Pending before the 113 th Congress is legislation, S. 1737 (Senator Harkin) and H.R. The minimum wage would be adjusted for inflation thereafter. Low-wage workers with children may receive additional income supplements through the child tax credit, and might qualify for certain need-tested government benefits such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps). If Congress sought to pursue an increase in incomes for low-wage earners, there is a debate over whether increases in the minimum wage or expansions of government aid through the tax system or benefit programs are more effective in helping low-income families and addressing poverty. The minimum wage affects workers regardless of their family status; the federal tax system and government benefit programs take into account family circumstances in determining tax liabilities and benefits. Therefore, minimum wage and earnings supplement policies have differing impacts, depending on a worker's family type. This report
describes current law minimum wage and tax-transfer earnings supplement policies; provides the illustrations of gross earnings and net income (after taxes and SNAP benefits) for full-time full-year minimum wage workers at both the current minimum wage ($7.25 per hour) and the proposed $10.10 minimum wage; and discusses some of the policy implications of addressing poverty through both the minimum wage and federally-funded earnings supplements. However, such a worker in a family of two or more people has gross earnings less than the 2014 poverty guidelines. This section illustrates the effect of the federal minimum wage, federal taxes, and Supplemental Nutrition Assistance Program (SNAP) benefits on the net income of families, and relates that net income to the official federal poverty guidelines by family type. The main distinction is the presence of children in the family. However, because the tax credits (earnings supplement) depend on the number of children in the family, this family's net income is less than that of the single mother with two children. On an annual basis, such an increase would boost gross earnings by $5,928. Employment Effects

A minimum wage increase would improve the well-being of workers—regardless of their family type—only if they remain employed. Following the research in the 1990s and early 2000s, a few reviews and "meta studies" came out in the 2000s that attempted to examine the voluminous research on the minimum wage:
In an extensive review of minimum wage studies, economists David Neumark and William Wascher in 2007 noted that there is a "lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage" but "a sizable majority of the studies surveyed … give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages." In recent years, there have been numerous studies suggesting little or no disemployment effects of minimum wage increases. A minimum wage increase would raise the earnings of those who support families and have greater need, as well as those who do not. Federal policy has increasingly relied on increases in refundable tax credits and SNAP to assist the working poor, particularly those in families with children. The Budget Costs of Earnings Supplements

Recently, there has been increased attention to the federal budget costs of low-income aid. Research has also found that the EITC is more likely to result in spending on large items: durable goods and vehicles. However, if EITC increases the number of people in the labor force, it could also affect wage rates through the operation of supply and demand. As the illustrations in this report show, not all workers benefit from the EITC. Several reference points along the horizontal (hourly earnings equivalent) axis are highlighted, with corresponding vertical markers on each income source/definition:
full-time full-year work at the current federal minimum wage ($7.25/hour), shown at 1.00; full-time full-year work at $8.16 per hour (about 1.13 times the current federal minimum wage), which marks the point at which the depicted worker would begin to incur a regular federal income tax liability (before credits); full-time full-year work at $8.57 per hour (about 1.18 times the current federal minimum wage), which marks the point at which the depicted worker would begin to incur his or her EITC begin to phase-out; full-time full-year work at $8.37 per hour (about 1.29 times the current federal minimum wage), which marks the point at which the depicted worker would lose food assistance under SNAP, due his or her gross earnings reaching the program's gross income limit, set at 130% of the Federal Poverty Level; full-time full-year work at $12.66 per hour (about 1.75 times the current federal minimum wage), which marks the point at which the depicted worker would begin to incur a positive net tax liability (i.e., combined FICA taxes and regular federal tax liability begin to exceed combined EITC and CTC benefits); and full-time full-year work at $18.51 per hour (about 2.55 times the current federal minimum wage), which marks the point at which the depicted worker would no longer be eligible for the EITC.
Pending before Congress is legislation (S. 1737 and H.R. 1010) that would raise the federal minimum wage from its current $7.25 per hour to, ultimately, $10.10 per hour. The minimum wage would be adjusted for inflation thereafter. Whether the minimum wage or alternative policies, namely government-funded earnings supplements such as the Earned Income Tax Credit (EITC), are more effective in addressing poverty has been long debated.
The minimum wage affects workers regardless of their family status. A full-time, year-round worker at the current minimum wage would gross $15,080 in the year. A worker's poverty status, however, depends on family circumstance, specifically family size. A single full-year, full-time worker earning the current federal minimum wage would have gross earnings above the 2014 poverty guidelines, but the same worker in a family of two or more people would have gross earnings that fall below these guidelines.
The federal tax system and government benefit programs take into account family circumstances in determining tax liabilities and benefits. Therefore, minimum wage and earnings supplement policies have differing impacts, depending on a worker's family type. The main distinction is the presence of children in the family. Low-wage workers heading families with children receive considerable benefits from federal income tax credits and Supplemental Nutrition Assistance Program (SNAP) food assistance. Childless singles do not benefit from refundable tax credits as do households with children. The effect of federal tax and SNAP benefits is to partially mitigate differences in net incomes relative to poverty among the family types.
An increase in the minimum wage would boost gross earnings and increase the net incomes of families with a worker employed full-time, all year earning the minimum wage. However, because the federal tax system is progressive and need-tested benefits pay more to families with less income, the income boost would be less than $1.00 for each $1.00 increase in gross earnings, as workers pay more taxes and lose some benefits. The degree to which workers would gain net income because of a minimum wage increase also differs by family type.
The impact of an increase in the minimum wage on the well-being of minimum wage workers depends in great part on whether the wage increase would cause a loss in employment. Some economic studies have found that increases in minimum wages cause job loss; other economic studies have found no such job loss. A previous consensus that increasing the minimum wage reduces employment, at least among teenagers, has been challenged by numerous recent studies suggesting little or no dis-employment effects of minimum wage increases. However, the debate over the employment effects of the minimum wage is likely to continue.
There are also some considerations to expanding government-funded earnings supplements, such as the EITC, child tax credit, and SNAP. Expanding these earnings supplements would result in costs to the federal budget. In addition, these programs too might affect the labor market, albeit in ways different from a minimum wage increase. Research has provided evidence that the EITC has increased the number of workers in the labor market. Through the operation of supply and demand, this could suppress wage rates. Since all workers do not qualify for earnings supplements through the EITC, the child tax credit, or SNAP, lower-wage workers who do not receive them might be harmed economically. There has been some recent attention to considering minimum wage policies and earnings supplements as complementary, rather than alternative, policies.