When we discuss the minimum wage, we often frame it as a debate between workers and business owners. But there is a third party that has a massive stake in this conversation: the taxpayer.
A recent report by Scioto Analysis reveals that Oklahoma’s current low-wage environment creates a “hidden cost” for the state. When full-time workers earn wages that are too low to cover basic necessities, the public often picks up the tab through state-funded safety net programs. By raising the minimum wage to $15 an hour, Oklahoma has the opportunity to move from a government-subsidized labor market to a more efficient, private-sector-led economy.
The “Hidden Subsidy” of Low Wages
Currently, Oklahoma is one of only 16 states still adhering to the $7.25 federal minimum wage. But as the report notes, the cost of living, even in a relatively affordable state like ours, far exceeds that floor. When employers pay wages below what it takes to live, their employees often rely on public assistance programs like SNAP (food stamps) and Medicaid to bridge the gap.
In essence, taxpayers are providing a “hidden subsidy” to low-wage employers. The Scioto Analysis report highlights a critical finding from economic researchers: public safety net programs save 24 cents for every additional dollar in wages paid to minimum wage workers.
By raising the wage to $15, we shift the responsibility of supporting workers from the government back to the employer, where it belongs in a healthy market economy.
Reducing Government Expenditure
The fiscal impact of a wage increase is substantial. The report cites national estimates suggesting that a $15 minimum wage could reduce government expenditure on public assistance programs by between $13.4 billion and $31.0 billion.
For Oklahoma, this means lower demand for public programs. As 100,000 Oklahomans are lifted out of low-wage status, their reliance on state-funded assistance naturally declines.
An increased wage also means increased tax revenue. Stagnant wages slow down income growth, which in turn leads to revenue shortfalls for the state. Higher wages mean a more robust tax base, allowing the state to fund essential services like infrastructure and education without raising tax rates.
Fixing Market Inefficiencies
Economists often look at “deadweight loss, inefficiencies created when a market isn’t functioning correctly, as a way to analyze the economy. The Scioto Analysis report argues that the labor market is not “perfectly competitive.” In many cases, employers hold wages below the market-clearing level because of an imbalance in power.
A $15 “price floor” helps correct this imbalance. By addressing these inefficiencies, the state can improve overall economic wellbeing. Instead of the government spending billions to manage the symptoms of a weak labor market, a higher minimum wage addresses the root cause: income that doesn’t keep pace with the economy.
A Move Toward Self-Sufficiency
The ultimate goal of any fiscal policy should be to encourage self-sufficiency. The report finds that Oklahoma workers are working just as much as those in the rest of the country, yet they are significantly more likely to be uninsured or earning below the national average.
Raising the minimum wage isn’t about creating a new government program; it’s about ensuring that work actually pays. When a full-time job provides a livable income, workers gain independence, the demand for social services drops, and the taxpayer is no longer asked to fill the gap left by an outdated wage floor.
Conclusion
If we want to reduce the size of government and the burden on the taxpayer, we must ensure that Oklahoma’s labor market is capable of supporting its people. The data from Scioto Analysis suggests that a $15 minimum wage is a fiscally responsible path forward—one that promotes work, rewards effort, and protects the public purse.
Read the entire report here.
