earnings of as much as $2,150.

So State Senate and Assembly passed legislation last week that would newly exclude that income from a family’s total when it comes to calculating public benefits eligibility.

“We do not want to discourage our young adults from participating in the Summer Youth Employment Program,” said Eichenstein.

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