RELEASE: The Public Cost of a Low Minimum Wage in Georgia

UC Berkeley Labor Center

For Immediate Release
December 18, 2020
Contact: Ken Jacobs, (415) 516-3135
kjacobs9@berkeley.edu

Study: Low Georgia Wages Cost Taxpayers $4.7 billion

Families of more than half of Georgia workers who would receive pay increases under a $15 minimum wage are enrolled in a public safety net program

Berkeley, CA – Georgia is one of 21 states that uses the federal minimum wage of $7.25/hour as its wage floor. In July of 2019, the U.S. House of Representatives passed the Raise the Wage Act, which would phase in the first national minimum wage increase since 2009. The bill has stalled in the Senate, but could prevail depending on the final make-up of the U.S. Senate, to be determined by the January runoff election.

A new study by the UC Berkeley Labor Center finds that the families of more than half of Georgia workers who would receive pay increases under a $15 minimum wage are enrolled in a public safety net program at an annual cost of $4.7 billion. The study highlights not only the significant role Georgia voters are playing in the eventual shape of the federal government, but also just how much the state’s workers and other taxpayers have to gain from an increase in the minimum wage. In addition to improving the lives of low-wage workers and their families, the Raise the Wage Act would reduce costs for the safety net programs that low-wage workers turn to when their jobs don’t pay enough.

McDonald’s worker and mother of four Melissa Sconiers is frustrated that employers like hers are raking in record profits while families like hers struggle. “I sometimes help out at the homeless shelter, and I see so many families struggling in the pandemic, losing their jobs and then their homes. Meanwhile companies like McDonald’s and Amazon make more money than ever. It’s not right.” Ms. Sconiers and her children are on Medicaid, because they can’t afford the insurance McDonald’s offers on her $9/hour salary.

“When restaurants, retailers and other employers pay low wages, workers need public safety net programs to make sure they have health care and enough to eat. Passing the Raise the Wage Act would help workers make ends meet with the money they are paid, and take some pressure off state governments,” explains Ken Jacobs, chair of the UC Berkeley Labor Center. “Our research shows just how important this legislation is to low-wage families and all of us who are contributing to and counting on safety net programs to help families stay healthy.”

Study details and findings:

  • The report examines utilizations of the five of the largest means-tested safety net programs: Medicaid; Children’s Health Insurance Program (CHIP); basic household income assistance under Temporary Aid for Needy Families (TANF); Earned Income Tax Credit (EITC); and Supplemental Nutrition Assistance Program (SNAP).
  • Researchers focused on “affected working families,” defined as a family where at least one member worked at least 10 hours a week for 45 weeks or more and was paid less than $13.49 per hour.
  • Over half of affected working families in Georgia (51%) are enrolled in at least one safety net program to bridge the gap between their wages and the cost of supporting a family.
  • Just under half (49%) of dollars spent on safety net programs in Georgia go to working families who would get a raise from the Raise the Wage Act, at a cost of $4.7 billion.

“Particularly as we look at recovery from pandemic-related unemployment and recessions, it’s critical we are able to target these public funds appropriately for maximum community benefit,” Jacobs says.  “When we require that employers pass more of the money workers earn on to them through a higher minimum wage, it will impact the workers, their families, and the entire community.”

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The UC Berkeley Center for Labor Research and Education (Labor Center) is a public service project of the Institute for Research on Labor and Employment (IRLE) at UC Berkeley.