Study: Raising the minimum wage could save America money

Raising the minimum wage to $10.10 an hour would reduce government outlays on food stamps by $4.6 billion per year, according to a study released Wednesday.

The estimate published by the Center for American Progress, a left-leaning think tank, is among the first to assess a significant question: the effect of increasing the minimum wage on the cost of food stamps.

The cost of food stamps has soared in recent years on the back of the 2008 recession, and subsequent slow recovery:

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.

Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.

Sign up

But here's the thing: Essentially, in-work welfare such as food stamps subsidize the wages of employees of private companies. It's hard to do your job if you're not getting enough money for nutrition or to support your family. So having the government pay for the food of low-wage workers can be seen as a big boondoggle to big business — keeping the labor force fed and watered to the great benefit of employers.

By raising the minimum wage, government can force employers to take on a greater proportion of the cost of maintaining and supporting their workforce. And it's not like they can't afford it. Corporate profits are at an all time high, both in nominal terms, and relative to the size of the economy. --John Aziz