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Working poor receive nearly 50% of public assistance benefits, study says

California Healthline

By Claudia Figueroa, Manufacturing Editor

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).

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).