This issue brief examines the use of public assistance programs by low-wage workers and assesses how raising the federal minimum wage to $10.10 over three years—as proposed by the Fair Minimum Wage Act of 2014, a bill introduced by Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.)—could affect utilization rates, benefit amounts, and government spending on these programs.
The key findings are:
- About half of all workers in the bottom 20 percent of wage earners (roughly anyone earning less than $10.10) receive public assistance in the form of Medicaid and the six primary means-tested income-support programs, either directly or through a family member. These programs include the Earned Income Tax Credit (EITC); the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps; the Low Income Home Energy Assistance Program (LIHEAP); the Supplemental Nutrition Program for Women, Infants, and Children (WIC); the Section 8 Housing Choice Voucher program; and the Temporary Assistance for Needy Families program (TANF) or equivalent state and/or local cash assistance programs.
- Workers in the bottom 20 percent of wage earners receive over $45 billion in government assistance each year from the six primary means-tested income-support programs.2
- Roughly half of all public assistance dollars from means-tested income-support programs that go to working individuals go to workers with wages below $10.10.
- If the minimum wage were raised to $10.10, more than 1.7 million American workers would no longer rely on public assistance programs.
- Raising the minimum wage to $10.10 would reduce government expenditures on current income-support programs by $7.6 billion per year—and possibly more, given the conservative nature of this estimate. This would allow these funds to be repurposed into either new programs or expansions of existing programs to further leverage the poverty-fighting impact of this spending.3
- Safety net programs would save 24 cents for every additional dollar in wages paid to workers affected by a minimum-wage increase to $10.10.
Chosen excerpts by Job Market Monitor. Read the whole story at Raising the Federal Minimum Wage to $10.10 Would Save Safety Net Programs Billions and Help Ensure Businesses Are Doing Their Fair Share | Economic Policy Institute.