For years, the union-backed Fight for $15 campaign has argued that raising minimum wages will curb low-wage workers’ reliance on government assistance programs—saving taxpayers money.
Not so, says a new study that found federal and state minimum-wage boosts have had no statistically significant impact on working-age adults’ net use of several such programs, including Medicaid and the Supplemental Nutrition Assistance Program formerly known as the food-stamp plan.
The study, partly funded by the right-leaning Employment Policies Institute, contends a $15 minimum wage is poorly targeted to recipients of these programs. Among those who would be affected by a $15 minimum wage, just 12% are SNAP recipients and just 10% are Medicaid recipients.
It’s a less-explored part of a years-old debate between economists who have researched the hot-button topic of minimum wage and its effects on the U.S. economy.
The difference with this new report, being released Friday, its authors say, is that it looks at a wider swath of government assistance programs over a longer period of time and across multiple major data sources, including those with information on welfare caseloads and expenditures.
“We were trying to bring some more harmony and understanding across the different studies” that have already been conducted, said Joseph Sabia, an associate professor in San Diego State University’s economics department. He conducted the research with graduate student Thanh Tam Nguyen.
In addition to SNAP and Medicaid, the study looked at the effect of minimum wage increases on participation in four other public programs: the Free and Reduced Price School Nutrition Program, Housing Assistance programs, Temporary Assistance for Needy Families, and the Special Supplemental Nutrition Program for Women, Infants and Children. It used data from sources including the Current Population Survey, the Survey of Income and Program participation, the U.S. Department of Health and Human Services, and the National Income and Product Accounts. The examination spanned three decades and 50 states plus the District of Columbia.
Mr. Sabia said higher minimum wages did help some workers get off the welfare rolls but others stayed stuck because of adverse employment effects such as a reduction in jobs or hours worked. While each 10% minimum wage increase resulted in reduced receipt of SNAP and WIC, for example, the amounts weren’t statistically significant and at the same time the receipt of school-nutrition assistance and housing assistance increased.
“Minimum-wage increases redistribute the income of low-skilled workers, helping some, hurting others,” Mr. Sabia said, and added that there’s scant evidence minimum-wage boosts reduce welfare caseloads or public spending on needs-based public programs. He said expanding the earned-income tax credit program would be a “far better” tool.
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