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Study says wage boost will reduce food stamp numbers, history says otherwise

By   /   March 24, 2014  /   No Comments

By Johnny Kampis | Watchdog.org

CULLMAN, Ala. — A new study touts the positive effect of raising the federal minimum wage on reducing food-stamp participation, but historical evidence shows that may not prove true.

The left-leaning Center for American Progress argues a proposal in Congress to raise the minimum wage to $10.10 an hour would reduce enrollment in the Supplemental Nutrition Assistance Program by between 6.5 percent and 9.2 percent — or 3.3 million to 3.8 million people — and cut annual program expenditures by $4.6 billion, or 6 percent.

Alabama’s program enrollment likely would drop by about 60,000 residents, and the federal government would send about $100 million less a year for SNAP recipients in the Yellowhammer State, according to the study.

IT’S A SNAP: Participation in the welfare food program has grown precipitously in recent years, despite minimum wage increases.

But a Watchdog.org examination of the numbers found that, over time, Alabama has seen big spikes in food-stamp enrollment in many of the years in which the minimum wage increased. That may indicate the overall economy and welfare policy have more to do with the fluctuations of SNAP than how much the lowest-earning workers make.

Alabama doesn’t have a separate minimum wage law, so whatever the federal government sets is what state employers pay.

Take the most recent series of congressionally mandated minimum wage increases. As the federal standard went from $5.15 to $5.85 from 2006 to 2007, Alabama SNAP participation also increased by 0.4 percent. The next year, the minimum wage jumped from $5.85 to $6.55. SNAP enrollment in Alabama increased by 4.7 percent. The wage went up from $6.55 to $7.25 from 2008 to 2009 as food-stamp participants grew by a whopping 18.7 percent in Alabama.

You can download a spreadsheet of Alabama SNAP enrollment information here.

Participation dropped in the state from 1995 to 1997 by 14.8 percent as the minimum wage was increased from $4.25 to $5.15, but it went up by 28.9 percent between 1989 and 1993 as the wage was increased from $3.35 to $4.25.

In total, SNAP participation in Alabama more than doubled from 435,296 in 1989 to 910,244 in 2012 as the minimum wage increased from $3.35 to $7.25 during that span. Benefit payments have tripled to $1.39 billion annually in the Heart of Dixie the past two decades.

President Obama has pushed for the higher mandated wage, and in his State of the Union address said he would unilaterally give a minimum $10.10 wage to workers under new federal contracts.

A Congressional Budget Office report released in February said about 900,000 workers nationally would move above the poverty threshold with a $10.10 minimum wage.

“Low-wage workers are disproportionately enrolled in SNAP,” the Center for American Progress study states. “A minimum wage increase that lifts many families out of poverty should therefore reduce public expenditure on this program.”

SNAP benefits decline 30 cents for every $1 increase in family earnings and phase out entirely around the federal poverty level, the CAP study notes.

On the flip side, the CBO report notes that employment likely would be reduced by about 500,000 because of the measure.

Employment Policies Institute, quoting U.S. Census statistics, noted that more than four-fifths of minimum wage earners are teenagers living with their parents, adults living alone or married couples with dual incomes. All the people in those categories would be less likely to be on food stamps than the 17 percent of people trying to raise a family on the minimum wage.

API photo

ROBERTSON: Little correlation between food stamps and minimum wage.

Katherine Robertson, senior policy counsel at the Alabama Policy Institute, said such statistics would seem to counter the CAP report.

“To conclude that a raise in minimum wage is likely to reduce food stamp caseloads requires an assertion that many minimum wage employees are in poverty. There is strong evidence to the contrary,” she told Watchdog.org via email.

“Instead, as the CBO concluded, businesses will simply cut the number of minimum wage workers on their payrolls. Past trends show these cuts are more likely to negatively impact poor workers, than a higher wage would positively impact these same individuals.”

In other words, those on food stamps would continue to be on food stamps.

Michigan Capitol Confidential examined the numbers in the Wolverine State, finding a similar growth in SNAP numbers as the minimum wage increased. That’s because in the complex American economy, many factors are working with and against each other, said James Hohman,  assistant director of fiscal policy at the Mackinac Center for Public Policy.

“Michigan’s experience shows that the direction of the economy is the most important factor in whether food stamp rolls increase or decrease,” he told MCC.

The Center for American Progress has strong ties to the Obama administration. Its president, Neera Tanden, served as director of domestic policy for the Obama presidential campaign.

Reach Johnny at johnny.kampis@franklincenterhq.org.

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Johnny Kampis is a content editor at Watchdog.org, and is helping to start the organization’s Alabama Watchdog bureau in his home state. Johnny previously worked in the newspaper industry and as a freelance writer, and has been published in The New York Times, Time.com and Atlanta Journal-Constitution.

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