Will the end of low wages bring higher prices?

Krissy Clark, from Marketplace, and Andrew Bouvé, from Slate, have a look at what would happen if Wal Mart raised wages to its workers enough to make it a living wage:


Their conclusion: not a whole lot. Wal Mart would have to raise the hourly wage for its salaried employees to $13.63/hour, for a total cost of $4.8 billion annually. This might sound like a lot of money, and it is, but Wal Mart had a $17 billion profit last year alone, and that´s after spending $15 billion on stock buybacks to make its shareholders happy.

Even without reducing its profits one dime, the reports find that the retail chain would only have to raise prices on its stores by 1.4% to cover the increase in wages.

The video is part of a wonderful series from Marketplace, “The Secret Life of a Food Stamp“, giving an in depth look on how companies like Wal Mart rely on public benefits both to make money and to pay workers low wages. Make sure to have a look.

CAHS year in review: Access Benefits Online

The Connecticut Association for Human Services (CAHS) started the Access Benefits Online (ABO) program in February 2010 to improve access to work supports. ABO is built on two main ideas:

  • To offer quality application assistance for public benefits in Community Based Organizations (CBOs) across the state.
  • A focus on serving hard to reach populations.

Our model is based in the following:

Monitor, Keyboard, and Mouse

  • Many CBOs have built trust within the community.  We rely in this trust to reach out to clients that would otherwise not apply for public benefits.
  • We train our CBO partners so they become a reliable, trusted access point to public benefits, with up to date information, a powerful software screening tool that can check eligibility for 12 public benefits (SNAP, TFA, Husky A, B, C and D, among others )  and good, reliable data to track their performance.
  •  The whole process should be seamless: the application is completed and sent to DSS by the CBO staff.

CAHS has steadily built a network of community partners across the state, from eight CBOs in 2010 to 35 sites this year. 2013 has been a year of growth, thanks to our partnership with the Community Health Center Association of Connecticut. Thirteen community health centers across the state use ABO to screen their clients for SNAP, Medicaid, Husky and other benefits, help them fill their applications and track enrollments. This has greatly increased the volume of clients we serve every month, from 266 screenings/month in 2012 to close to 800 this past year.

In 2013 CAHS and our partners screened more than 9,000 households for benefits covering more than 20,000 individuals. More than 8,000 were referred to DSS to apply for benefits. As the end of September, 3,709 households had been enrolled to at least one benefit, completing more than 6,200 benefit enrollments. ABO partners successfully focused on traditionally underserved groups: 46% of our clients were Hispanic, 17% African American. 28% spoke a language other than English in their household; 39% of them were under 18 years old.

 

Next year CAHS will continue working with our community partners and DSS to further improve and streamline benefit access in Connecticut. The Affordable Care Act will add many people to Medicaid, and CAHS will be there, helping them get the benefits they need.

To that, however, we need your help. Please support CAHS to help us provide these services that low income families rely on and have a better new year. With your donation we will be able to be in more place, help more families, make a bigger difference. And all with your help.

The high cost of low wages

wagesThere has been plenty of talk these past few days on how many jobs in our state and across the country simply do not pay enough. This was put into focus on a very stark, glaring way when one Wal-Mart in Ohio hosted a food drive for its own employees, seemingly oblivious to the fact that they needed this sort of charity because Wal-Mart is not paying them a living wage on the first place. That coming from a company that is spending $7.6 billion a year repurchasing its own stock to prop up share prices and make stock holders happy.

Leaving food drives aside, these low wages are also a drag on public budgets. Wal-Mart, as many other big employers, not only do not pay much to their workers, but also encourage them to apply for public benefits to fill the gap. Instead of offering a living wage, their workforce is forced to rely on SNAP (Food Stamps). Instead of providing health insurance, workers have to rely on Medicaid or Husky.  As a result, a two-income working class family in Connecticut can end up receiving almost as much money in public, taxpayer-funded benefits as they receive in wages.

In our new policy brief, we have a look at the data to see who are these workers, and what is the cost for the state’s budget. You can download the policy brief here. Worker’s share of the national income pay has been steadily dropping for the past two decades. It is time to change this.

Today, SNAP benefits get cut

Today the 2009 Recovery Act‘s temporary boost in SNAP (food stamp) benefits expires. This will translate into a benefit cut for each of the 424,000  SNAP recipients in Connecticut.

The change will cut SNAP benefits an average of $36 for a household of four. A household of three, such a mother with two children, will lose $29, or a total of $319 a year. The cut is equivalent to 16 meals a month for a family of three, based on the cost of the US Department of Agriculture “Thrifty Food Plan“. 87% of SNAP recipients live in households with children, seniors or people with disabilities. These cuts directly affect the most vulnerable.

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The cuts have a direct economic impact. According to a Center for Budget and Policy Priorities study, Connecticut will receive $44 million less a year in public benefits. The cuts will decrease the disposable income of many families, creating a ripple effect on local retailers and businesses. The Congressional Budget Office has long ranked SNAP as one of the most effective fiscal stimulus programs: the money goes to families in need that spent the money right away. Pulling these money out of the economy will also hurt the economy as a whole, not just its recipients.

Congress is working on the long delayed farm bill, with House and Senate delegations trying to reach an agreement in a conference committee. The House proposal includes more than $40 billion in cuts; the Senate $4 Billion. As part of our work with the New England Consortium CAHS is advocating to the New England delegation to stop these cuts.

SNAP is a crucial part of this country’s safety net. We can not afford any more cuts.

Why we need SNAP: a soldier’s tale

A story from one of our CAHS outreach staff, not for too long ago:

SNAPI used to go to the VA Hospital in West Haven, in Connecticut. The social services office is in the old wing of the building. Old dinky offices with old furniture, yellowed American Legion posters and creaky floors, were many vets go get some information about services available to them. There, I was the food stamp guy; Roger, helping people with paperwork every other Tuesday. Every time I go there was a line of vets, always punctual, waiting for me at the office door.

A few months ago, one of the guys in the line was Michael. He is a former Army corporal, just out of the service. He had come back from Afghanistan last year, and was living  day to day, sometimes sleeping in a friend’s couch, sometimes on the back of his van. He had been diagnosed with severe post traumatic stress disorder, and was receiving treatment at the VA. Unfortunately, his disability claim had not come through yet, so he had nothing to eat.

Michael had a kid. Nine year old kid, actually. He was going to school in West Haven, staying with a distant relative on and off, with Michael barely being able to hide his shame in front of him. He had two meals a day in school; not much else. He tried to apply for SNAP, but he could not handle the 12 page application. He was desperate. The stress was tearing him apart. Back from war, but unable to take care of himself or his kid.

We helped him apply for SNAP. Filled the paperwork, brought it to DSS. I guess the New Haven office had a dedicated person for handling vet applications; he started receiving SNAP benefits the following week. Now he had money to put food on the table and take care of his son. He had some stability; he started getting better.

Six months later, I ran into Michael again, at the VA office. He had rented a small condo by the water, barely a week ago. He was working as a mechanic part time. He was still recovering, but he had a place to call his own. He came back just to tell us that the food stamps had saved his life.

These programs are lifelines. People’s lives depend on them. People rebuild their lives on them. Cutting SNAP means leaving people behind, and we Americans don’t leave people behind.

This program is under risk. The Republican house majority has proposed huge cuts on SNAP benefits. Without SNAP, many families will not be able to support themselves. Stories like the one above show why we need this program.

CAHS has long been one of the leading voice in Connecticut to defend SNAP, but we need your help. If you think this program is important, if you don’t want to see families in need be left behind when they need help, please donate to CAHS to help us fight for this program.

You can find more information here; it is easy, and we will greatly appreciate your help. Thanks for your support.

SNAP and poverty: the safety net at work

The Center for Budget and Policy Priorities have calculated how many people are lifted above the poverty line thanks to the SNAP program. Their finding: a bit over four million.

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It is not just lifting out of poverty – it also makes the poor less poor:

In addition to keeping some people out of poverty, SNAP also made tens of millions of people less poor in 2012.  For these individuals, the program reduced the gap between their income and the poverty line and made them better able to afford a basic diet.

Even thought SNAP works, the main issue remains: a lot of Americans still struggle to bring food to the table every month.

Data released earlier this month by the U.S. Department of Agriculture showed that 17.6 million American households lacked access to adequate food at some point in 2012 because they didn’t have enough money or other resources to meet their basic food needs.

With these data points in mind, it would be ludicrous for a political party to cut a program so essential for so many Americans. Unfortunately, that is what the House Republicans plan on doing just this week, cutting $40 Billion from the program. Cutting SNAP is a terrible idea – it is a very effective program that really helps those in need. It needs to be preserved, not cut; doing so will only hurt working families that can ill afford another hit.

Chris Murphy and the SNAP challenge

The US Congress is debating the new farm bill this week, and this means talking about SNAP. The Supplemental Nutritional Assistance Program (the old food stamps) is one of the foundations of our safety net, and the biggest line item on the farm bill.

The SNAP program is facing significant cuts. The bill on the House of Representatives cuts $20 billion out of the program; the one in the Senate $4 billion. To show the impact of these cuts Senator Chris Murphy has decided to highlight the hardships that SNAP recipients face every day, taking on the SNAP challenge.

IMAG0012What is the SNAP challenge? For this past week the Senator has spent for food only $4,80 a day, the average benefit amount for SNAP recipients in the state of Connecticut. He has been tracking his experience on his Facebook page and Twitter accounts, and his accounts are quite interesting.  He shared what he learned these days at a round table in the Connecticut Food Bank on East Haven. Some of his comments today: he really is hungry all the time, has lost six pounds in a week and has relied on ramen and bananas for most of his meals. On today´s meeting he stressed on how buying any kind of healthy food for $4,80 is pretty much impossible.

The main take away, however, goes beyond the SNAP challenge – it is the fact that the SNAP program is crucial for many, many families, it is probably underfunded as it is, and even so Congress will probably reduce the benefit if no one gets on the way. It is time to call our legislators again, and tell them that many, many people in the state and across the country can not even make ends meet with the SNAP program as it is. We can not cut it more.

The fiscal cliff for means-tested benefits

There has been a lot of talk lately regarding marginal tax rates. The debate, as usual, has focused in the tiny, minuscule slice of population that would be affected by a hypothetical tax increase to those making more than $250,000 as year (2% of the population), and how a three point bump in their tax rate would affect their willingness to work.

If a 39% marginal tax rate could turn hard workers into slackers and reduce investment, it might be interesting to explore other parts of the tax system with huge marginal tax rate spikes. To be more precise, we can look at how the tax system looks like for a family that is receiving some means-tested public benefit programs as they get close to the income limit for those benefits. Eugene Steurle, from the Urban institute (via Paul Krugman) has a very detailed study on the marginal tax rates for those families, and the picture is certainly not reassuring:

What we see in this graph is what happens as a family gets closer to the Federal Poverty Level (FPL) threshold and begins to lose benefit programs. The dotted line above is how the system is set up now; the line below is how the social safety net will operate once the Affordable Care Act (ACA) is fully implemented.

In real terms, a family that moves from 50 to 51% FPL (the cut off point for Medicaid) sees a 50% marginal tax rate, as a modest income increase is undermined the loss of benefits. The jump is even more pronounced in the 130% FPL line, where most families start losing SNAP benefits (food stamps) and the Earned Income Tax Credits (EITC) begin to phase out. A single mother might end up seeing marginal tax rates above 90%, with almost 90 cents of extra dollar earned going to cover each dollar of benefits lost.

If high marginal tax rates drive families to work less, we should pay less attention to what happens to the top 2% and look at the huge fiscal cliff that low income families face as they hit the income limits for means-tested benefits. The ACA will help to diminish this, as the subsidies extend much further (up to 400% FPL), but the problem remains: the non-universal, means-tested nature of much of our safety net ends up creating a huge incentive   against getting out of poverty. Moving towards more universal programs (like Medicare or Social Security) is the only way to avoid these penalties.

 

Exactly What Government Should be Doing

An outstanding statement from Congresswoman Rosa DeLauro in defense of the Supplemental Nutrition Assistance Program, or SNAP.

It rebuts recent false statements about the program:

“The Food Stamp Program swelled because the economy entered the worst recession since the Great Depression and remains severely depressed even 18 months after the official recovery began. And this expansion of food stamps was a good thing – benefits keep 5 million people out of poverty and are universally considered some of the most effective fiscal support available to help an economy that is projected to see unemployment rates above 8% until 2015,” said Elise Gould of the Economic Policy Institute. “Cutting these benefits would simply be a mistake for families and a mistake for the economy.”

…and points out how it stimulates the economy:

“And these funds did not just assist struggling Americans, they were instrumental in keeping our economy afloat as they were reinvested in our economy at a rate of $1.73 for every dollar spent. Food stamps added nearly $5 billion to the national economy in 2009 alone.”

Not to even mention…..SNAP keeps people from going hungry. 

SNAP use on the rise – and what we can do to help

The Wall Street Journal has an interesting map on SNAP use by state, and how it has increased during this recession. Right now 10.9% of Connecticut´s population is receiving Food Stamps, a 7% increase from 2010. As it stands now, SNAP is one of the central components of our safety net, and its use doesn´t look like it will go down anytime soon.

The numbers could actually be even higher if SNAP participation rates were better. Only two thirds of households that are eligible for SNAP benefits actually apply for assistance in Connecticut, a rate that roughly tracks the nationwide average. Lack of information, a convoluted application process and poor access to state agencies contribute to this low adoption.

Part of our work at CAHS is to do outreach in the community promoting SNAP benefits, trying to help the navigate the chronically overburdened, always confusing DSS system. For the past three years we have seen the steady increase of families than need assistance first hand, so we have even expanded our application assistance and outreach efforts by developing and implementing EarnBenefits in the state in cooperation with Seedco and more than twenty community partners. Only in 2011 we have screened more than 5,000 individuals for benefits, filling the applications and referring more than 4,000 to DSS and other state agencies to get the help they need.

Using community partners is a central part of our efforts for one very important reason: getting to hard to reach populations to improve the SNAP participation rate. Local non profits and municipal agencies can reach to groups that either are reluctant to go to a DSS office in a very effective manner. Our focus with EarnBenefits has been working to make access a priority, not just for SNAP, but for other state benefits as well.

You can learn more about the EarnBenefits program and our community partners here. We are currently expanding our network to the Hartford region, so stay tunned for updates.