The minimum wage is causing a bit of campaign drama, notably in Wisconsin, as John Nichols reports. Republican Governor Scott Walker, running neck and neck against Democrat Mary Burke, inflamed the debate this week when he rejected complaints that the state’s $7.25 an hour wage floor was too low. “I don’t think it serves a purpose,” Walker said of the labor standard.
One of the most bizarre points in the Walker administration’s argument for why $7.25 is a living wage (it’s not) is that some low-wage workers supplement their earnings with public assistance. It’s true that even many full-time employees in Wisconsin and elsewhere rely on government aid—because their wages are too low. Walker, meanwhile, is no supporter of social programs. If he had his way, there would be an even smaller safety net for workers to fall back on.
Walker isn’t the only candidate digging in his heels against efforts to raise the minimum wage while simultaneously bashing public aid. This isn’t just callous—it’s also dumb policy. There are lots of reasons to raise the minimum wage, like the fact that it will boost the economy and that 80 percent of Americans support it. But one reason in particular should get conservatives’ attention: it will help people get off government aid programs and save the government money.
How many people? About 1.7 million, according to a brief released Thursday by the Economic Policy Institute, which examined the implications for public-assistance enrollment of raising the federal wage floor to $10.10 an hour.
Nearly half of all recipients of government aid work full time, but because lawmakers have let the minimum wage stay low while the cost of living rises, many workers can’t get by on their earnings. The result is that roughly half of all workers making hourly wages below $10.10 rely on public assistance directly or via a member of their family, according to EPI. And about half of all the funds for the six main types of government support—food stamps; the Earned Income Tax Credit; the Low Income Home Energy Assistance Program; Supplemental Nutrition for Women, Infants, and Children; the Section 8 Housing Choice voucher program; and Temporary Assistance for Needy Families—go to people working for less than $10.10 an hour.
Those programs were designed to provide temporary support to people who were down on their luck, noted David Cooper, an economic analyst at EPI and the brief’s author, on a call with reporters. “They were not intended to act as long-term subsidies to employers so businesses could get away with paying poverty-level wages,” he said. As it stands now, the government is essentially giving a $45 billion handout every year to companies that pay less than $10.10 in order to patch the gap between what they pay their employees and what those workers need to survive.
It’s important to note that raising the wage floor wouldn’t justify cuts to the safety net. Even $10.10 is below a living wage in many cities, and there are still an awful lot of people without full-time work. “Given the extraordinarily high rates of poverty and child poverty that persist in the wake of the Great Recession, there is every reason to think that current levels of spending on these programs are woefully inadequate to truly combat poverty and lift living standards for program participants,” Cooper wrote.
But raising wages would free up money that could be used to benefit those who aren’t directly affected by the increase. Cooper estimates that lifting the wage floor to $10.10 would save the government at least $7.6 billion annually—money that could be used to strengthen and expand safety net programs like the Earned Income Tax Credit or be invested in infrastructure projects that create jobs.