Rising premium costs crowd out wage growth and ESI coverage across the wage distribution: Estimated wage crowd-out by rising health care costs by wage fifth, 1979–2016
| All | Bottom | Second | Middle | Fourth | Top | |
|---|---|---|---|---|---|---|
| Hourly wage, nominal | ||||||
| 1979 | $6.38 | $3.06 | $4.07 | $5.40 | $7.38 | $10.53 |
| 2007 | $19.80 | $8.02 | $11.24 | $15.34 | $21.68 | $35.69 |
| 2016 | $24.50 | $9.54 | $13.19 | $18.24 | $25.62 | $44.79 |
| ESI coverage rate | ||||||
| 1979 | 69.0% | 37.9% | 60.5% | 74.7% | 83.5% | 89.5% |
| 2007 | 55.4% | 24.3% | 45.9% | 60.3% | 69.8% | 76.9% |
| 2016 | 53.1% | 24.3% | 43.9% | 57.1% | 67.5% | 73.1% |
| Cost of employer contributions to ESI premiums as % of hourly wages, per covered employee | ||||||
| 1979 | 8.6% | 16.8% | 12.5% | 9.4% | 6.9% | 4.7% |
| 2007 | 23.7% | 53.2% | 38.5% | 28.0% | 19.4% | 11.5% |
| 2016 | 25.1% | 59.5% | 43.1% | 31.0% | 21.1% | 11.8% |
| Hourly wages plus employer contribution to ESI premiums | ||||||
| 1979 | $6.76 | $3.26 | $4.38 | $5.78 | $7.81 | $10.97 |
| 2007 | $22.40 | $9.06 | $13.22 | $17.93 | $24.62 | $38.84 |
| 2016 | $27.77 | $10.92 | $15.69 | $21.47 | $29.28 | $48.67 |
| Hourly wages plus employer contributions to ESI premiums, counterfactual if ESI share held constant at 1979 level | ||||||
| 1979 | $6.76 | $3.26 | $4.38 | $5.78 | $7.81 | $10.97 |
| 2007 | $20.74 | $8.35 | $11.88 | $16.21 | $22.71 | $36.98 |
| 2016 | $25.62 | $9.93 | $13.91 | $19.22 | $26.81 | $46.33 |
| Hourly wages potentially crowded out by rising ESI premium costs, $ | ||||||
| 1979 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| 2007 | $1.66 | $0.71 | $1.34 | $1.72 | $1.90 | $1.86 |
| 2016 | $2.15 | $0.99 | $1.78 | $2.25 | $2.47 | $2.34 |
| Hourly wages potentially crowded out by rising ESI premium costs, % of wages | ||||||
| 1979 | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| 2007 | 8.4% | 8.9% | 11.9% | 11.2% | 8.8% | 5.2% |
| 2016 | 8.8% | 10.4% | 13.5% | 12.3% | 9.6% | 5.2% |
Notes: The per-hour cost of employer contributions to ESI (employer-sponsored insurance) was calculated by dividing total hours worked in the economy by total employer contributions. This per-hour cost was then adjusted by the share of all workers with ESI coverage to get a cost per covered worker. This cost per covered worker was then compared with average wages in the fifths of the wage distribution. The counterfactual of no excess health costs was simulated by holding employer contributions to ESI fixed as a share of overall compensation over the period.
Sources: Data from EPI State of Working America Data Library 2018 as well as BEA 2018, NIPA Tables 7.8 and 6.9