Center for American Progress

How to Reduce Poverty and Save Taxpayers $4.6 Billion Per Year

How to Reduce Poverty and Save Taxpayers $4.6 Billion Per Year

Raising the minimum wage to $10.10 per hour will cut spending on federal assistance programs and strengthen families, the economy, and our nation.

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Alex Robles joins dozens of sign-holding protesters at a rally against low wages in front of a McDonald's in December 2013. (AP/Ross D. Franklin)
Alex Robles joins dozens of sign-holding protesters at a rally against low wages in front of a McDonald's in December 2013. (AP/Ross D. Franklin)

A single number can change the public debate on an issue that seems stalled. Two weeks ago, such a number appeared in a report by the Center for American Progress and the Institute for Research on Labor and Employment that connects a higher minimum wage with decreased costs in the federal Supplemental Nutrition Assistance Program, or SNAP, formerly known as food stamps.

The number is $4.6 billion, and it represents how much money taxpayers will save annually if the federal minimum wage is raised to $10.10 per hour. Paying workers a higher minimum wage will reduce their need for federal assistance, creating huge savings for the taxpayer-funded program.

The report, “The Effects of Minimum Wages on SNAP Enrollments and Expenditures,” documents the connection between higher wages and lower public spending on SNAP in a clear and measurable way. For instance, every $1 increase in family earnings brings a 30 cent drop in SNAP benefits. Given such savings, political opponents of a higher minimum wage who also want to slash safety net programs such as SNAP will have a hard time justifying their actions. After all, if they want to cut government spending, the best way to do so is by raising the minimum wage.

“You can’t have it both ways,” said Melissa Boteach, Vice President of the Poverty to Prosperity Program at the Center for American Progress. In an interview for this column, Boteach pointed out the multiple contradictions in conservative arguments that complain about government spending programs but ignore the solution staring them in the face.

Boteach, who was part of the team that commissioned the report, said that conservatives should applaud how a higher minimum wage would boost the economy. “It’s a win-win all around,” she said. “Workers win, taxpayers win, and small businesses and the economy win when workers have more money to spend.”

The number $4.6 billion also reveals how businesses that pay low wages are part of the problem. I don’t know about you, but I find it irritating that my tax dollars are subsidizing corporations whose wages are so low that their workers qualify for basic government assistance.

Don’t get me wrong—SNAP is an effective program, and conservative politicians should not slash its budget. It feeds families, improves the health of low-income children, and is a smart investment in our nation’s well-being and future. But why should I pick up the tab for low-wage employers—such as Wal-Mart, Target, McDonald’s, Taco Bell, and Pizza Hut—whose incomes are soaring?

The fact is that millions of these employers’ workers make poverty-level wages. The current federal minimum wage of $7.25 comes to only $15,080 per year for full-time workers, which falls $4,000 below the federal poverty line for a family of three. Compare those numbers to Wal-Mart’s profits of $17 billion last year.

When it comes to these realities, states and localities are way ahead of the federal government. More than 20 states have a minimum wage higher than the federal one, and momentum to raise the minimum wage is building in other states as well. Public support is broad and strong. According to Gallup, more than three in four Americans would vote for a higher minimum wage, including a majority of Republicans, at 58 percent; independents, at 76 percent; and Democrats, at 91 percent.

One reason this issue has such strong support is people believe that workers should make enough to be able to support their families if they work full time. Earning a fair wage lets them do that.

Unfortunately, many conservative members of Congress are out of step with the public on this issue and out of touch with the facts, not to mention with the $4.6 billion taxpayers will save if given a higher minimum wage. One way to get the process moving, says Boteach, is for concerned House members to sign a discharge petition and force a vote on raising the minimum wage. That way, elected officials will be held accountable on this issue, and all Americans can see where their representatives stand.

In essence, raising the minimum wage is about fairness and the value of work. It expresses a contract, or covenant, among workers, employers, and the government that each segment of society needs to do its part to make our economy and nation strong.

In his homilies and remarks, Pope Francis often speaks of the dignity of work. He recently celebrated his first anniversary as pope, so let’s let him have the last word. “We get dignity from work,” he said, speaking on the Feast of St. Joseph the Worker. “Work … fills us with dignity, makes us similar to God who has worked and still works, who always acts. I address a strong appeal that the dignity and safety of the worker always be protected.”

Sally Steenland is Director of the Faith and Progressive Policy Initiative at the Center for American Progress. Steenland, a best-selling author, former newspaper columnist, and teacher, explores the role of religion and values in the public sphere.

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Sally Steenland

Former Director, Faith and Progressive Policy Initiative

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