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Idea of the Day: How the Minimum Wage Affects SNAP

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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.

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This is part of a regular column: Idea of the Day

For more from the same column, click here