Tipping Point: Exploring the Risk of Benefits Cliffs Among Direct Care Workers in Virginia
July 31, 2025
Direct care workers provide vital support to older adults and people with disabilities, yet many live in poverty due to low wages and unstable hours. To make ends meet, they often depend on public benefit programs to survive. Because of strict program rules, modest income gains can reduce or eliminate access to these public benefits and increase workers’ tax burden, offsetting income increases or erasing them altogether—a situation known as a “benefits cliff.” To understand this issue in Virginia, PHI, in partnership with LeadingAge Virginia and PositiveAge, conducted a study using data modeling and worker interviews to analyze the financial impact of hypothetical $5,000 income increases.
Key Takeaways
A pay raise can be a financial setback for many direct care workers in Virginia. They can lose 35-37% of a $5,000 income increase to lost public benefits and higher taxes, an effective tax rate comparable to that of the wealthiest Americans.
