Can
Increasing the Minimum Wage Make You Healthier?
It’s a
complex question. First, we have to determine how to measure health. Then, we
need to compare the health of a lot of folks who got minimum wage increases
against the health of a lot of folks who did not. And finally, we have to weed
out a variety of personal, social and even political issues that also affect
people’s health to make sure we isolate the true impact of minimum wage
increases.
That’s
exactly what Brady Horn, Joanna Maclean, and Michael Strain attempted to do in
their research working paper published by the National Bureau of Economic
Research in August 2016.
Using data
from 1993 to 2014 including 347,421 men and 377,520 women from ages 21 – 54,
the researchers studied the health impacts of minimum wage increases on workers
whose highest level of education is a high school degree.
But what is “health”
and how do you measure it? Think of your health like a car. When people are
born, you are a certain kind of car – some people are born as Fiat’s, Jeep’s or
Mitsubishi’s (not great health), some are born as Ford’s, Buick’s and Chevy’s
(decent health), and some are born as Lexus, Audi’s and Porsche’s (you get the
idea). But no matter what, all cars get older. And at times cars require
repairs. Sometimes, you want to upgrade your car, such as adding a new stereo system
or new tires. Since there are a lot of things to spend money on in life, you
have to decide how much to spend on your car and how much to spend on other
items. The same can be said for the health of individuals. This idea is
referred to as the Grossman Model, developed by Michael Grossman in 1972, and it
is widely accepted as an accurate economic health model.
So what does
the Grossman Model have to do with measuring health to answer our question? It
all comes down to investing in one’s health. Essentially the Grossman Model
predicts that as people get wealthier, they get healthier, because they invest
in their health through eating well, spending money on the doctor, and exercising,
to name a few examples. So, we’d be tempted to predict that as minimum wage
increases, people get healthier. But is it true?
Before we look
at the results, let’s weed out a lot of other factors that can influence
people’s health. The researchers in this study considered individual
characteristic, such as race and education, state characteristics (some states
are “healthier” than other states), state and national policies that could
affect the health of workers, and even month-by-month health trends (people are
sicker in certain months than in others). With these many factors controlled
for, we can begin observing the results.
In this study
health was measured through three survey questions. First, people were asked, ‘In
general, how would you rate your health?’ The possible responses are (1)
excellent or very good health and (2) fair or poor health. Second people were
asked, ‘Now thinking about your physical health, which includes physical
illness and injury, for how many days during the past 30 days was your physical
health not good?’ And similarly, people were asked, ‘Now thinking about your
mental health, which includes stress, depression, and problems with emotions,
for how many days during the past 30 days was your mental health not good?’ These
questions are subjective, and the researchers recognize this fact, but point
out that these self-reported health measures have also been proven to be
directly related to real objective health effects, like mortality, in almost a
dozen other studies.
So, here are
the results. For men who did not
experience a minimum wage increase, “50% report their health as very good or
excellent while 13% report their health as fair or poor. The average number of
days in the last 30 on which men report their physical and mental health was
not good is 2.01 and 2.72. Turning to women, 51% report their health as very
good or excellent, 14% report their health as fair or poor, and the average
number of days in the last 30 on which physical and mental health are reported
as not good is 2.67 and 4.21.”
And now
let’s compare to those who did experience
a minimum wage increase, and for the sake of this study, an increase of $1 per
hour. The amount of employed men who reported their health as fair or poor was
6% higher, at 19% versus 13%. However, employed men also reported that they
experienced 0.12 fewer bad mental health days, 2.60 versus 2.72. There is no discernible
change for any of the health measure among employed women.
It is not
clear from this study that increases in minimum wage have any positive effects
on workers’ physical health. In fact, there may be evidence to suggest that
minimum wage increases have a negative effect on workers’ physical health.
However, the study may also show that workers’ mental health is improved by an
increase in minimum wage.
There are a
number of factors considered by the researchers, which could explain why an
increase in minimum wage does not have a clear positive effect on workers’ physical
health. First, additional income may not be spent on healthy foods or
lifestyles. People may spend money on health-harming products, such as alcohol
or cigarettes. Second, many minimum wage earners provide a second source on
income for their families, meaning that the family as whole, and the family’s
health, may not be effected by an increase in the minimum wage. Third, as
minimum wages increase, opportunity for work decreases, and this may offset the
effects of a wage increase as fewer jobs are available.
The study
does show, however, that increases in minimum wage do positively affect mental
health for workers on the whole. As people make more money, people’s financial
worries diminish.
So, can
increasing the minimum wage make you healthier? It depends. You may worry less
about your finances, but it’s not clear that your physical health will improve.
In terms of physical health, the study is inconclusive. Many States throughout
the country are considering an increase to the minimum wage, and while this may
have many effects, a clear impact on physical health is not one of them without
further study.
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Source: Do Minimum Wage Increases Influence Worker Health? Brady P. Horn, Joanna Catherine Maclean, Michael R. Strain, Working Paper 22578, National Bureau of Economic Research, August 2016.