New report reveals raising the minimum wage to $10.10 will save the federal government $46 billion in 10 years.
Washington, D.C. — A report released Wednesday by the Center for American Progress verifies that boosting the wages of low-wage workers through raising the minimum wage will lower government expenditures on nutrition assistance and reduce participation in the Supplemental Nutrition Assistance Program, or SNAP. Liberals and conservatives alike have long expected that raising the minimum wage for low-income workers would reduce government spending on certain safety net programs. The report is the first serious analysis to offer evidence that this claim is absolutely true.
The groundbreaking research, commissioned by CAP and authored by economist Michael Reich and Rachel West of the University of California at Berkeley, finds that raising the minimum wage to $10.10 per hour would lower government spending on SNAP by $46 billion over the next 10 years.
The report, which includes a state-by-state breakdown of savings and enrollment reductions, shows that the impact of raising the minimum wage to $10.10 an hour in Michigan would produce the following results:
- Approximately 110,200 people in Michigan will no longer need SNAP
- The reduction of people in Michigan using SNAP will save the federal government $205.4 million annually
“This research underscores that the best way to reduce spending on nutrition assistance is not cutting food aid for families struggling against hunger, but improving the bottom lines of families by ensuring that they are not earning poverty wages to begin with,” said CAP President Neera Tanden. “Lawmakers calling themselves fiscal conservatives should wholly embrace a minimum-wage increase that will generate $46 billion of savings in nutrition assistance aid alone.”
According to the findings in the report, a 10 percent increase in the minimum wage would reduce SNAP enrollments by between 2.4 percent and 3.2 percent and reduce program expenditures by an estimated 1.9 percent. Taking into account each state’s 2014 minimum-wage level, the results are then applied to the current legislative proposal to raise the federal minimum wage to $10.10 per hour. The results imply that a raise in the minimum wage would reduce SNAP enrollments by 3.3 million to 3.8 million people. The total annual decrease in program expenditures is nearly $4.6 billion, or about 6 percent of current SNAP program expenditures. The report also includes a state-by-state breakdown of savings and enrollment reductions.
Read the report: The Effects of Minimum Wages on SNAP Enrollments and Expenditures by Michael Reich and Rachel West
- Listen to an audio recording from the CAP Action press call featuring Senator Brown, Professor Reich, and CAP President Neera Tanden discussing this report.
- INTERACTIVE MAP: Raising the minimum wage to $10.10 would cut taxpayer costs in every state
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