Minimum wage increase and SNAP spending reductions, compared

"How do minimum wage policy increases affect enrollments and expenditures on means-tested public assistance programs? In this report we address this question for the case of the Supplemental Nutrition Assistance Program, or SNAP, formerly known as the food stamp program.

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? 

SNAP drops back to pre-stimulus rates

"The exact reduction that families will see beginning Nov. 1 depends on the recipients' situation, but a family of four with no changes in circumstance will receive $36 less per month, according to the USDA.

...Others are less worried about the immediate cuts. Parke Wilde, associate professor at the Friedman School of Nutrition at Tufts University, said that in real dollars, the cuts brings the program's aid levels back in line with where they were in the mid-2000s, before benefits were boosted as part of the American Reinvestment and Recovery Act.

"That's neither great nor terrible," Wilde said.

He said the bigger issue is the debate in Congress over whether, and how much, the SNAP program could be cut in years to come. The House of Representatives passed a bill in mid-September that would eliminate about $39 billion form the SNAP budget over 10 years, while the Senate has approved a bill that makes much smaller cuts to the program."

CNBC