LB 108, as amended by AM 975, could help Nebraskans continue to put food on the table as they advance in the workplace, effectively incentivizing Nebraska workers to continue to strive for self-sufficiency and providing a pathway out of government assistance.

The bill would expand access to the Supplemental Nutrition Assistance Program (SNAP) to those with incomes of 165% of the federal poverty level.[1] This benefit expansion would not only help more families become eligible for the program but also help the nearly 170,000 Nebraskan families currently enrolled in the program.[2] It would help lessen the cliff effect that occurs when raises and promotions push workers above the current state SNAP threshold of 130% FPL.

The loss of SNAP benefits and other support programs can quickly wipe out the increase in income from promotions and create a disincentive for Nebraskans to seek or accept raises and advancement opportunities.[3] For example, right now in Nebraska, a $0.43 raise can cause a $16,000 decrease in annual resources for some parents working full time and raising two children. In order to make up for such a drastic loss in resources, the parent would need to work an extra 24 hours a week.

This is why the cliff effect is considered among the greatest barriers to self-sufficiency for low-income families,[4] as it results in pay raises being rejected, more hours being worked and fewer people pursuing educational opportunities that may also result in an increase in income.[5]

Expanding SNAP not only helps families, but also employers, who may face significant churn in lower-paying positions because of the cliff effect, meaning they may be “perpetually recruiting, hiring and training for the same entry-level positions,” according to the National Conference of State Legislatures. “To the detriment of all, the workforce shortage is not filled, families do not exit social support systems, and economic growth is stymied.”[6]

Employers also benefit from the increased consumer spending power created through SNAP. Studies show that for every $1 of benefits redeemed, local economies see $1.70 in economic growth during a recession.[7] This economic boost comes at little cost to the state government, as the federal government pays the full cost of SNAP benefits and splits the cost of administering the program with states.

In Fiscal Year 2019 (FY19), more than $220 million in SNAP benefits were issued to Nebraska residents at a cost to the state of $19 million in administrative expenses.[8] If all of those benefits were redeemed in the state, it would have produced nearly $375 million in economic activity, starting with the local grocer and boosting local economies throughout the state.

NET Nebraska will stream the debate on LB 108 live.

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[1] Voices for Children in Nebraska, “Family Bottom Line,” accessed at https://voicesforchildren.com/data-research/family-bottom-line/ on April 14, 2021.

[2] Center on Budget and Policy Priorities, “Nebraska, Supplemental Nutrition Assistance Program,” Jan. 15, 2021, accessed at https://www.cbpp.org/sites/default/files/atoms/files/snap_factsheet_nebraska.pdf on April 20, 2021.

[3] The chart includes SNAP, the child care subsidy, the Earned Income Tax Credit, the Child Tax Credit, as well as state and local taxes paid. It doesn’t include medical expenses or costs in either the resource calculation or the self-sufficiency calculation.

[4] Derek Thomas, “The Cliff Effect: One Step Forward, Two Steps Back — Policy Design as a Disincentive for Economic Mobility,” public IN review, accessed at https://journals.iupui.edu/index.php/spea/article/download/16414/pdf_5/23094 on April 20, 2021.

[5] Kayla Goldfarb, “Pushed over the Edge with Nowhere to Land; summarizing key qualitative findings concerning the benefit cliff effect in Connecticut,” Connecticut Association for Human Services, March 2019, accessed at https://www.cga.ct.gov/hs/related/20200130_Benefits%20Cliff%20Informational%20Forum/Statement-Liz%20Fraser,%20Connecticut%20Association%20for%20Human%20Services.pdf on April 20, 2021.

[6] National Conference of State Legislatures, “Addressing Benefits Cliffs,” accessed at https://www.ncsl.org/research/human-services/addressing-benefits-cliffs.aspx#:~:text=The%20cliff%20effect%20refers%20to,some%20or%20all%20economic%20supports.&text=Often%2C%20wage%20increases%20result%20in,only%20a%20small%20overall%20increase on April 20, 2021.

[7] Mark Zandi, “The Economic Impact of the American Recovery and Reinvestment Act,” Jan. 21, 2009, accessed at https://www.economy. com/mark-zandi/documents/Economic_Stimulus_House_Plan_012109.pdf on April 20, 2021). This estimate is in line with modeling done by the USDA’s Economic Research Service in 2010, when the agency found that every dollar of SNAP benefits redeemed grew the gross national product (GDP) by $1.79 during an economic downturn. See Kenneth Hanson, USDA Economic Research Service, “The Food Assistance National Input-Output Multiplier (FANIOM) Model and Stimulus Effects of SNAP,” October 2010, accessed at https://www.ers.usda.gov/webdocs/publications/44748/7996_err103_1_.pdf on April 20, 2021.

[8] Data obtained directly from Nebraska’s Legislative Fiscal Office.