For Immediate Release
Raising the Minimum Wage Would Take at Least 1.7 Million Workers Off Public Assistance and Reduce Safety Net Spending by at Least $7.6 Billion a Year
WASHINGTON - The value of the minimum wage has been so severely eroded by inflation that businesses today are paying minimum wage workers 25 percent less than they were in the 1960s. Policymakers’ failure to raise the wage floor has contributed to decades-long wage stagnation and caused an increasing number of full-time workers to turn to public assistance programs to make ends meet. In Raising the Federal Minimum Wage to $10.10 Would Save Safety Net Programs Billions and Help Ensure Businesses Are Doing Their Fair Share, economic analyst David Cooper finds that if the minimum wage were raised to $10.10 an hour, 1.7 million Americans would no longer rely on government assistance. This would reduce government spending on current income-support programs by more than $7.6 billion per year, allowing this money to be re-purposed into either new programs or expansions of existing programs to fight poverty. The public saves 24 cents for every additional dollar paid by employers to workers under a minimum wage increase to $10.10.
“Essentially, low-wage employers are being subsidized by the taxpayer. Prices are going up, but paychecks are not, and taxpayers are making up the difference,” said Cooper. “We’ve long known that raising the minimum wage would help millions of workers and give the economy a boost—now we know it’s a winning idea for taxpayers, too.”
Cooper examines workers who receive benefits from at least one of the seven primary means-tested public assistance programs: 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; Medicaid; and the Temporary Assistance for Needy Families program (TANF) or equivalent state and/or local cash assistance programs. Approximately half of workers in the bottom 20 percent of wage earners rely on at least one public assistance program.
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The Economic Policy Institute, a nonprofit Washington D.C. think tank, was created in 1986 to broaden the discussion about economic policy to include the interests of low- and middle-income workers. Today, with global competition expanding, wage inequality rising, and the methods and nature of work changing in fundamental ways, it is as crucial as ever that people who work for a living have a voice in the economic discourse.