By Izhar Harpaz and Sopan Deb
For millions of people struggling with the Great Recession, the American dream had become just another jaded catchphrase. But for single dad and Army veteran Dan Greeley, a Longmont, Colo., resident, the future looked promising.
In 2011, Greeley was about to be promoted to director of operations at Sister Carmen, a nonprofit community center and food pantry, and he was certain that his higher income would finally allow him to fulfill a dream: to buy a house for his three young children, ages two, four and six.
“Everything I do is for my kids,” Greeley told NBC News' Lester Holt in an interview airing Friday, March 15 at 10pm/9CDT on NBC's Rock Center with Brian Williams. “I can live in an apartment and be happy. But they want a house, they want a backyard. They’re going to get a house and they’re going to get a backyard.”
But instead of getting a raise, Greeley was forced to take a pay cut.
He fell victim to what is known as the "Cliff Effect," when a small increase in a family's income can lead to an abrupt termination of an essential public benefit like food stamps, health insurance or child care assistance.
For Greeley it was child care. As the single parent of three young children he needed lots of it and it came at a high cost -- $2300 a month, almost all of his take-home pay. And that was before his rent, car payments, utilities and health care bills. Not to mention the money he needed to put food on the table.
“The way I was brought up, we didn't ask for help,” Greeley said. “We just figured it out and this was the first time I had to ask for help.”
As long as he earned below $50,000 a year, Greeley qualified for as much as $1,700 a month through Colorado’s Child Care Assistance Program (CCAP), a fund jointly subsidized by the state and federal government to support working parents. But as a result of budget cuts in 2010, Boulder County lowered the income limit to 185 percent of the federal poverty level for a family of four – about $41,000. That was $3000 less than what Greeley was making. And even though his upcoming raise would have increased his income a bit more, it would not have been nearly enough for Greeley to pay for his kids’ child care on his own; Greeley would have been earning more, but would in fact be worse off.
“My stomach was in knots,” Greeley said. “Supposed to get a raise, and instead, I took a pay cut.”
Sister Carmen CEO Suzanne Crawford, Dan’s employer, couldn't believe it when her newly minted director of operations showed up ashen-faced at her office. “For me, it was really educational,” she said. “Because I would never in a million years expect an employee to come in and ask me for a pay cut.”
She agreed to cut his pay, but with reservations.
“I was angry, as an employer, that somebody that works so hard and is so dedicated to the organization has to take a pay cut in order to keep working here and to have care for his children,” Crawford said. “It’s just really frustrating.”
Roadblocks to self-sufficiency
“Parents who are trying to work at low or moderate wage jobs and raise kids often run into roadblocks where the system just doesn't make sense,” said Olivia Golden, an expert on child and family assistance programs at the Urban Institute, a non-partisan economic and social policy research organization based in Washington, D.C.
A possible solution would be to gradually phase out benefits as a family’s income grows rather than cutting it off. But the problem, Golden said, is that federal support for child care assistance is capped, and in a weak economy states cannot generate enough additional revenue to assist all those in need.
“It's like trying to take a sheet that's not big enough for the bed and pull it and tug it across,” Golden said. “States find themselves trying to use those dollars to meet a need that's much bigger than what they can meet.”
The federal government estimates that one in three families who are eligible for child care assistance do not receive any help at all. And the ones who do are subject to income limits that may fit a state or county’s tight budget – but do little to help families become self-sufficient. Low-income working families can face other benefit cliffs when they cross income thresholds that lead to loss of food stamps or Medicaid, but Golden said that the loss of child care assistance is perhaps the most significant for those families like Greeley’s who are on the cusp of a middle class life.
“We've been talking a lot about the middle class and the American dream,” Golden said. “And to me, people who are working hard, trying to raise their kids, and on the edge of that middle class life, it should be one of our priorities to help them gain the stability they need to have that life that we all aspire to.”
Searching for a home
Greeley wakes up every morning at 3:00 a.m. An hour later, he packs his children’s bags and then drops them off at a day care facility that has been able to accommodate his early work schedule. At 4:00 p.m., he’s back with the kids to start what he considers his “real job.”
“I get home. I got food to cook. I got bath time. I’ve got play time. I’ve got school homework,” Greeley said. “Yeah, I don’t get a break. But I wouldn’t have it any other way. I’m going to say that. I love it, every minute of it. It’s my life.”
A life Greeley hoped would include a home he and his kids could call their own. But his pay cut threatened his goal of buying a home. While it managed to save his child care benefits, it also lowered the mortgage he qualified for. By June 2012, after six months of searching, Greeley still had not been able to find a house he could afford. His first six offers were rejected.
“The American Dream is owning a home,” Greeley said. “I fought for it. I served my country for it. And I felt like I was getting left behind.”
When a doubled income creates hardship
Colorado’s Gov. John Hickenlooper is trying to figure out how to lend a helping hand to working families like Greeley’s.
“That's the age-old challenge,” Hickenlooper said, “You want to provide a hand up, not a hand out.”
The governor came face-to-face with the Cliff Effect when he hired his executive assistant, a single mother who had been earning $9 an hour at her previous job.
“We said, ‘We’ll start you at $16 an hour, almost double.’ When she sat down and looked at what that did to her entire universe -- she would lose her health care, she’d lose her child care,” Hickenlooper said. “We almost doubled her income and she was going to come out worse.”
The governor recently signed legislation that would help families with child care even after they exceed the income limit. Now he has to find the money to pay for it.
“We have to look at our priorities. Certainly child care and early childhood education is critically important to our state,” Hickenlooper said, “If we’re going to add something, we’ve got to figure out where it’s going to come from.”
The governor fears that not giving working families the help and incentives to rise out of poverty will create a collective disillusion that may hamper the nation’s recovery.
“If people aren't fully committed to doing better, and getting a promotion, and working harder, then the business is never going to do as well as it can,” Hickenlooper said. “And if your businesses aren't doing well, then the country's not going to do well.”
On a sunny day in July, Greeley finally got lucky. For the sake of his children he made another offer on a house, and was surprised to learn that the offer -- the seventh one on the seventh house -- was accepted.
“I was happy,” Greeley said. “I was so excited to come and tell the kids, ‘Hey, you got your new house, the one you love.’”
The good news did not stop there. As he was moving into his new home, Greeley found out that Boulder County, helped by a property tax hike, had found some more money in its coffers and increased the child care income limit. That meant that after three years Dan was finally able to get that raise.
“What a feeling,” Greeley said.
Editor's Note: Lester Holt's full report, 'Cliffhanger' airs Friday, May 24 at 10pm/9c on NBC's Rock Center with Brian Williams.