A politician says, "We could help low-wage workers by offering them tax credits like the earned income tax credit, but it would be cheaper to do it by raising the minimum wage because that would cost the government nothing." a. What type of policy is the minimum wage? A tax expenditure An automatic stabilizer A government regulation Social insurance b. How can the minimum wage increase government spending? A higher minimum wage raises costs for businesses. A higher minimum wage decreases the amount of tax revenue collected by the government. If a higher minimum wage increases unemployment, government spending on social insurance programs will increase. The minimum wage increases the amount of tax revenue collected by the government.