Washington, D.C. — Today in Congress, Sen. Patty Murray (D-WA) and Rep. Bobby Scott (D-VA) are expected to introduce a new proposal to raise the federal minimum wage to $12 per hour by 2020. This new legislation, to be jointly introduced in both the Senate and the House as the Raise the Wage Act, is a positive commitment by lawmakers to raise the wage for struggling workers and their families. It will not only allow for increased earnings and a reduction in poverty, but will also lead to beneficial taxpayer savings, including more than $5 billion per year in Supplemental Nutrition Assistance Program, or SNAP, costs.
America’s current minimum wage of $7.25 is a poverty wage and leaves many full-time workers turning to federal and state assistance programs such as Medicaid and food assistance to make ends meet, with U.S. taxpayers footing the bill. Employers should be paying a good, living wage instead of shifting that burden onto taxpayers.
Last year, the Center for American Progress found that minimum-wage increases lead to statistically significant reductions in SNAP enrollment and spending. When workers’ incomes are increased, some end up relying less on SNAP benefits while others see their earnings boosted above the threshold for SNAP eligibility, which currently stands at 130 percent of the federal poverty level.
Poverty to Prosperity Program Senior Policy Analyst Rachel West applied this same analysis to calculate the taxpayer savings if Congress approves raising the minimum wage to $12 per hour by 2020. Should the proposed bill become law, it would reduce taxpayer spending on nutrition assistance by $5.3 billion every year.
“Instead of slashing SNAP benefits—as some have recently proposed—lawmakers could use a minimum-wage increase to reduce SNAP spending in a way that benefits taxpayers, boosts the economy, saves jobs, and leaves working families better off,” writes West in her column.
To arrive at the $5.3 billion figure, the Center for American Progress took into account states’ 2015 minimum wages and the most recently available SNAP data and assumed that inflation matches the Federal Reserve’s average annual target rate of 2 percent, which would make $12 in 2020 equivalent to about $10.87 in today’s dollars.
Click here to read the full column and to view accompanying calculations table.
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For more information on this topic or to speak with an expert, contact Liz Bartolomeo at [email protected] or 202.481.8151.