Low Wages and High Public AssistanceIndiana Cannot Survive on $7.25

Jamie Morgan, Indiana University South Bend

Abstract

Literature

Hypothesis, Modeling, and Data Collection

Welfare and WagesCitations

Acknowledgements

Findings and Implications

Indiana Economics by CountyStagnant wage policies in Indiana have led to a reliance of state assistance programs as low wage workers struggle to make ends meet. The current minimum wage in Indiana of $7.25 does not provide a living wage for residents and is unlikely to rise given the current political climate. While the federal government and cities across the nation have implemented prevailing wage policies, Indiana continues to fall behind in earned income potential despite requiring public assistance programs to include job placement participation. Using data from the United Way ALICE (Asset Limited, Income Constrained, Employed) report and Indiana Family and Social Services Administration (FSSA), research shows Indiana TANF and SNAP public assistance programs are not sufficiently structured to help the working poor. Multivariable regression results show ALICE residents of Indiana are not significant the state public assistance rates demonstrating a gap in welfare policy.

Keywords: minimum wage, public assistance

State Minimum Wage: $7.25

Population: 6,079-91,8977

Working Poor: 16-29%

Unemployment: 5.3-11.4%

Median Income: $35,220-$88,429

Public Assistance: 3-23%

Hypothesis 1: States ALICE rates will have a positive effect

on public assistance rates, an increase in the rate of ALICE

residents will cause public assistance rates to raise.

Hypothesis 2: States the rate of single parents will have a

positive effect on public assistance rates, an increase in the

rate of single parents will cause public assistance rates to

raise.

Hypothesis 3: States political ideology rates will have a

positive effect on public assistance rates, an increase in the

rate of those voting democrat in the 2012 presidential

election will cause public assistance rates to raise.

Hypothesis Null: States ALICE, single parenthood, nor

political ideology rates will have an effect on public

assistance rates.

Low-wage workers are

disproportionately enrolled in

public assistance programs.

The federal cost for public

assistance programs in Indiana

between 2009 and 2011 was

4,247 million with 52% going to

working families.

Raising the federal minimum

wage to $10.10 per hour, will

reduce nationwide SNAP

enrollment by 3.8 million persons

(6.5-9.2%).

Poverty Measurements

• ALICE (a United Way acronym for

Asset Limited, Income Constrained,

Employed) standardizes measurements

providing a more accurate local view of

financial instability than federal poverty

guides.

• Individual and families categorized as

ALICE are working but are unable to

afford basic needs such as housing,

food, child care, health care, and

transportation.

• The 2012 Indiana ALICE report

identified 990,660 minimum wage jobs

that need to be increased to $11.62

per hour to afford the Household

Survival Budget.

Living wage movement

• People working full time jobs should

be able to support their families

Welfare History in America

• Shifts in policy due to Presidential

Administration: 1935 Social Security

Act under Roosevelt, 1969 Nixon

popularizes "Workfare", 1996 Clinton

signs PRWORA welfare reform

• Shifts in social thought: Civil Rights

changes welfare from a charity to a

right

According to current ALICE poverty measurements, no county in Indiana protects workers from earning less than the required amount for self-sufficiency. As a result, Hoosiers turn to public assistance to fill the income gap caused by low wages. While the literature has shown the working poor qualify and require public assistance programs, the programs themselves do not accommodate for this vulnerable population.Further research is required to understand the relationship between the working poor and low wages, as the United Way has prepared ALICE data for California, Florida, and New Jersey the potential exists to expand this modeling to additional regions for national implications.

Haplin, S. (2014). A Study of Financial Hardship in Indiana. United Way.

Jacobs, K., Perry, I., & MacGillvary, J. (2015). The High Public Cost of Low

Wages. Research Brief, UC Berkeley.

Pollin, R. N. (1998). The living wage: Building a fair economy.

Prashad, V. (2003). Keeping up with the Dow Joneses: Debt, prison,

workfare. South End Press.

West, R., & Reich, M. (2014). The Effects of Minimum Wages on SNAP

Enrollments and Expenditures. Washington: Center for American Progress.

Many thanks to Dr. Tae Kyu Wang, Indiana University South Bend, for

guidance and statistical support.

2012 ALICE rates by county

To be self-sufficient on

minimum wage in Indiana