New research in economics suggests that raising the minimum wage will improve the health of many Americans, especially those with low income, and this improvement should help bend the cost curve for medical care.
In a paper published by the prestigious National Bureau of Economic Research, David Meltzer and Zhou Chen (from the University of Chicago and the Centers for Disease Control) analyze data from the Behavioral Risk Factor Surveillance System (BRFSS) from 1984-2006. The BRFSS interviews more than 350,000 adults each year, making it the largest health survey in the world. Meltzer and Chen test whether variation in the inflation-adjusted minimum wage is associated with changes in body mass indexes of adults. They find that gradual reductions over time in inflation-adjusted minimum wages across states explain about 10% of the increases in average body mass since 1970.
Additional evidence derives from a study by DaeHwan Kim and myself that used the Panel Study of Income Dynamics (PSID) to investigate whether increases and decreases in inflation-adjusted wages predict obesity. The PSID is a nationally representative sample of 5000 American families that have been followed since 1968 by the University of Michigan’s Survey Research Center. We find that low wages predict increases in the prevalence of obesity. This study was published in the Journal of Occupational and Environmental Medicine. Obesity is estimated to cost $190 billion in medical bills each year according to a recent study in the Journal of Health Economics. A 10% decrease in obesity would result in a $19 billion of savings every year, as estimated by Meltzer and Chen.
But it is not just obesity that may be affected by increasing the minimum wage. Juan Du and I use the PSID to consider wage and hypertension correlations. We analyze data on roughly 5600 adults from 1999 to 2005. We find that low wages in baseline years predict whether respondents will be newly diagnosed with hypertension in subsequent years. We find these predictions to be especially strong for women and persons under age 40, and these two groups are more likely than men over age 40 to be employed in low-wage jobs. This study was recently published in the European Journal of Public Health.
Finally, scores of studies in economics and epidemiology link low income to health problems including diabetes, heart disease, arthritis, and premature mortality.
The mechanisms through which low wages adversely affect health are varied, but two stand out. First, low wages can result in financial stress. Workers and their families may face persistent hassles associated with finding funds to pay for rent, electricity, groceries, and gas for the car. Even if the low-income family has insurance, funds for blood pressure and cholesterol medicines may not be available if the family must make co-payments and pay deductibles. The stress and lack of medicines likely adversely affect health. Second, many people partially assess their self-worth based on their wage. Unrelenting, long-term feelings of low self-worth likely also have negative consequences for health.
The weight of research evidence indicates that an increase in the minimum wage would improve the health of the US population and likely help restrain the soaring costs of medical care.
Cawley J, Meyerhoefer C. The medical care costs of obesity: An instrumental variables approach. Journal of Health Economics, 2012. 31 (1): 219-230
Kim D, Leigh JP. Estimating the effects of wages on obesity. Journal of Occupational and Environmental Medicine, 2010 52 (5): 495-500
Leigh JP, Du J. Are low wages risk factors for hypertension? European Journal of Public Health, 2012. 22 (6): 854-859.
Meltzer DO, Chen Z. The impact of minimum wage rates on body weight in the US. National Bureau of Economic Research Working Paper No. 15485, November 2009. http://www.nber.org/papers/w15485.pdf?new_window=1 Accessed March 2 2013.