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California Healthline, May 20, 2004
Families with low-wage, working members receive nearly 50% of the
$21.2 billion spent in California each year for state and federal
public assistance programs, including Medi-Cal, according to a study
released Thursday by the University of California-Berkeley Center
for Labor Research and Education, the San Francisco Chronicle
reports. The study, "The Hidden Public Costs of Low-Wage Jobs
in California," found that families in which at least one member
was employed for at least 45 weeks of the year received 48% of assistance
-- or $10.1 billion -- delivered through 10 state and federal programs
and that about 75% of those working families had full-time wage earners
(Abate, San Francisco Chronicle, 5/20). Medi-Cal accounted
for 35% of public assistance to these families, making it the largest
portion of aid for low-wage families (Cleeland, Los Angeles Times,
5/20). In the report, commissioned by the National Economic Development
and Law Center, lead author Carol Zabin and colleagues calculated
that if the state minimum wage was increased from $6.75 an hour to
at least $8 an hour, the state would save $2.7 billion in public assistance
because fewer residents would require aid. The study found that if
minimum wage was increased to $10 an hour, the state would save nearly
$5 billion. "If those people could be pulled up to higher wages
somehow, then that money could be used for all those folks on waiting
lists who can't get access to the programs," Zabin said (Vigil,
San Diego Union-Tribune, 5/20). The study also suggests mandating
employer-sponsored health insurance and providing more opportunities
for training and development to increase skills. Government intervention
is necessary because low-wage jobs are growing faster than the overall
economy in California, increasing the stress on public assistance
programs, according to the study. "What those employers [with
low-wage jobs] are doing is shifting labor costs onto the public,"
Zabin said (Los Angeles Times, 5/20).
Reaction
Alan Gin, a University of San Diego professor who monitors regional
economic issues, said, "The problem is that there's a lot of
stress on business now as a result of health care costs. More and
more businesses are thinking about not offering medical benefits,
and if they know that their employees can qualify for assistance,
that could help make the decision easier." However, Mitch Mitchell,
vice president of public policy for the San Diego Regional Chamber
of Commerce, disputed the assertion that "businessmen go into
this thinking, 'Public assistance is available, so I don't feel bad
not offering health care,'" saying that the cost of providing
health benefits has been "a huge barrier" for employers
(San Diego Union-Tribune, 5/20). Jack Kyser, chief economist
at Los Angeles County Economic Development, said that while low-wage
jobs are a problem, "[y]ou've got to be careful" about introducing
government mandates that raise business costs because they could drive
more jobs from the state, making the solutions "worse than the
problem we're trying to fix" (Los Angeles Times, 5/20).
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