Monday, January 20, 2014
Food stamp cuts and the need for better pay
And as many have seen or know that many still run out of food
before the month, ending up at Walmart at 12 am on the first of the month.
With cuts many will run out sooner.
Also for sales in a food stamp economy, Walmart and all places that does
food stamps will have less go to them. People on food stamps don't save up
their food stamps it all gets spent to the end so the cut goes to the store owners.
~~~~850,000 may have $90 less in food stamps
A deal on food stamps in Congress could trim as much as $90 a
month from 850,000 of the nation's poorest who seek help to buy groceries.
The measure is part of the latest farm bill and aims to cut about $9 billion
from food stamps over the next 10 years, according to the
Congressional Research Service.
It's less than the $39 billion that Republicans had wanted to cut from the program;
but double what Democrats had suggested.
Lawmakers characterize the deal as getting rid of a "loophole" that has helped 17 states
dole out more generous food stamps to some people who also get as little as $1 dollar in
federal help to heat or cool their homes. They also stress the move won't cut families from
food stamps, it will just shrink the amount.
Advocates for the poor are irate. The newly-proposed reductions come just months after
the $11 cut from food stamp checks that went into effect on Nov. 1, when the recession-era
boost in funding ended. Since then, food pantries have reported larger crowds, as families
exhaust their allotment before the month ends.
"They're calling it a loophole, but it's taking away real money from real families,"
said Joel Berg, executive director, of the New York City Coalition Against Hunger,
an advocacy group. "It seems like they're just thinking: We must pass a farm bill at all
costs, even if the cost is throwing 800,000 under bus."
The food stamp changes are part of a larger farm bill that remains stalled in Congress
over a separate measure to stabilize dairy prices that has irritated House Speaker
John Boehner and other Republicans. The goal is to get it passed before the spring
crop planting season, because farmers need to know what to expect for their corn,
wheat or tobacco yields.
The bill would end direct payments to farmers for planting crops and replace it with a
revamped crop insurance program. The food stamps program is fully funded for the next
two years by the most recent budget deal. Delaying the farm bill won't jeopardize
recipients from getting benefits. However, the bill would result in less funding in
The main issue is wages! Low pay is less spending money for the workers, making
less sales, sales tax for your town, more cost in food stamps.
Less money taxed and put into Social security.
It's like low taxes being less money to live on, in your town is to the poor
has less to live by, so they don't live. Do without, I never needed it anyway!
Those points of view that kills small towns!
Thus the low wages zombies that take everyone down with them.
Down with them, is the cost of low pay, the cost of food stamps.
So the Republicans cut the food stamps and the poor lives by their means,
burning wood to keep warm in the winter.
Walk without cars, look poor, over all bring attention to everyone how poor things are.
Kind of like having pan handlers in front of the red lobster and everywhere!
That is power! They have it with that! The poor hurts businesses more than just low sales!
The money saved by cutting food stamps has to be put in for keeping towns alive etc.
As the cost of the poor gets moved the savings gets lost.
The view that a higher minimum wage will drive up the cost of everything is
not all that it is. It will drive up the cost to the rich that would be able to afford
to buy it, as the poor will just walk away from the higher price.
Also "wage compression" I see also as not there. "Employers may try to offset the cost
of a minimum wage increase by freezing or reducing the pay of higher income employees."
More likely that is when you have a high turnover rate at the work place, as many go
for better paying jobs, more stable invirement. Or they just deal with it.
Over all it takes care of it's self in time. The longer that happens in the work place the
less workers you might be seeing and lower productivity because of new workers
or overwhelmed workers working slower!
In the end that way pulls down many work places that act that way.
~~~~Economists agree: Raising the minimum wage reduces poverty
They all tend to think that raising the minimum wage would reduce poverty.
That’s the conclusion of a major new paper by Dube, titled “Minimum Wages
and the Distribution of Family Incomes.”
Let’s first highlight the major results. Dube uses the latest in minimum-wage statistics
and finds a negative relationship between the minimum wage and poverty. Specifically,
raising the minimum wage 10 percent (say from $7.25 to near $8) would reduce the number
of people living in poverty 2.4 percent. (For those who thrive on jargon, the minimum wage
has an “elasticity” of -0.24 when it comes to poverty reduction.)
Using this as an estimate, raising the minimum wage to $10.10 an hour, as many
Democrats are proposing in 2014, would reduce the number of people living in
poverty by 4.6 million. It would also boost the incomes of those at the 10th percentile
by $1,700. That’s a significant increase in the quality of life for our worst off that
doesn’t require the government to tax and spend a single additional dollar.
And, given that this policy is self-enforcing with virtually no administrative costs
while challenging the employer’s market power, it is a powerful complement
to the rest of the policies the government uses to boost the living standards of the
worst off, including the Earned Income Tax Credit, food stamps, Medicaid, etc.
Now, this is normally the part where we’d have to go through the counter-arguments,
using different data and techniques from different economists, to argue that the
minimum wage wouldn’t do this. But this is the fun part: Dube’s paper finds a remarkable
consistency across studies here. For instance, in a 2011 paper by minimum-wage opponent
David Neumark, raising the minimum wage 10 percent would reduce poverty 2.9 percent
(an elasticity of -0.29) for 21-44-year-old family heads or individuals.
That’s very similar to what Dube finds. Neumark doesn’t mention this directly in the
paper however; Dube is able to back out this conclusion using
other variables that are listed.
Indeed, Dube digs out the effects of the minimum wage on poverty from 12 different
studies in the new wave of literature on the topic that started in the 1990s with
David Card and Alan Krueger field-creating research. Of the 54 elasticities that Dube
is able to observe in these12 papers, 48 of them are negative.
Only one study has a sizable positive one, a 2005 one by David Neumark, a study that
stands out for odd methodology (it lacks state and yearly ﬁxed effects, it assumes quantiles
are moving in certain directions) that isn’t standard in the field or in his subsequent work.
(Indeed, it is nothing like Neumark’s standard 2011 study, mentioned above, which finds
that the minimum wage reduces poverty.) Including that study, there’s an average elasticity
of -0.15 across all the studies; tossing it, there’s one of -0.20 across the 11 studies,
similar to what Dube finds.
However these previous studies also have issues which Dube’s new study examines.
This paper uses data up through 2012, so there is much more substantial variations to
examine between states’ minimum wages compared to earlier studies from the 1990s.
Meanwhile there are additional controls added, including those that deal with the business
cycle as well as regional effects. The range of controls provide 8 different results, all
of which are highlighted.
Now, as a general rule with these numbers, you should never observe too far away
from the mean that is, you shouldn’t take the effects of small changes to see what would
happen if we, say, increased the minimum wage 500 percent, or to levels that don’t actually
exist right now. But the results are promising. Indeed, they are promising on three
different measures of poverty.
There’s the normal definition of poverty established in the 1960s as a result of how
much food costs takes up in your family budget. But the relationship is both relevant
and even stronger for the poverty gap, which is how far people are away from the
poverty line, and the squared poverty gap, which is a focus on those with very
low incomes. The elasticities here are -0.32 and -0.96 respectively, with the second
having an almost one-to-one relationship because the minimum wage reduces the
proportions of those with less than one-half the poverty line.
What should people take away from this? The first is that there are significant benefits,
whatever the costs. If you look at the economist James Tobin in 1996, for instance, he
argues that the “minimum wage always had to be recognized as having good income
consequences….I thought in this instance those advantages outweighed the small
loss of jobs.” Since then there’s been substantially more work done arguing that the loss
of jobs is smaller or nonexistent, and now we know that the advantages are even better,
especially when it comes to boosting incomes of the poorest and reducing extreme poverty.
The second is that this isn’t a thing that people proposing an inequality agenda just
happened to throw on the table. A higher minimum wage is a substantial response to
the challenges of inequality. Opponents of a higher minimum wage focus on the idea
that it largely won’t benefit the worst off.
However, look at this graphic from the study:
A higher minimum wage will lead to a significant boost in incomes for the worst off in the
bottom 30th percent of income, while having no impact on the median household.
As many economists have argued, the minimum wage ”substantially ‘held up’ the lower
tail of the U.S. earnings distribution” through the late 1970s, but this effect stopped as the
real value of the minimum wage fell in subsequent decades.
This gives us an empirical handle on how the minimum wage would help deal with
both insufficient low-end wages and inequality, and the results are striking.
Charles Darwin once wrote, “If the misery of the poor be caused not by the laws of nature,
but by our institutions, great is our sin.” One of the key institutions of the
modern economy, the minimum wage, could dramatically reduce the misery
of the poor. What would it say if we didn’t take advantage of it?