Friday, August 9, 2013

SNAP and the Minimum Wage

Last week the House Budget Committee held a hearing marking the War on Poverty’s 50th anniversary. The testimony provided, and the following discussions, included a wide variety of opinions regarding the effectiveness of safety net programs. Of the heavily debated, SNAP drew a significant amount of attention. Policy for Results has previously posted on the significance of SNAP, but in light of the hearing, here are a few important facts to keep in mind:
  • Snap is targeted at the most vulnerable families
  • 76% of SNAP households included a child, an elderly person, or a disabled person
  • The majority of households have income well below the maximum allowed for eligibility
  • SNAP benefits do not last most participants the whole month
  • 90% of SNAP benefits are redeemed by the third week of the month
  • 58% of recipients currently receiving SNAP benefits turn to food banks for assistance at least 6 months of the year 
Despite the support that SNAP provides to working families, in November, SNAP benefits will be cut for all participants. For families of three, the cut will be $25 to $30 a month—a total of $300 to $360 a year. Nationally, the total cut is estimated to be $5 billion in fiscal year 2014.

The SNAP program is intended to provide supplemental support to families and research shows that it does. However, the statistics also highlight another important factor addressed at last week’s hearing. A majority, 60%, of households receiving SNAP have someone who is employed, and 90% of households receiving SNAP have a family member who finds work within a year. While this demonstrates the importance of what a crucial support the program provides to working families, this also shows the inefficiency of the current minimum wage to provide families with the opportunity to meet their basic needs.

In the past, the federal minimum wage would increase slightly with inflation, helping to keep millions of Americans out of poverty—minimum wage workers who worked full-time and year round earned nearly enough to keep a family of three above the official poverty level. However, since the early 1970s, the minimum wage has fallen significantly – by over 25%. The current minimum wage is $7.25, but the minimum wage in 1968 would have been equivalent to $10 an hour. Even after the 2007-2009 federal increases, the minimum wage remains far too low to sustain working families.

If the minimum wage were to increase to $10.10, a worker currently making $15,000 would earn $20,000 a year—a significant difference for families living in poverty.

Increasing the federal minimum wage to $10.10 by July 1, 2015, would raise wages for about 30 million workers, who would receive over $51 billion in additional wages over the phase-in period. Women would be disproportionately affected, comprising 56% of those who would benefit from the increase. Around 55% of affected workers currently work full time, more than a quarter are parents, and over a third are married. This would not only dramatically impact these families but would also positively impact the economy - GDP would increase by roughly $32.6 billion, resulting in the creation of approximately 140,000 net new jobs over the phase-in period.

Looking for meaningful solutions for the future, it is essential to maintain safety net programs that can assist the most vulnerable. However, long term solutions have to address the minimum wage. Families working full time should be able to provide their families with their basic needs – and right now they can’t. The research shows that many of the beneficiaries of SNAP are working and are still unable to afford food. To seriously address poverty requires ensuring working families are adequately paid and that when needed, there is a safety net in place to ensure that children and their families can continue to meet their needs.

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