1 / 26

Food Security and the Federal Minimum Wage

Food Security and the Federal Minimum Wage. William M. Rodgers III Heldrich Center for Workforce Development Rutgers University November 2013. Motivation. Proposal to Raise Federal Minimum Wage from $7.25 to $10.10 by July 2015. The Increases are a Household Issue:

derick
Download Presentation

Food Security and the Federal Minimum Wage

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Food Security and the Federal Minimum Wage William M. Rodgers III Heldrich Center for Workforce Development Rutgers University November 2013

  2. Motivation • Proposal to Raise Federal Minimum Wage from $7.25 to $10.10 by July 2015. • The Increases are a Household Issue: • Women comprise 56% of beneficiaries • Over 88 percent of beneficiaries are at least 20 years of age • 55% of the affected workers work full time • 70% are families with incomes less than $60,000 • More than 25% are parents • Over one-third are married • (Source: Cooper and Hall, EPI, March 13, 2013)

  3. Motivation cont. Statement supporting proposals to increase the federal minimum wage from $7.25 to $10.10 per hour. • “Raising the minimum wage puts dollars in the pockets of people who are by necessity most likely to spend them immediately at the grocery store, the childcare provider, the auto-repair shop and other local businesses.” Margot Dorfman, CEO, U.S. Women’s Chamber of Commerce (March 5, 2013).

  4. Household Food Security • Food secure: Access by all members at all times to enough food for an active healthy life • Food insecure: • Limited or uncertain availability of nutritionally adequate foods, or • Uncertain ability to acquire food • Hunger: An uneasy or painful sensation caused by a (involuntary) lack of food

  5. The 1996 and 1997 Increases in the Federal Minimum Wage • October 1st, 1996 • $4.25 to $4.75 per hour • September 1st, 1997 • $4.75 to $5.15 per hour

  6. The 2007, 2008 and 2009 Increases in the Federal Minimum Wage • July 24th, 2007 • $5.15 to $5.85 per hour • July 24th, 2008 • $5.85 to $6.55 per hour • July 24th, 2009 • $6.55 to $7.25 per hour

  7. Research Questions • What impact did the 1996 and 1997 increases in the federal minimum wage have on food security? • What impact did the 2007, 2008, and 2009 increases in the federal minimum wage have on food security? • What impact would increasing the federal minimum wage to $10.10 per hour have on food security?

  8. Summary of Preliminary Findings • Food security rates increased from 1995 to 1999, but fell from 2005 to 2011, mirroring macroeconomic fluctuations. • The increases in the minimum wage raised food security, especially the 1996/97 increases. • Food security is lower in households where the householder has no more than a high school degree, is nonwhite, or is a single-parent. • These householders benefit disproportionately from the increases. • Increasing the federal minimum wage to $10.10 would provide food security to approximately 29 million hourly wage workers. • The increases would have the greatest impact on southern households. 10 of the Top 15 beneficiaries are Southern states.

  9. Measuring Food Security:Households are assigned a food security status based on their pattern of responses to the following questions.  Now I’m going to read you several statements that people have made about their food situation. Please tell me whether the statement was often, sometimes, or never true in the last 12 months. • “I worried whether our food would run out before we got money to buy more.” • “The food that we bought just didn’t last, and we didn’t have money to get more.” • “We couldn’t afford to eat balanced meals.” • * “We relied on only a few kinds of low-cost food to feed the children because we were running out of money to buy food.” • * “We couldn’t feed the children a balanced meal because we couldn’t afford that.” • * “The children were not eating enough because we just couldn’t afford enough food.”

  10. Measuring Food Security cont.: • In the last 12 months, did you or other adults in your household ever cut the size of your meals or skip meals because there wasn’t enough money for food? • How often did this happen – almost every month, some months but not every month, or only one or two months?  • In the last 12 months, did you ever eat less than you felt you should because there wasn’t enough money to buy food? • In the last 12 months, were you ever hungry but didn’t eat because you couldn’t afford enough food? • Sometimes people lost weight because they don’t have enough to eat. In the last 12 months, did you lose weight because there wasn’t enough food?

  11. Measuring Food Security cont.: • In the last 12 months, did you or other adults in your household ever not eat for a whole day because there wasn’t enough money for food? • How often did this happen – almost every month, some months but not every month, or in only one or two months?  • * In the last 12 months, did you ever cut the size of any of the children’s meals because there wasn’t enough money for food? • * In the last 12 months, did any of the children ever skip meals because there wasn’t enough money for food? • * How often did this happen – almost every month, some months but not every month, or in only one or two months? • * In the last 12 months, were the children ever hungry but you just couldn’t afford more food? • * In the last 12 months, did any of the children ever not eat for a whole day because there wasn’t enough money for food?

  12. Household Food Security Scale:Categorical Measure(Households with Children) Source: U.S. Department of Agriculture.

  13. EMPIRICAL MODELS: Identifying the impacts of the increases in the minimum wage: FSij = α0 + α1%Affectedij + α2 EPOPij + α3FDSTMPij + εij • FSij denotes the change in the i th state’s food security at the j th income category from period t, a period before the increase in the minimum wage and t+1, a period after the increase in the minimum wage, • %Affectedijdenotes the i th state’s share of working householders earning between $4.25 and $5.14 or $5.15 to $7.24 per hour in the j th income categoryprior to the minimum wage increase, •  EPOPij denotes the i th state’s change in employment-population ratio of householders in the j th income category from period t to t+1, and • FDSTMPij denotes the i th state’s change in food stamp usage of householders in the j th income category from period t to t+1, and • εij denotes an error term.

  14. The Data • Current Population Survey Food Security Supplements: 1995 to 1999, and 2005 to 2011. • 1995, 1997 and 1999 Survey Month: April • 1996 Survey Month: September • 1996 Survey Month: August • 2005 to 2011 Survey Month: December

  15. Timeline of CPS Food Security Supplement and Increases in the Minimum Wage

  16. The Data cont.:Building State-Year Aggregates • Sample Restrictions: • Each household head must have complete information: age, sex, race, ethnicity, and educational attainment • Information on household structure, number of household members, urban residency, food stamp usage and amount. • Pre and Post Analysis: • Pre: Pool 1995 and 1996, 2005 and 2006 • Post: Pool 1998 and 1999, 2010 and 2011 • Variation by Household Income and State (Change in Food Security, food stamp usage and EPOP) • Income categories: • Less than $12,500; • $12,500 to $34,999; and • $35,000 or more

  17. The Nominal Hourly Wage Distribution of Reference Persons, 1995/96 and 1998/99(in Percent) Notes: Author’s calculations from the 1995, 1996, 1998, and 1999 CPS Food Supplement. To be included in the sample, the household must have complete information for all of the following variables: household family income, structure, size, and urban residency status, as well as the reference person’s hourly wage, gender, race/ethnicity, age, educational attainment, and industry and occupation of employment.

  18. The Nominal Hourly Wage Distribution of Reference Persons, 2005/06 and 2010/11(in Percent) Notes: Author’s calculations from the 2005, 2006, 2010, and 2011 CPS Food Supplement. To be included in the sample, the household must have complete information for all of the following variables: household family income, structure, size, and urban residency status, as well as the reference person’s hourly wage, gender, race/ethnicity, age, educational attainment, and industry and occupation of employment.

  19. Change in Macroeconomic Indicators Notes: Author’s calculation from BLS and BEA data.

  20. Household Food Security Notes: Author’s calculations from selected years of the CPS Food Supplement. To be included in the sample, the household must have complete information for all of the following variables: household family income, structure, size, and urban residency status, as well as the reference person’s hourly wage, gender, race/ethnicity, age, educational attainment, and industry and occupation of employment.

  21. The Impact of the Increases in the Minimum Wage on Food Security(Change in Food Security as a function of Percent Affected prior to Increase) Notes: Models also control for changes in employment-population ratio and food stamp usage. State dummy variables are also included. The pooled model includes a dummy variable denoting the cross section. Models are estimated using weighted least squares, where state population is the weight.

  22. Estimated Food Security Effects of Proposed Increases in the Federal Minimum Wage Notes: “% Affected” comes from Appendix Table 2 in David Cooper and Doug Hall, “Raising the Federal Minimum Wage to $10.10 Would Give Working Families, and The Overall Economy, a Much-Needed Boost.” Economic Policy Institute, 13, 2013. http://www.epi.org/publications/bp357-federal-minimum-wage-increase/. The coefficient for “All” households In the pooled model of the previous slide is multiplied by “% Affected” to obtain the predicted change in food security.

  23. Southern States Comprise 10 of the Top 15 States with the Largest Benefits

  24. Preliminary Conclusions • Food security rates are pro-cyclical. From 1995 to 1999 they increased, but fell from 2005 to 2011. • The increases in the minimum wage raised food security, especially the 1996/97 increases. • Food security is lower in households where the householder has no more than a high school degree, is nonwhite, or is a single-parent. • These householders benefit disproportionately from the increases. • Increasing the federal minimum wage to $10.10 would provide food security to approximately 29 million hourly wage workers. • The increases would have the greatest impact on southern households. 10 of the Top 15 beneficiaries are Southern states.

  25. Next Steps • Impact on Low Food Security Status and Hunger Status • Impacts on Children and Adults • Item Analysis – Which food security questions drive impact? • Improve controlling for macro conditions during the 2007/08/09 increases • Specification Tests

  26. Specification Tests FSi,(1996-1995) = γ01 + γ11 %Affectedi,1996 + γ21StateEPOPi,(1996-1995)+  εi,(1996-1995), FSi,(1998-1996) = γ02 + γ12 %Affectedi,1996 + γ22StateEPOPi,(1998-1996) +  εi,(1998-1996), FSi,(1999-1998) = γ03 + γ13 %Affectedi,1996 + γ23StateEPOPi,(1999-1998) +  εi,(1999-1998),

More Related