Raising minimum wage lower public assistance costs

[eridani]

http://www.epi.org/publication/wages-and-transfers/

Millions of Americans rely upon public assistance programs to help meet their basic needs. These programs provide a vital lifeline for individuals and families struggling to get by. Indeed, given rising costs of necessities such as child care, housing, and health care, many families’ ability to achieve a modest but adequate standard of living requires resources earned on the job and assistance from government programs.1

However, for many workers in certain sectors, wages are so low that even those who work full time must rely heavily on government assistance to make ends meet. This suggests that low pay by many employers—facilitated by weakened or inadequate labor standards, such as a low minimum wage and outdated overtime regulations—is placing unwarranted demands on public resources. As corporations achieve extraordinarily high profit levels and executive pay reaches new heights, it is appropriate to question whether employers are effectively passing off a portion of their societal responsibilities on to taxpayers.

This report examines the utilization of public assistance among low-wage workers and their families. After a brief review of previous research, it presents data on program participation and transfer income receipt by working individuals’ annual hours of work, hourly wage level, major industry of employment, and state. Then it examines how higher wages among workers at various wage levels affect utilization rates and benefit dollars received. Finally, it discusses policies that would raise wages and the effect these policies would have on public assistance utilization and overall program spending. It concludes that higher hourly wages for low- and middle-wage workers, achievable through a variety of labor-market policies, would unambiguously generate savings in government safety-net and income-support programs—savings that could be used to strengthen and expand anti-poverty programs or make critical public investments to boost productivity and grow the economy.

[fourcents]

1. It also puts more money into Social Security and decreases the deficit.

[Sherman A1]

2. K&R!

[pampango]

3. "Conclusion: Raising wages among low- and middle-wage workers would simultaneously lift incomes and

reduce spending on public assistance programs. The government could then use these savings to bolster anti-poverty efforts or make new job-creating investments. Increasing the federal minimum wage is one simple way this could be achieved—though it is not the only way. As explained in EPI’s Agenda to Raise America’s Pay, we can raise wages by eliminating the lower subminimum wage for tipped workers, updating overtime protections, strengthening workers’ ability to organize and negotiate with employers collectively, improving enforcement of labor laws, providing undocumented immigrant workers a path to citizenship, and ensuring monetary policy prioritizes full employment. These policies would help undo decades of wage stagnation that have prevented greater improvement in living standards for the vast majority of American households. They would also bring greater balance to the roles that the private and public sectors play in improving American workers’ quality of life.

Long article but worth reading. Great policy recommendations for raising wages.