By NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — A team of MBA students from MIT’s Sloan School of Management—one of the world’s top-ranked business schools—worked with the Hutchinson Community Foundation on a research project exploring economic disparities between two distinct areas of Hutchinson and Reno County where life expectancy rates differ by 13 years. Of particular focus was the cliff effect, which occurs when working families lose public support benefits
faster than they can earn income to replace the lost resources.
"Shawna Logue at the Salvation Army started having conversations about the cliff effect," said Kari Mailloux with the Hutchinson Community Foundation. "We realized that was a gap in understanding in our community. Why were people working so hard to get ahead, but still falling off this cliff and needing different kinds of assistance that we didn't think they were getting?"
The cliff effect is where a raise from an employer actually makes an economic situation worse.
"You might get a pay raise, but you might lose your child care or housing," Mailloux said. "In the end, your net increase in wages actually leads you to be worse off because you lose those benefits. A lot of times, people don't see that coming, and so it feels like you're falling off a cliff."
It's important to note that there are times when good employees may have to turn down raises or leave for other jobs because of the cliff effect.
"There's no ladder out of getting this raise and getting to the next level of whatever society and the system has set up for people, it's just, okay, now you don't qualify for this, you kind of have to deal with it."
The hope is to be able to engage the community and policymakers to find ways to fill in the gaps when people's income grows so they can become more self-sufficient.