Minimum Wage Boost Could Cut Food Stamp Spending by $4.6B

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Don’t like food stamps? Raise the minimum wage. That’s the finding of a new study by the Center for American Progress, a left-leaning Washington, D.C., think tank.

The report says a hike in the minimum wage from $7.25 to $10.10 per hour, as proposed by the Obama administration, would cut the federal food stamp bill by $4.6 billion a year and reduce enrollment in the program by up to 9.2 percent.

The report is one of the first to study how increasing the federal minimum wage would impact the Supplemental Nutrition Assistance Program or SNAP, commonly known as food stamps. SNAP reaches about 1 in 7 Americans and had a hefty $78 billion price tag in 2011.

University of California economist Michael Reich co-authored the Center for American Progress report. According to The Washington Post:

“What is the best way to make people independent and be able to sustain their standard of living without having to depend on government support?,” Reich asked. “It turns out that raising the minimum wage helps make people more independent while saving the government money.”

It’s estimated that taxpayers spend about $7 billion a year to subsidize low-wage fast-food workers – which we talked about here — and $900 million a year helping bank tellers – which we discussed here. SNAP represents a chunk of those funds.

Opponents of an increased minimum wage argue that it would eliminate some jobs and slow job growth.

What do you think of the reported link between hiking the minimum wage and decreased dependency on government programs, like food stamps? Share your comments below or on our Facebook page.

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Comments & discussion

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  • Robert

    Big surprise. Another prime example of the need for better education and understanding of economics in America. Just one method for our government to ween and minimize the public demand for so called entitlements. Start with putting more of the burden on industry. This is just one of the positive effects of higher minimum wage. It is also just one aspect of a larger plan necessary to balance the power of industry, government and the public. The saddest affront to positive change is: politics and special interests. Guess where the balance of power is today.

  • bigpinch

    If a law dictating a minimum wage increase isn’t “government support” then I don’t know what is. It is a tax on employers imposed by the government.

  • bigpinch

    The “Poverty Threshold” for a family of three, according to the U.S. Dept. of Health and Human Services is $19,530. Supplemental Nutrition benefits are available to a three person family earning less than 130 percent of the threshold or
    $25,389.
    If we assume that this theoretical family hasn’t yet been redefined by the Left as beingother than a husband, a wife, and a child, then both parents will have to work. A single worker earning $10.10 per hour and working a 40 hour week will only earn $21,008, annually.
    The “new normal” is more like 32 hours a week. So, if both parents are working for the increased minimum wage they’ll
    bring home $33,613, assuming paid vacations and holidays. Mom can also rest assured that while she’s breaking her back in the back room at Wal-mart, somebody else if feeding her baby and teaching it to say, “Da-da.” But, thank God, she won’t be buying groceries with food stamps.
    According to the USDA’s Center for Nutrition, the annual cost of food for this family ofthree will range between $5,928 and $11,772. The lower figure holds if all meals are prepared at home and nobody buys a bag of peanuts or a soda for a treat. But
    if both parents are working it’s likely that there won’t be enough time to cook all the meals at home and brown-bag it every day, so the lower figure is unrealistic. Well, if the lower figure is used, this family of three will now have $19,470 dollars to spend on low-cost items like rent, transportation, utilities, child care and health care. Home mortgage? Forget about it.
    So why should both parents work when they can qualify for $4,791 in Supplemental Nutrition benefits as long as their household income stays below $25,398? That’s a net income of $30,189 and they don’t have to pay for child care. Where’s the incentive to get off food stamps?
    Like most ideas culled from the groves of Academe and the Obama administration, they’re not worth the paper they’re scribbled upon.

    • TeeTime

      What’s your answer to the SNAP dilemma? You come across as a very informed citizen. Don’t just scold, be bold, and offer positive input.

      • bigpinch

        Well, I don’t have time to write a comprehensive answer to your question, nor time to re-write “The Wealth of Nations,” here.
        First, I wasn’t “scolding.” Second, I don’t see SNAP as a “dilimma.” Third, my input was positive in that I tried to give a description of the situation. The conclusions of the study and Obama’s stance of raising the minimum wage to $10.10 an hour is pandering and intellectually offensive. It is to be dismissed out of hand for the evil trash that it is and that’s not being negative.
        The people must and will eat. If the theoretical family acts in self-interest to feed themselves and not be entirely swallowed up, have their life as a family sacrificed to low-wage work, it is because they are making the smartest choices they can make under the circumstances. For further discussion, see Michael Smiley Gawthrop’s comment.

  • Michael Smiley Gawthrop

    Yet another study that doesn’t look at the base problem of why so many people are working in low skill and consequently low pay jobs because there is nothing better available. I’ve long argued the solution to so many people on minimum wage not being able to make ends meet isn’t to raise minimum wage, but create opportunities for better careers so people aren’t stuck in minimum wage.

    • bigpinch

      Amen.