By definition, government spending on a means-tested program should decline as average earnings increase, insofar as benefit levels fall with increased earnings and insofar as the earnings increase makes some individuals ineligible for any benefits. Both of these conditions are satisfied in the case of the effect of minimum wages on SNAP benefits. SNAP benefits decline 30 cents for every 1 increase in family earnings and phase out entirely at about the federal poverty level. Low-wage workers are disproportionately enrolled in SNAP. A minimum wage increase that lifts many families out of poverty should therefore reduce public expenditure on this program.
But the relationship may be more complex. If a minimum wage increase reduces employment, thereby adding to the number of unemployed, the number of SNAP recipients could increase. SNAP recipients who are unemployed, disabled, or retired will not be affected by a minimum wage increase. Conversely, if many SNAP recipients have earnings that already bring them close to becoming ineligible for the program, a minimum wage increase may have a very small effect on SNAP expenditures. The quantitative effect of minimum wages on SNAP spending is not self-evident. It requires a causal analysis.
...According to the finding in this report a 10 percent increase in the minimum wage reduces SNAP enrollment by between 2.4 percent and 3.2 percent and reduces program expenditures by an estimated 1.9 percent. Taking into account each state’s 2014 minimum wage level, we apply these results to the legislative proposal put forward by Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA) to raise the federal minimum wage to $10.10 per hour. Our results imply that the effects of the Harkin-Miller proposal on wage increases would reduce SNAP enrollments by between 6.5 percent and 9.2 percent (3.3 million to 3.8 million persons). The total anticipated annual decrease in program expenditures is nearly $4.6 billion, or about 6 percent of current SNAP program expenditures."
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Six of one, half a dozen of the other?
3 comments:
It is an odd little corner being looked at, it took me a moment to realize how small, a segment of a segment of a segment of the economy. It can hardly tell you anything, but what is being asked? How the policy affects people or how the policy affects government or both?
As to people, this would be people who 1) are working 2) work at minimum wage 3) receive benefits (so are among the group who even look to government for help, there are people who don't even think of that) 4) receive this specific benefit once called food stamps.
How does one affect the other? This is econometrics. It is two cups of water on a balanced platform, but it is only two cups of fifteen hundred cups, large and small, shot glasses to gallon containers, all balancing on a platform. You take water from one and pour into another and ask what? How the two glasses feel? How the balance board is upset? How everything else was sloshed a little, a lot? What got splashed out? Who got more? Where it went?
A better argument in my view is to say harshly, "Now look, Agitator in Chief, your administration and the Treasury Dept. under it chose to manage its own debt by injecting trillions new dollars into the economy, your economy now, your puffed up money, each share now incrementally worth less, buys less, large purchases more distant. Not a problem when you already have millions and the largest surplus portion of that flows in the same channels your new money flows, and collects in the same pools, stock market higher, the money has to go someplace when it does not go to creating employment, but it is a serious problem indeed for "the folks" on the bottom living paycheck to paycheck where every dollar counts. You diluted their dollars. So yes, of course do something about that. But unfortunately being both economically retarded and ideologically fierce causes you to conclude it is employers and not you who must make up the difference there. Someone else must fix the problem for "the folks" you fucked up.
You fucked up, someone else pays, someone else fixes. Typical. Shiftless. Actually, the reverse, shiftful. You've taken shiftlessness to its full fruition of shiftfulness.
Give all people on welfare more money directly off your M1 money presses. Give all people on Social Security more money to compensate for the bulge in M1 that your Treasury and now weirdly your Federal Reserve created that fucked up the Folks ™ dependent on liquid money in cash form.
Government created this problem with its own money in its own economy not employers. If anything, government should be paying employers to help increase minimum wage naturally not by law and not burdening them, but Obama does not know that because Obama knows Jack Shit about the incredibly complex interrelationships of econometrics.
The absurdity of demagoguing minimum wage, his absurdity, is recognizable from children's literature. He is the character Wizard of Oz pulling the levers blowing smoke, the tiniest of dogs hopped out of a basket to pull back the curtain, and tasking unnecessarily do something he wants done, incompetent in his own task, expensive as hell in puffery, and the whole time it is one's own choice to wake up and be home in familiar surroundings.
A different fiscal cliff.
Great rant, Chip. Confessionarlily, I know absolutely jack about the economy, except for little tidbits like printing dollars creates inflation.
EMD, fabulous chart, thanks.
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