5 Reasons to Consider a No-Strings-Attached, Basic Income for All Americans

  Economy  

AlterNet / By Lynn Stuart Parramore

5 Reasons to Consider a No-Strings-Attached, Basic Income for All Americans

An idea whose time has finally come.

March 17, 2014  |

What if you could receive a guaranteed basic yearly income with no strings attached? Didn’t matter how much money you made now, or in the future. Nobody would ask about your job status or how many kids you have. The check would arrive in the mailbox, no matter what.

Sounds like a far-fetched idea, right? Wrong. All over the world, people are talking guaranteeing basic incomes for citizens as a viable policy.

Half of all Canadians want it. The Swiss have had a referendum on it. The American media is all over it: The New York Times’ Annie Lowrey considered basic income as an answer to an economy that leaves too many people behind, while Matt Bruenig and Elizabeth Stoker of the Atlantic wrote about it as a way to reduce poverty.

The idea is not new: In his final book, Martin Luther King Jr. suggested that guaranteeing people money without requiring them to do anything in exchange was a good way for Americans to share in prosperity. In the 1960s and early 1970s, many in the U.S. gave the idea serious consideration. Even Richard Nixon supported a version of it. But by 1980, the political tide shifted to the right and politicians moved their talking points to unfettered markets and individual gain from sharing the wealth and evening the playing field.

Advocates say it’s an idea whose time has finally come. In a world of chronic job insecurity, stagnant wages, boom-and-bust cycles that wipe out ordinary people through no fault of their own, and shredded social safety nets, proponents warn that we have to come up with a way to make sure people can survive regardless of work status or economic conditions. Here are five reasons they give as to why a guaranteed basic income might just be the answer.

1. It would help fight poverty: America is the richest country in the world, yet widespread poverty continues to afflict us. Social Security has arguably been the most successful program for reducing poverty in American history, dramatically cutting poverty among the elderly and keeping tens of millions above the poverty threshold. Why not expand it to all?

Matt Bruenig calculated that by giving everybody a mere $3,000 a year, including children (who would receive the money through their parents), we could potentially cut poverty in half. The program would be simple: you get it no matter how much money you make, which would prevent poor people from having to worry about losing the benefit. With everybody in it together, you get a much larger base of political support (one of the reasons means-testing has always been a back-door way of killing Social Security— it reduces support).

In the 1970s, the small Canadian town of Dauphin ran an experiment through a social policy called “Mincome.” Everybody in the town was allowed to get a minimum cash benefit during the duration of the program. Poverty was eliminated, because people living below the poverty line saw their income boosted through monthly checks. But the results were about more than an official line marking the poverty threshold. Mincome positively impacted the horrible conditions associated with the cycle of poverty. When people had a basic income, they were able to better care for their families, stay healthy and improve their education — all the things that help people stay out of poverty in the future.

2. It could be good for the economy: A basic guaranteed income has the potential to positively impact the economy in several ways, which is why economists from John Kenneth Galbraith to Milton Friedman have advocated it.

For one thing, it could help solve the problem of demand. The great driver of the economy in a capitalist system is something economists call “aggregate demand.” The Econ 101 lesson is simple: when ordinary people have money in their pockets, they spend it on goods and services, which in turn allows businesses to thrive because they are able to invest and to hire more people. Proponents argue that a basic guaranteed income would increase demand, which would help the economy to prosper.



But wait, wouldn’t people get lazy if they had a basic income? One of the things the Mincome researchers wanted to know was whether a guaranteed basic income would cause people to stop working. Despite all the dire predictions that had circulated in academic literature before the experiment, the Mincome effect on number of hours worked was actually quite small — hours dropped 1 percent for men, 3 percent for married women and 5 percent for unmarried women.The decrease in hours was mostly the result of people taking the time to raise newborns, care for family members, and pursue their education — people did not cut back on work just to loaf around. In addition to activities which would serve as economic investments for the future, the experiment also resulted in things like fewer hospital visits and illnesses, all of which reduce public health costs.

Many argue that a guaranteed basic income is also potentially good for entrepreneurship, making it easier for people to start a small business or switch careers.

3. It could have many benefits to society: Clearly, we want policies that help us create a more stable society where more people can reach their potential and fewer people resort to crime and violence. Advocates say a guaranteed basic income does just that.

Researchers found that during the Mincome years, more people in Dauphin finished high school, more adults pursued education, and students achieved higher test scores. As noted, people got healthier, too: Fewer people visited the hospital, mental illness decreased, and the number of work-related injuries went down. Plus, social ills like domestic abuse dropped.

As a recession hit and the center-left politics of the 1970s shifted rightward in Canada, interest in the Mincome experiment waned. However, Canadian economic researcher Evylen Forget notes that most people who participated in Mincome wish the program had continued, citing benefits like increased opportunity to pursue an education.

Candadians are now reviving the idea, many arguing that such programs would actually encourage people to work because they would eliminate welfare provisions that penalize the poor who take very low-paying or part-time jobs. In Brazil, advocates have pointed out that a basic guaranteed income could help guard against such scourges as child labor, while Swiss activists make the case that it would help people do more meaningful work, making for happier and better workers.

Philippe Van Parijs, a Belgian philosopher, argues that a basic income is a powerful tool for social justice, allowing everyone, no matter what their circumstances, the possibility to pursue their conception of a good life. He notes that a guaranteed basic income could address some of the issues associated with sexist divisions of labor in which women are expected to do more of unpaid, care-giving work in our society.

4. It might be more efficient than present systems: In the current patchwork of systems confronting poverty, like welfare, food stamps and vouchers, people can fall through the cracks. A guaranteed income could help solve problems caused by rules and restrictions that leave some without subsistence income when they need it.

It’s not just liberals and progressives who like the sound of a simple basic guaranteed income. Something streamlined appeals to conservatives who like versions that could replace existing tax credits and social assistance programs — though it’s important to note that most advocates don’t propose it as a full substitute for existing programs. The American Enterprise Institute’s Charles Murray points out that a streamlined system would obviate the need for people to fill out multiple forms and visit myriad offices to receive benefits. (In his book In Our Hands: A Plan to Replace the Welfare State, Murray suggested an income of $10,000 a year to anyone who was American, over 21 and out of jail.)

5. Let’s not forget simple human dignity: Why is living in dignity not a right? These days, even Americans who get up in the morning every day and report to full-time jobs may not earn enough for a decent standard of living. People like fast-food workers, big-box store employees, caregivers, beauty salon workers, and farm hands often can’t earn enough to feed their families and keep a roof over their heads. Millions have seen no real increase in earnings in decades. Material security, as well as the intangible things that come along with it, like self-esteem and peace of mind, are often out of reach.

A guaranteed basic income is one way to help people to survive with dignity and free them from the humiliation of having to participate in criminal activity and accept abusive work conditions. Because everyone gets it, such a program might serve to eliminate the stigma of a hand-out. Of course, the payment has to be large enough that it helps people actually live in dignity, and some, like economist L. Randall Wray, prefer it as a supplement to something like a jobs guarantee program for this reason.

What’s clear is that our current capitalist system and social safety net have failed too many of us. It may be that in order to confront that epic fail, policy makers will need to get bolder in considering universal guarantees to all citizens.


Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

Paul Ryan’s worst nightmare: Here’s the real way to cut poverty in America

SALON

Saturday, Mar 15, 2014 08:15 AM EDT

Paul Ryan’s worst nightmare: Here’s the real way to cut poverty in America

If you want to really reduce our nation's poverty, there's a simple way: Renounce libertarianism and start spending

 
Michael Lind

Topics: Poverty, GOP, Mitt Romney, Paul Ryan, America, Editor's Picks, Inequality, U.S. Economy, Libertarianism, Business News, Politics News

 

Paul Ryan (Credit: AP/Carolyn Kaster)

Poverty is back in the news, for several reasons. The first is the 50th anniversary of President Lyndon Johnson’s 1964 “War on Poverty” speech. In addition, Republican congressman and 2012 vice-presidential candidate Paul Ryan has released a much-criticized report about federal poverty programs. In 2012 the Romney-Ryan ticket suffered from Mitt Romney’s dismissive comments about the “47 percent” and conservative caricatures of the poor as welfare-dependent moochers and “takers.” Ryan’s attempt at a version of what George W. Bush called “compassionate conservatism” appears to be an effort at rebranding the right as something other than an alliance of Have-Lots and Have-Somes against Have-Nots.

Public debate about poverty typically focuses on the causes of poverty, rather than the cures. The causes of poverty are many and various. You may be poor because you are the child of poor parents; or because you grew up in an economically distressed urban or rural region; or because you were bankrupted by unexpected medical bills; or because you lost all your money gambling on imaginary real estate in “Second Life” (this actually occurred, in a case of which I know). Because poverty has multiple causes, policies must be equally numerous, if the goal is to avert or prevent poverty in the future.

But it’s not necessary to avert or prevent poverty in the future in order to cure the poverty that already exists in the present, for whatever reason. Let me illustrate this point with an example. The treatment of victims of gunshot wounds in the emergency room may be identical — even though one gunshot wound was caused by a shooting in the course of a robbery, another by a failed suicide attempt and a third by reckless play with a firearm. Doctors and nurses can treat the victims of the gunshot wounds now, while leaving others to propose better policing, better suicide-prevention counseling and better firearm safety training in the future.

Fortunately, drastically reducing existing poverty in the U.S. is not a difficult intellectual problem, even though it is a difficult political problem. With sufficient political will, we could slash existing poverty in the U.S. very quickly, while simultaneously trying to prevent as much poverty as possible in the future. Some public policy problems, like averting global warming or regulating shadow banking, are incredibly complex. By comparison, antipoverty policy is simple.

We know exactly what we need to do to radically reduce poverty in America. We know that it could be done, and we know how to do it, because many other First World democracies have slashed poverty already.

Among developed nations, the U.S. is an outlier in having a high proportion of its population living in poverty. Among the 34 member nations of the Organization for Economic Cooperation and Development (OECD), in 2010 on average 11.1 percent of the population suffer from “relative income poverty.” In the U.S. , however, the number is 17.4 percent. Among developed countries, only Chile (18%), Turkey (19.3%), Mexico (20.4%) and Israel (20.9%) have more of their people living in poverty, according to the OECD.

The low-poverty nations tend to be Scandinavian countries like Sweden (9.1%), Norway (7.5%), Finland (7.3%) and Denmark (6.0%). Some on the right argue that it is wrong to compare small, relatively homogeneous countries with a giant, pluralistic, continental society like the U.S. Others argue that the English-speaking countries as a whole are willing to tolerate more poverty and inequality than the Nordic social democracies.

The numbers don’t support these arguments. Among the most populous Western states are France (7.9%) and Germany (8.8%), both of which have around half as many people in poverty as the U.S., notwithstanding their own growing immigrant populations. And while all English-speaking countries tend to be less statist than continental European societies, all of the other anglophone nations have considerably less poverty than the U.S., including Australia (14.4%) and Canada (11.9 %). Indeed, three English-speaking countries — Ireland (9.0%), the UK (10.0 %) and New Zealand (10.3%) — have fewer citizens in poverty than the OECD average in 2010 of 11.1%.

How do other countries do it? They don’t necessarily have fewer poor people to begin with. According to an OECD study, with respect to “pre-tax, pre-transfer” poverty, the U.S., at 13, ranked in the middle of 26 high-income nations. When it comes to “post-tax, post-transfer” poverty, however, the U.S. was nearly the worst, second only to Israel.

The difference is entirely the result of government social spending on the poor — mostly in the form of transfer payments, like public pensions, unemployment insurance, child subsidies and/or wage subsidies. Many other developed democracies start out with lots of poor people, just like the U.S. But the countries with big welfare states remove most of them from poverty. The American welfare state does lower the poverty rate — but not enough. The American welfare state is way too small to be effective in doing its job of lowering poverty.

We know, then, how to slash poverty in the U.S. It’s very easy. All we have to do is expand the American welfare state, not necessarily to Swedish levels, but at least to Canadian or British levels. If we restrain public and private health cost inflation, by adopting medical price controls (“all-payer regulation”) of the kind used in most other democracies to prevent price-gouging by pharma companies, hospitals and doctors, we can pretty much end poverty in America very quickly.
A progressive fantasy? Well, not exactly. Yes, most American progressives would embrace much higher social spending. At the same time, many on the American left would prefer to pay for it with steeply progressive income taxes.

But the countries with really generous welfare states and social insurance systems, like those of Scandinavia, do not pay for them chiefly or solely with “soak-the-rich” income taxation. Progressive income taxes are part of the mix — but as Peter Lindert has pointed out, broad, relatively regressive taxes that fall on the middle class and working class, such as payroll taxes and the value-added tax (VAT), a consumption tax, are necessary to fund governments that take a bigger bite out of a nation’s GDP without inducing capital flight — or even capitalist flight.

Ironically, it is American conservatives rather than American progressives who favor a national consumption tax (even as some on the right oppose a value-added tax, which is by far the most efficient and familiar way to tax consumption). “Grand bargains” are usually bad ideas, but here’s a good one: We could slash poverty in the U.S. by means of “progressive” levels of social spending, funded in part by a “conservative” national consumption tax.
As an intellectual exercise, then, radically reducing poverty in America is extremely simple and non-controversial, at least among experts (genuine, scholarly experts, not paid propagandists at conservative and libertarian think tanks). All we have to do to radically reduce poverty from all causes in the U.S. in the near future is to increase government spending, raise taxes and increase regulation (all-payer medical price regulation).

Merely to state it like that is to suggest the political difficulty of translating this simple and straightforward policy agenda into reality. Between anti-tax Tea Party fanatics and cowardly Democrats terrified of being called “tax-and-spend liberals,” there is no chance of substantial reductions of American poverty in the near future. But this intellectual exercise is still worthwhile, for two reasons.
First, it allows us to understand that most of the people who talk about poverty in the U.S. are not actually talking about reducing poverty right now. They are focused on preventing poverty in 20 or 40 or 60 years, by means of preschool programs, or family therapy, or regional economic development, or whatever. Those are all fine and good. But because the experts and politicians and pundits talk almost exclusively about averting future poverty, rather than reducing present-day poverty, most Americans do not realize that present-day poverty, whatever its cause, really could be quickly reduced — if there were the political will to do so and to pay the necessary taxes.

This intellectual exercise is useful for another reason. It allows us to distinguish those who are serious about reducing poverty in America from charlatans. It is impossible to substantially reduce poverty in the U.S. without spending a lot more money on the poor and perhaps the middle class and paying for that spending with much higher taxes. Anyone who claims otherwise is, by definition, a fraud. Conservatives who claim that they know how to reduce poverty without raising spending and taxes are either ignoramuses or conscious con artists. And so are timid centrist Democrats who sound progressive, but whose actual proposals for addressing poverty are nothing more than teeny-weeny itty-bitty tweaks to the Earned Income Tax Credit (EITC) or the child tax credit.

This is not rocket science.  The U.S. can reduce its post-tax/post-transfer poverty rate from 17.4 % at least to the OECD average of 11.1%, if not the Danish level of 6.0%. But doing so will cost money. Lots and lots of money.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation.

  Culture  

Salon.com / By Lindsay Abrams

Buy Less, Do More: 5 Reasons Experiences Make Us Happier than Things

 

It's time to shift from materialism to experientialism, says author James Wallman.

Photo Credit: hxdbzxy/Shutterstock.com

 

 

 

March 9, 2014  |  

 

 

British trend forecaster James Wallman has coined a new word: “Stuffocation.” (Think “stuff” and “suffocation.”) Wallman claims it’s one of the most crushing afflictions of modern society. Not only does the materialism it’s caused by have a disastrous ecological impact, the argument goes, it’s keeping us from leading more fulfilling lives.

The first step toward recovery is recognizing that more stuff doesn’t equal more happiness — something Wallman says is already happening. The second is finding something more meaningful to replace material items. That something, he argues, is experience: doing things instead of buying things. It’s an idea that, slowly but surely, he sees moving from the fringes of society to the mainstream.
If stuffocation is the key affliction of our time, in other words, then experientialism is going to be the key solution. In “Stuffocation,” his recently released book, Wallman chases down the people who are shifting away from acquiring and toward doing; speaking with Salon, he makes a convincing case for the rest of us to follow in their footsteps. This interview has been lightly edited and condensed.

“Stuffocation.” Aside from the clever name, what’s new about this idea? Is it just a clever name for materialism, or is there something else you’re trying to get at? 

The important thing about being a good cultural analyst and a good trend forecaster comes from applying the methodology sensibly and intelligently. And I say that because the way that I forecast the future is inspired by something a futurist named William Gibson once said: “The future is already here, it’s just not very evenly distributed.” So my role is to see the future here in the present and to identify the innovative ways of doing things that are happening now that I believe are going to catch on and move into the mainstream.

Some people have said, “What’s new about the problem with materialism? Everybody knows this. What’s new about saying that experience is better than material things? Lots of people say they know that already.” But I don’t think anyone else has quite said it. I don’t think anyone has identified this as being the defining problem. And stuffocation, for me, in some ways feels like a bag and I’ve put into it all the different aspects that explain this problem.

What’s new is the way I’ve bagged up these problems together. So some people say, just hold on a second, it just sounds like “affluenza” or “status anxiety” 2.0. “Status Anxiety,” by Alain de Botton, is also a great book, but it says that we’re feeling anxious because of today’s society. Affluenza says the ways we live our lives, all this affluence, is causing us to be depressed. But if you look at stuffocation and all of the problems involved with it, it’s not just about the stress that comes with modern life. It’s about all the problems that come with modern life, which could also include the impact we’re having on the environment, for example. So what I’ve done is, I’ve taken these other things that other people have identified and I’ve synthesized those into a whole, which is the problem of stuffocation.

My use of the term “experientialism” is much more cultural than it’s been used in the past. It’s a value system that underpins what we’re doing, but no one has identified it as the better way for us to live, as the way to solve the problems of stuffocation. No one’s stated that as a manifesto and no one has made that forecast that we are moving from a value system of materialism to a value system of experientialism. No one’s said that that’s going to be the key defining, cultural trend of the 21st century.

And you’re saying that it will be the defining trend?

Yes, I believe it will be. It’s important to note that this is for developed Western, successful countries and those who have moved from the problem of scarcity to the problem of abundance. The defining problem of the 20th century in many ways has been the defining problem of human existence: scarcity. The magic of the Industrial Revolution met the geniuses who created the consumer revolution, particularly the mad men and women of the ’20s who created a consumer revolution. And it worked first in the United States.

The “American paradox,” as Christine Frederick called it, is that it worked so well in the States that everyone else, the Brits, the French, etc., said, “Hold on,  their standards of living are going up in this incredible way and we want ours to do that too.” So those of us who were lucky enough not to get bamboozled by communism followed suit as quickly as we could after the Second World War. And then the magic of that idea meant that all the others followed too: the Brazilians, the Indians; they all want some of this too.  So that was the big idea of the 20th century, and I think — for all the reasons of stuffocation — that doesn’t work  anymore.

I think people are pretty familiar with the narrative of how materialism became this key way of living. But when did the shift away from that and toward experientialism begin? 

The thing about seismic cultural change is it doesn’t really work so well for news pegs. There’s very rarely a kind of moment when you say, “right, that’s it.” Especially at this point it’s very hard to identify the turning point. You know, if you look at the Industrial Revolution, that took 150 years to happen. So for people living every day it was evolution, not revolution. But looking back we can say it was revolution. I think what we’re going through to later historians might look like revolution, but for those of us living every day it will feel much more like evolution.

And so in terms of picked moments, it’s really hard to put your finger on it. To give you one example, in 1970, 80 percent of people were materialistic, now it’s 50 percent. And that’s been a gradual shift. In 2011, the experiential luxury section was bigger than any of the other sectors for the first time. There’s this guy named Chris Goodall — he’s an ex-McKinsey consultant, he’s a Cambridge University grad, and he taught economics at Harvard briefly — he thinks that we’ve reached the point or we’re passing the point of “peak stuff.”

Goodall’s research began in 2003, and that’s when he’s kind of set his point. He found that our behavior has been changing: We’re now consuming less cars, concrete, paper, steel, fertilizer — a lot of key parts of our economy. We now are what’s called “dematerializing.” So, I would say, the first decade of this century is probably a reasonable time to peg that.

You write a lot about these extreme case studies where, for example, people are selling all their possessions. I think also of things like micro-apartments — this sort of thing feels like a fringe movement. If this is something that’s going to become mainstream, how do you see it taking hold in larger society?

The book almost followed the journey of me identifying this problem and then going looking for the answer. So it’s a very whittled down list — I came across a far larger number of ideas, but I just wanted the ones that I thought were most relevant. The message of “Stuffocation” at the end of the day is not anti-consumerism or anti-capitalism. It’s not anti-stuff, it’s not about getting rid of all of our stuff. I don’t believe we’re going to do that.

The people who are minimalists, who are taking this to the extremes, are reacting. There’s no doubt about it, there are some small number of millions in the States who are doing it and it’s spread around the world. For me, I don’t think we’ll be getting rid of all of our stuff, but what makes me think that this is mainstream is the way it resonates. The response I’ve had from journalists, and from readers, is that even when people don’t agree with everything I talk about, the idea of stuffocation resonates with them: “Oh yeah, I know what you mean, we’ve got too much stuff.”

If you think about the study by UCLA’s Center on Everyday Lives of Families in Los Angeles, the most comprehensive report on contemporary living ever created, they reached the conclusion that we’re living in the most materially rich society in global history. We have light-years’ more possessions than any preceding society. We’re facing material saturation. We are coping with extraordinary clutter and we’re in a clutter crisis. And just to be really clear, those aren’t my terms. Those are the terms of ethnographers and anthropologists whose job it is to be objective. They were beating drums to tell people what they should do. And I think that because we have so many positions, because things have become ubiquitous and cheap and it’s so easy just to buy things nowadays, because we’ve been trained to become that way, that when you tell people, “Yeah, I’ve got too many of this, I’ve got too many pairs of shoes, I’ve got too many books on my shelf that I’ve never read. I’ve got loads of stuff that I just don’t use that just fills up my home” — it just resonates for people.

So there are a lot of things playing into this attitude, and you point out that concern for the environment could be one of them. Do you think that plays a prominent role in people moving away from materialism, or is it more of a secondary outcome?

It’s funny, because when I talk about stuffocation, I very rarely mention the environmental aspect. And it has a very small mention in the book. That’s partly because I feel it’s so obvious. But also, not only is it obvious, I think it’s one of those drivers of stuffocation — one of those things that fits into the bag of stuffocation — is that it’s all well and good for some people to be concerned about the environment, but there are a lot of people who a) aren’t bothered about the environment, and b) even if they are bothered about the environment they aren’t bothered enough to do something about it and stop consuming stuff.
So firstly, like I said, this isn’t a trend for 2014 that’s going to be gone by 2015. This is not something that means that Cyber Monday and all those sale shopping days aren’t going to happen. People aren’t going to stop going to the store. It’s not going to happen overnight. Because all of the reasons for stuffocation aren’t short-term blips. They are observable, long-term trends. I think as we see climate change continue to happen, there seems pretty clear evidence that things are changing. As we see that start to affect more and more people in terms of weather patterns changing, there will be increasing concern about the environment and that will affect us.

But at the same time, even if you have no interest in the environment, all of the other things that are causing stuffocation — status anxiety, affluenza, the clutter crisis, the stable society that we live in today — all of these things will push us to shift from materialism to experientialism. You don’t need to believe in environmentalism to agree with the other aspects of stuffocation and the other reasons why we’re shifting from materialism to experientialism.

What are some of those other reasons?

One of them is the knowledge that we get more happiness from experiences than we get from material goods. And that is very new knowledge. That was discovered in a paper in 2003 by two psychologists called Thomas Gilovich and Leaf Van Boven. The paper, wonderful name, was called: “To Do or To Have, That Is the Question.” For me, that was a watershed moment because before that time, you couldn’t say for sure whether an experience or a material good was better. Someone could say, “Look, if you think experience is better than material goods, you’re buying the wrong stuff.”

It sounds like more of a philosophical debate.

Yeah, exactly. There was no answer. But these guys proved, in a social science way, that experiences are better than material goods. It didn’t really get a lot of publicity until about 2009, but the thing is, once we have that knowledge — and there are other works and books coming out about this — once you know that, if you continue to put your focus on material goods rather than experiential you’re making the choice not to be happier.

Let’s go back to the idea of knowing that jogging is good for us, for example, which I think was discovered in the 1950s or 1960s, or that cigarettes were bad for us, or that eating blueberries is good for us, or eating broccoli is good for us — the thing is, it’s quite rare that once we discover that we start changing. It wasn’t when it was discovered that there was a correlation between smoking and disease that you suddenly saw people jogging more. It took a number of decades for it to really change. But it has changed our behavior. It has changed our culture over a number of decades. And by the same token, the knowledge that experience is better than material goods at making us happy, giving us identity, giving us status, giving us meaning in our lives, is going to change the way people make decisions.

I’d love to talk about the different facets of experientialism. As you say, it’s something that can require spending a lot of money. What are some of the ways you see this as an improvement over materialism?

I’m really glad you brought that up, because a lot of people sometimes have a bit of an issue with the way that I talk about experientialism as going skiing in Tahoe or Park City or going to Morocco on vacation or wherever. And the fact that the shift from materialism to experientialism is not anti-capitalist, not anti-consumer. It’s not about spending less money. Because a really important part of our system is that we need people to keep spending money to give people jobs, to create the great standards of living that we have. If we want to have more, we have to spend more — it’s a very simple correlation in terms of our economy. I’m not trying to bring down the economy at all.

But at the same time, the magic of the experientialist viewpoint is you don’t need to go to Peru on a holiday. You don’t need to go to Marrakech for a vacation. You don’t need to spend a whole bunch of money to have a great time and experience. If you look at the statistics, living near a park makes you happier. Going for a walk with friends. Being in nature. Just doing things is good for you in terms of making you happy.

So it depends on what you define as significant experiences.

Well, it depends on you. It depends on your choice. Some people like to go skiing. Some people like to go for a walk. Some people like to rock climb. Some people like to ramble in the hills. There’s a very interesting piece of research that I came across recently that says really gung-ho, seat of your pants, exciting experiences really work well for young people whereas for older people, what they should look to do is the simple experiences. Going for a walk with a friend, having dinner with a friend, whatever it might be. I think you’re trying to make a statement about who you are. And what’s interesting, I think today, is that instead of making a statement about who we are in terms of our material goods, we’re much more focused on making a statement on who we are through experiences instead. So if you think of the rise of Tough Mudder, there’s a great example.

And one of the interesting things about that discovery in 2003 is since then there has been lots of research into why experientialism is better than material goods at making us happy.

You beat me to the question.

So there are five key reasons why experiences are better than material goods at making us happy. The first thing is something that social scientists call “hedonic adaptation.” And that’s simply a way of saying that with material goods you get bored of things quickly, whereas with experiences you don’t. The great example is the mobile phone. When you first get it you press the buttons, you play with it, you tell your friends about it, you’re excited. A week later, not so excited. A month later, ehh. Three months later it’s part of the furniture. You just get used to the thing being around.

The second thing is “positive reinterpretation.” That’s basically, if you buy a bad material good, let’s say a pair of shoes that actually don’t fit that well or a pair that squeak or that coat that swishes or makes a weird noise when you’re walking, there’s nothing you can do about that. It’s just a bad decision. That’s it. But with an experience, if it goes wrong, it doesn’t really go wrong at all.
Think about being on a long bus ride, and you’ve sat next to a person who’s sick – literally sick – all over you. And there are chickens on the bus, the windows won’t open or shut, you bang your head, the seat is really uncomfortable, and you break your coccyx and you’re just in agonizing pain, it’s supposed to be a one-hour journey and it takes three days. At the time, that’s a really horrible thing to be going through. But the more you tell it, the better it is, right? There’s that magic. The magic of a bad experience is that it’s almost like there’s no such thing as a bad experience. That’s probably my favorite reason.

The third reason why experiences are better than material goods – and this actually references the status anxiety – is that experiences are much harder to compare than material goods. And that means that we don’t get the same kind of tension that comes with comparing things. You know, if you’ve ever bought a handbag, and your colleague turns up the next day with the better one – let’s say you got the one from Top Shop, and it’s a great bag, but your colleague got the Gucci one, and there’s no doubt about it, it’s a better bag. Or I have a Nissan, it’s a very plain, average car, and one of my neighbors has a Porsche, another one has an Audi. And there’s no doubt about it that they have nicer cars than me.

But let’s say, for the sake of argument, that for a holiday your neighbor goes to the Four Seasons in Hawaii, or the Maldives, or one of those amazing islands off Brazil and stays in a five-star resort, and drinks champagne from the refrigerators, which are on the beach. And you go to Wales for a rainy camping holiday. Or you drink warm beer on the beach, or whatever it might be. Now there’s no doubt about it that they had a swankier holiday than you. But did they have a better holiday? Is chilled champagne on the beach better than warm beer? People often smile at me when I say this, and say of course they did.
But actually, you might be really wealthy and having what looks like an amazing time, but you might not be happy and having fun. It’s much more about the people you’re with and what you’re doing. But anyway, from that basis, it’s much harder to compare experiences than it is material goods.

You could argue, though, that people going on social media and posting photos of their vacations is breeding a lot of envy, couldn’t you?

Definitely. The FOMO [fear of missing out] idea is, I think, the 21st-century version of “keeping up with the Joneses.” It’s been fascinating talking to people – particularly in the salons I’ve been hosting recently –they have a real problem with status and with the idea that people are posting pictures of where they are, and that’s destroying the experience. There’s no doubt about it: If you spend more time worrying about what you’re going to be posting or tweeting or putting on Facebook that you’re not going to have as good a time. There was great research lately that showed that if you Instagram shots of your food, you enjoy your food less. I think we can all relate to the idea that if you’re focusing on what other people think about your time, you’re not going to have as good of a time.

So there are some issues with replacing material things with experiences as a kind of better way. But I think people get too obsessed with the idea that taking a picture of something is about status. I’ve taken pictures of me and my brother and father on a ski slope in Chambery, or a wonderful picture of a cloud that was over Mont Blanc, for example, and I didn’t take that picture to show off to people I was there. I mean, possibly slightly, but I took it as a memory that I was there, and to share it with, for example, my niece who’s on Instagram and wants to see a picture of her family skiing together. It’s not just about status. It’s just about sharing what we do.

So back to those last two reasons …

Yes. So No. 4 is about identity. If you think about the things that you have versus the things that you’ve done, the things you have contribute far less to your identity. Wedding gifts are a great example, as compared to actually having had a wedding. Or if you just had to choose between giving back $1,000 worth of clothes and things that you have, versus giving back $1,000 worth of a weekend away with friends, most people would give back the stuff. Have you seen the movie “Eternal Sunshine of the Spotless Mind”? Experiences really matter — things that happen to us, that we have done, really contribute to our identity.
If you’ve climbed the hill, if you’ve done the Tough Mudder course, if you’ve learned to surf, if you’ve learned how to make bread or cupcakes, or you’ve run the New York Marathon, or you’ve gone ice skating in Central Park — that contributes to who you are. Whereas having a material good doesn’t contribute in the same way nearly as much.

The final point — and this one is really key — is that experiences tend to bring us closer to people. Because we’re social animals, being closer to people tends to make us happier. So if you’re buying something, it tends to separate you from other people (it doesn’t always, obviously there’s a mix here), whereas doing something tends to bring you closer.

There are two pieces of research I love. One shows that talking about experiential goods makes you happier than talking about material goods. The other shows that we prefer to listen to people who talk about experiences rather than materials. So if you know that piece of information, and if you have a choice of having $100 or $1,000 to spend on a material good or an experiential good, you’ll know that with the experience, you’ll enjoy doing it more, you’ll enjoy talking about it more, and people will be more inclined to listen to you. So in every single way, it will bring you closer to other people and it will make you happier.

Lindsay Abrams is an assistant editor at Salon and a former writer and producer for The Atlantic's Health Channel.

Privatization Myths Debunked

Privatization Myths Debunked

A PDF version of this page can be found here.

Myth #1:  Privatization saves money.

The Truth: Privatization often raises costs for the public and governments.

Proponents of privatization promise to fix budget woes by saving the government money.  But numerous examples in a variety of sectors show that projected savings don't always materialize.   Cost overruns combined with hidden and indirect costs, such as contract monitoring and administration, can make privatization more expensive than in-house services for governments.   In fact, the Government Finance Officers Association estimates that hidden and indirect costs can add up to 25% to the contract price.[i]

The Government Accountability Office has found that methods by which agencies and privatization consultants conduct projections and report contract costs can make cost savings appear greater than they actually are.[ii]  According to a 2007 survey by the International City/County Management Association, 52% of governments that brought services back in-house reported that the primary reason was insufficient cost savings.[iii]

• An audit report from the Wisconsin Legislative Audit Bureau revealed that the state's department of transportation wasted more than $1 million by outsourcing almost half its engineering work to private contractors over the past five years.   The audit found that about 60% of these outsourced jobs could have been done at a lower cost by state workers, which would have saved the state $1.2 million.[iv]   

• In February 2009, Chicago and Chicago Parking Meters LLC signed a 75-year concession agreement for the operation of Chicago's 36,000 parking meters.   Along with many problems related to malfunctioning meters, rates have significantly increased, causing many residents to think twice before parking in the city.   Many stores and merchants in the area complain that the rates have decreased business.   In some parts of the city, rates increased in the first months to 28 quarters ($7) for 2 hours of parking time.   The parking charges also have been extended to 7 days a week and for more hours during the day.[v] 

Myth #2:  Private companies do a better job than the public sector.

The Truth:  Many examples show declines in service quality under private contractors.

Faith in the private sector to outperform government agencies is deeply ingrained in the American psyche.  However, the facts disproving that belief are steadily mounting.   In many cases, private contractors have failed to deliver, leaving communities without vital services and assets.   Private companies naturally seek to maximize profits, which can incentivize cutting corners to reduce costs.   This can greatly impair service quality and maintenance of vital assets.   The most popular reason for in-sourcing, according to the International City/County Management Association survey mentioned above, was a decline in service quality.   Over 60% of governments that brought functions back in-house reported this as their primary motivation.[vi] 

• In 2009, Indiana cancelled its $1.34 billion contract with IBM to provide public benefit eligibility services.   For two years, vulnerable families failed to receive benefits for which they qualified, including food stamps, health coverage, and cash assistance, due to the company's poor provision of these services.   The privatized system led to high error rates and poor timeliness, among many other problems.[vii]

• In 2010, Gary, Indiana cancelled its 10 year contract with United Water.   In May 2008, a state inspection found that the district, under United Water's management, had violated discharge limits 84 times between 2005 to 2007; had at least 25 pieces of broken equipment; filed inadequate monitoring reports; and failed to meet mandated deadlines.[viii] By cancelling the contract and bringing water service back in-house, the city expects costs to decrease from $16 million to $8 million a year.   

Myth #3:  Privatization allows governmental entities to better anticipate and control budgetary costs.

The Truth:  Cost estimates are extremely unreliable and privatization can cause result in unforeseen budgetary consequences.

Some believe that privatization allows for more precise budgeting, since the inflow or outflow of money appears fixed once a contract with a private entity is signed.   But hidden costs and cost overruns can significantly distort these figures, market circumstances can reverse the estimates, and ripple effects of privatization can increase unexpected areas of governmental budgets.

Governments cannot anticipate the cost of privatization failures, from the overtime expenses of sending city work crews to correct sloppy work by private road maintenance companies to the massive ordeal of rebuilding entire outsourced departments when a contractor's costs, delays or service breakdowns become unsustainable.

• In 2009, the Pew Center on the States analyzed Pennsylvania's failed attempt to sell the Pennsylvania Turnpike.  The Governor predicted that the lease income would generate about $1 billion a year for the state's transportation budget.  But this rosy figure assumed a 12% annual return on the state's investment.  According to the Pew report, with the stock market decline the previous year, the state would have actually lost money on its investment.[ix]

• Sometimes perceived cost savings in one area can increase the cost in another area of the budget.  According to the Economic Policy Institute, in 2006, nearly 20% of all federal contract workers earned less than the federal poverty level of $9.91 an hour, while 40% earned less than a living wage.  Many of these workers do not receive employer-sponsored health benefits[x].  As a result, these workers must rely on public benefit programs, such as Medicaid and the Earned Income Tax Credit (EITC) program to make ends meet.  Lower wages and benefits, while making contracts appear cost-efficient, lead to increases in other parts of the federal and state budgets. 

Myth #4:  Privatization allows governmental entities more administrative flexibility.

The Truth:  Privatization requires substantial administrative resources for monitoring and oversight.

Substantial time and personnel are necessary to adequately monitor contracts, especially those involving essential governmental functions.   If governments don't dedicate sufficient personnel and time to monitoring contracts, they run a high risk of poor contractor performance and wasting large amounts of money.

• In a Cincinnati Enquirer investigation, the newspaper concluded that the State of Ohio and many local governments engaged in "casually administered" contracts with "lax controls."  From 2000-2003, 116 state audits found that contactors misspent $97.7 million tax dollars.[xi]

• Texas entered into a contract with Convergys to administer human resources functions for the Health and Human Services Commission.   An audit in 2006 revealed numerous problems related to contract oversight.   As a result of the minimal oversight, the state was unable to be fully involved in the development, testing, and validation of contractor's system.   The agency relied on the contractor to both develop and perform the testing and then to assess the system and report the results of those tests.[xii]   As a result, the agency did not have the working knowledge of the system to hold the contractor accountable for technical performance issues.

Myth #5:  The public still maintains control over a privatized asset or service and the government retains the ultimate ability to make related public policy decisions.   

The Truth: Privatization can bind the hands of policymakers for years, allowing private companies significant control of a privatized asset or service and the ability to dictate important policy decisions.   

Non-compete and "make-whole" clauses are just a few of the ways that private companies control privatized assets and dictate important public policy decisions.   Non-compete clauses forbid competition and prohibit the government from making policy and planning decisions that may affect the contractor's revenues.   These contract terms have prevented numerous cities and states from improving public transportation or implementing other planning or environmental initiatives that may have threatened contractor revenues.   Asset privatization contracts also frequently stipulate that the government must reimburse or "make whole" the contractor if an event, such as a parade or sudden natural disaster, occurs.   Often the true ramifications of these types of provisions, which help reduce risk and guarantee profits for contractors, come as a surprise to policymakers. 

• In September 2008, Indiana was required to reimburse the private Indiana Toll Road operator $447,000 for tolls that were waived for people being evacuated during a severe flood.   This requirement in the contract forced the state to pay money to a private contractor in order to ensure the public's safety.[xiii]  

• In 2008, the private contractors that operated the Northwest Parkway in Denver, Colorado, objected to improvements on W.  160th Avenue.   The 99-year privatization contract allowed the private company to prevent improvements on city-owned and maintained roads, since the improvements "might hurt the parkway financially," by providing an alternative route for travelers, thus potentially reducing toll revenue.[xiv]   

Myth #6:  If anything goes wrong, the government can easily fire the contractor or adjust the contract.

The Truth:  Reversing privatization involves huge costs and service interruptions.

When governments turn over core services to private contractors, it can be very expensive and time-consuming to alter contract terms or cancel a contract.   Taxpayers can be stuck with legal expenses when companies file lawsuits seeking greater payment.  Additionally, contract cancellation can lead to service interruptions or loss of access to public assets during the transition period.

• Virginia sought to end its contract with Northrop Grumman for statewide information technology services because of numerous instances of missed deadlines, cost overruns, and technical problems.   The state's auditors calculated that cancelling the contract during fiscal 2010 would cost Virginia $400 million, which auditors said the state can't afford.[xv]   As of 2010, the state may be forced to remain in the contractual relationship because it cannot afford the cancellation.   

• In 2007, when Texas cancelled its contract with Accenture for public benefits eligibility services, it took 20 months for both parties to settle issues related to the contract cancellation.   In the meantime, many families continued to have problems accessing food stamps, welfare, and health insurance because the state had fired a large portion of its case workers at the beginning of the privatization effort.   Nearly three years later, Texas is still struggling to rebuild its public workforce.[xvi] 

Myth #7:  Companies are chosen for privatization contracts on the merits, not based on political or financial connections.

The Truth:  Government for profit opens doors to unscrupulous behavior by politicians and businesses.

As many examples illustrate, the companies that receive lucrative contracts may not be the best company for the job, but instead may have the most insider connections.

• Two judges in Pennsylvania received $2.6 million over seven years from Pennsylvania Child Care LLC, a private company that operated a juvenile detention center.  The judges helped secure the company a 20-year, $58 million contract with the county and aggressively sentenced children for minor infractions to ensure that the detention center remained at capacity.  In early 2009, the two judges were charged with racketeering, extortion, bribery, money laundering, and fraud, among other crimes.[xvii] 

• In 2009, the former president of the Jefferson County, Alabama county commission was convicted of taking bribes to steer government business to J.P. Morgan. The county commissioners followed advice of a J.P. Morgan consultant and set up an unorthodox financing scheme to refinance the debt on its sewer system. The county paid $120 million in fees -- six times the prevailing rate - to buy interest-rate swaps from J.P. Morgan and several other financial institutions. Within five years, the bad advice had increased the county's debt by $277 million. Low-income residents bore the consequences as the county raised sewer rates again and again to stave off bankruptcy.[xviii]

[i] AFSCME, "Government for Sate: An Examination of the Contracting Out of State and Local Government Services,"  Eighth edition.
[ii] United States Government Accountability Office, "Department of Labor, Better Cost Assessments and Departmentwide Performance Tracking Are Needed to Effectively Manage Competitive Sourcing Program." November 2008.   GAO-09-14.  
[iii]International City/County Management Association.   See: http://icma.org/en/results/surveying/survey_research/whats_new
[iv] Wisconsin Legislative Audit Bureau, "Construction Engineering in State Highway Projects." May 2009., See: http://www.legis.state.wi.us/LAB/reports/09-dotconstructionengineering_ltr.pdf
[v] In The Public Interest, Chicago Parking Meters case.   See: http://inthepublicinterest.org/case/chicagos-parking-meters
[vi] International City/County Management Association.   See: http://icma.org/en/results/surveying/survey_research/whats_new
[vii] In The Public Interest, Indiana Public Benefits Eligibility System case.   See http://inthepublicinterest.org/case/indiana-public-benefits-eligibility-...
[viii] Food and Water Watch, "The High Cost of Privatizing Water and Wastewater Services."  Summer 2010. 
[ix] Marcia Carroll, "Privatization: Recent Development," March 2009.
[x] Economic Policy Institute, "Outsourcing Poverty: Federal contracting pushes down wages and benefits."  EPI Issue Brief #250.  February 11, 2009.
[xi] Cincinnati Enquirer, "Weak Contracts Waste Tax Money," May 19, 2003.
[xii] Texas State Auditor's Office, "The Health and Human Services Commission's Consolidation of Administrative Support Services." January 2006.  SAO Report No.  06-018.
[xiii] Ellen Dannin, "Infrastructure Privatization Contracts and Their Effect on Governance." Pennsylvania Dickinson School of Law, Legal Studies Research Paper No.  19-2009.   2009.
[xiv] Ibid.
[xv] Washington Technology.  "Trio of big contracts have problems." October 29, 2009.  See: http://www.washingtontechnology.com/Articles/2009/11/02/Upfront-Contract...
[xvi] In the Public Interest, Texas Integrated Eligibility Redesign System Case.  See: http://inthepublicinterest.org/case/texas-integrated-eligibility-redesig...
[xvii]  In the Public Interest, Pennsylvania Kids for Cash case.  See: http://inthepublicinterest.org/case/pennsylvania-kids-cash-conspiracy
[xviii] In The Public Interest, JP Morgan Investment Consulting Fraud case.  See: http://inthepublicinterest.org/case/jp-morgan-investment-consulting-fraud

The Effects of Minimum Wages on SNAP Enrollments and Expenditures

  

The Effects of Minimum Wages on SNAP Enrollments and Expenditures

SOURCE: AP/Matt York

Cashier Irene Peters checks out a customer at a department store in Phoenix.

By Rachel West and Michael Reich | March 5, 2014

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See also: Raising the Minimum Wage to $10.10 Would Cut Taxpayer Costs in Every State by Rachel West and Michael Reich
 
Endnotes and citations are available in the PDF version of this report.

How do minimum wage policy increases affect enrollments and expenditures on means-tested public assistance programs? In this report we address this question for the case of the Supplemental Nutrition Assistance Program, or SNAP, formerly known as the food stamp program.

By definition, government spending on a means-tested program should decline as average earnings increase, insofar as benefit levels fall with increased earnings and insofar as the earnings increase makes some individuals ineligible for any benefits. Both of these conditions are satisfied in the case of the effect of minimum wages on SNAP benefits. SNAP benefits decline 30 cents for every $1 increase in family earnings and phase out entirely at about the federal poverty level. Low-wage workers are disproportionately enrolled in SNAP. A minimum wage increase that lifts many families out of poverty should therefore reduce public expenditure on this program.

But the relationship may be more complex. If a minimum wage increase reduces employment, thereby adding to the number of unemployed, the number of SNAP recipients could increase. SNAP recipients who are unemployed, disabled, or retired will not be affected by a minimum wage increase. Conversely, if many SNAP recipients have earnings that already bring them close to becoming ineligible for the program, a minimum wage increase may have a very small effect on SNAP expenditures. The quantitative effect of minimum wages on SNAP spending is not self-evident. It requires a causal analysis.

In an era of historically low real federal minimum wage rates, rising income inequality, job-market stagnation, and contentious debate about government deficit spending, the possibility that a higher minimum wage may lead to increased or reduced public spending has great relevance to the public and to policymakers. This report presents an initial empirical analysis of the effects of minimum wage policy on SNAP participation and expenditures. We do so by exploiting more than two decades of variation in binding state and federal minimum wage changes in an econometric framework. Our future research will examine the effects on SNAP further and apply an analogous framework to two other public assistance spending programs: the Earned Income Tax Credit and Medicaid.

According to the finding in this report a 10 percent increase in the minimum wage reduces SNAP enrollment by between 2.4 percent and 3.2 percent and reduces program expenditures by an estimated 1.9 percent. Taking into account each state’s 2014 minimum wage level, we apply these results to the legislative proposal put forward by Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA) to raise the federal minimum wage to $10.10 per hour. Our results imply that the effects of the Harkin-Miller proposal on wage increases would reduce SNAP enrollments by between 6.5 percent and 9.2 percent (3.3 million to 3.8 million persons). The total anticipated annual decrease in program expenditures is nearly $4.6 billion, or about 6 percent of current SNAP program expenditures.
Harkin-Miller proposes to index minimum wage levels in subsequent years to the consumer price index, or CPI. The minimum wage would then increase at the same rate as SNAP benefit and eligibility levels, which are also indexed to the CPI. Consequently, the savings over 10 years in 2014 dollars would be 10 times the one-year savings, for a total of approximately $46 billion.

Some of the reduction in SNAP program enrollment and expenditures would occur among workers making less than $10.10 per hour—those whose pay would be directly increased by the minimum wage law. Another part of the reduction would occur among workers currently earning between $10.10 and $11.50, who would also receive pay increases.

Although a large number of studies have examined the impact of minimum wage increases on earnings and employment, the impact of such minimum wage policies on public assistance enrollments and expenditures remains an under-explored subject in the economic literature. Only a few studies discuss the relation between the minimum wage and government transfer spending, much less attempt to identify the causal effect of one upon the other. Professors Marianne Paige, Joanne Spetz, and Jane Millar find positive effects of minimum wage increases on welfare caseloads; as they state, however, their results vary considerably with different sample periods and assumptions about state trends. Professors Marianne Bitler and Hilary Hoynes discuss the importance of SNAP as a safety net program, but they do not examine its relation to minimum wage policy. Research economist Sylvia Allegretto and her University of California at Berkeley colleagues show that low-wage workers in general, and fast-food workers in particular, are much more likely to be SNAP recipients than all workers.

Several studies have examined the relationship between the minimum wage and the Earned Income Tax Credit, or EITC. Professor David Neumark and William Wascher, a researcher at the Federal Reserve Board of Governors, find that a higher minimum wage increases EITC benefits for families in deep poverty, while reducing EITC benefits for some sub-groups. Professors David Lee and Emmanuel Saez argue that the minimum wage and EITC are complementary policies, not substitutes. The Congressional Budget Office, or CBO, argues that a minimum wage increase will not have a substantial effect on EITC spending, while Professor Jesse Rothstein examines whether the positive effect of the EITC on female labor supply has lowered wages. While these studies are of interest, the EITC is quite different from SNAP in having a substantial phase-in period in which EITC benefits increase, as well as a long phase-out period, with complete phase-out at an annual income of about $48,000 for a family of four, quite a bit above the reach of the minimum wage.

Research by Professor Arindrajit Dube on the causal effect of the minimum wage on family poverty represents the study most related to the one at hand. Dube finds that Harkin-Miller would raise about 4.6 million non-elderly Americans above the federal poverty level, or FPL. In contrast, when CBO uses a simple simulation method to address the same question, they find that Harkin-Miller would raise 900,000 people above FPL. The difference between these two estimates highlights the importance of undertaking a causal analysis. The methods used in this paper are in many respects similar to Dube’s. Moreover, since eligibility and benefit levels for programs such as SNAP and Medicaid are tied to the federal poverty level, Dube’s findings have direct implications for this study. Nonetheless, this report appears to be the first study to examine the effects of the minimum wage on SNAP. In future work, we plan to undertake similar analyses for the EITC and Medicaid.

The report proceeds as follows:

• Section 1 provides background information on the federal minimum wage, state minimum wages, and the SNAP program.
• Section 2 describes our methods and data.
• Section 3 provides our main results, including a simulation of the effects of a Harkin-Miller minimum wage increase, and a state-by-state analysis.
• Section 4 presents our conclusions.

Further details are provided in a series of appendices.
Rachel West is a master of public policy candidate at the Goldman School of Public Policy, University of California at Berkeley. Michael Reich is professor of economics and director of the Institute for Research on Labor and Employment at the University of California at Berkeley.