The Effects of Minimum Wages on SNAP Enrollments and Expenditures

Source: Rachel West and Michael Reich, Center for American Progress, March 2014

From the summary:
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. … In an era of historically low real federal minimum wage rates, rising income inequality, job-market stagnation, and contentious debate about government deficit spending, the possibility that a higher minimum wage may lead to increased or reduced public spending has great relevance to the public and to policymakers. This report presents an initial empirical analysis of the effects of minimum wage policy on SNAP participation and expenditures. We do so by exploiting more than two decades of variation in binding state and federal minimum wage changes in an econometric framework. Our future research will examine the effects on SNAP further and apply an analogous framework to two other public assistance spending programs: the Earned Income Tax Credit and Medicaid. According to the finding in this report a 10 percent increase in the minimum wage reduces SNAP enrollment by between 2.4 percent and 3.2 percent and reduces program expenditures by an estimated 1.9 percent. Taking into account each state’s 2014 minimum wage level, we apply these results to the legislative proposal put forward by Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA) to raise the federal minimum wage to $10.10 per hour. Our results imply that the effects of the Harkin-Miller proposal on wage increases would reduce SNAP enrollments by between 6.5 percent and 9.2 percent (3.3 million to 3.8 million persons). The total anticipated annual decrease in program expenditures is nearly $4.6 billion, or about 6 percent of current SNAP program expenditures. …
See also:
Raising the Minimum Wage to $10.10 Would Cut Taxpayer Costs in Every State
Source: Rachel West and Michael Reich, Center for American Progress, March 5, 2014