New Study Reveals Financial Pitfalls Facing Virginia’s Direct Care Workforce

A new study released by PositiveAge, a LeadingAge Virginia Foundation, reveals a significant and often hidden financial risk for Virginia’s aging services direct care workers: The Benefits Cliff. The report, Tipping Point: Exploring the Risk of Benefits Cliffs Among Direct Care Workers in Virginia, details findings from a research study led by partner, PHI, a national organization committed to strengthening the direct care workforce by producing robust research and analysis, leading federal and state advocacy initiatives, and designing groundbreaking workforce interventions and models.

The Tipping Point report finds that small increases, such as a $5,000 raise, can often lead to a disproportionate loss in public benefits and higher tax burdens. These sudden financial setbacks can leave workers worse off even after receiving a raise, with some facing effective marginal tax rates (EMTRs) of over 100%. The findings from this study spotlight the urgent need for policy reform to ensure higher wages don't come at the cost of essential supports. While PositiveAge prepares for the next phase of work of introducing innovative solutions to combat the benefits cliff issue, LeadingAge Virginia will be advocating for policy solutions in the 2026 General Assembly to stabilize and strengthen this vital workforce.

key findings

"The median share of each hypothetical $5,000 income increase that is lost to reduced benefits and taxes is 35 to 37 percent statewide—percentages that are equivalent to the tax rates for the wealthiest Americans."

"The cumulative percentage of workers experiencing at least one benefits cliff is 9 percent after the first hypothetical $5,000 income increase, 13 percent after the second, and 16percent after the third."

"In interviews, direct care workers described unpredictable income changes—driven by variable schedules and pay rates—that frequently led to benefit losses and deep financial hardship."

About LeadingAge Virginia

LeadingAge Virginia is an association of not-for-profit and mission-driven aging services organizations serving residents and clients across the aging services continuum, including life plan/continuing care communities, senior housing, assisted living, nursing homes, adult day centers, and home and community-based services. We work together to expand the world of possibilities for aging.

About positiveage

PositiveAge, a LeadingAge Virginia Foundation, is an emerging nonprofit focused on transforming the aging experience in Virginia by building coalitions and developing innovative solutions to promote positive aging.

About phi

PHI is a national organization committed to strengthening the direct care workforce by producing robust research and analysis, leading federal and state advocacy initiatives, and designing groundbreaking workforce interventions and models. For more than 30 years, we have brought a 360-degree perspective on the long-term care sector to our evidence-informed strategies. As the nation’s leading authority on the direct care workforce, PHI promotes quality direct care jobs as the foundation for quality care.