I just read a super interesting paper by health economists Juan Du and J. Paul Leigh on the relationship between wages and health. Specifically, they found that a $1 increase in the minimum wage translated into as much as a six-hour reduction in absenteeism per worker per year. The absences were due to the worker’s own illness as opposed to an illness of a family member that required the worker to stay home.
Du and Leigh offer three explanations for the observed association between a minimum wage increase and fewer absences:
- Better wages allow workers to afford better quality housing, neighborhoods, and food; health insurance, and preventative health care;
- Better wages improves job satisfaction, and leads to higher self-esteem and feelings of adequacy; and
- Better wages may reflect other job-related attributes, such as safety programs and employer-provided health insurance.
Du and Leigh used data from the Panel Study of Income Dynamics (PSID) for the years 1997 through 2013. PSID is a nationally representative sample of 5,000 U.S. families with responses from more than 18,000 individuals. It’s the world’s largest running household study of its kind with continuously collected data on employment, income, consumption, health, philanthropy and much more.
Two of the key variables used by Du and Leigh for this analysis on minimum wage increases on health were:
- Did you miss any work in year [blank] because you were sick?
- How much work [in days] did you miss?
They compared the data for individuals who were subject to a minimum wage increase and those who were not. The researchers included a variety of characteristics in their analyses, including years of education, age, sex, marital status, as well as geographic changes in unemployment rates, SNAP and TANF benefits. Their inquires—each following logically to the next—yielded consistent results. Among them, a $1 increase in the minimum wage resulted in a 32 percent decrease in absences (due to a worker’s own illness.)
PSID respondents choose from one of five descriptors to describe their health (e.g., excellent, good, poor). Du and Leigh used that data to examine the relationship between the minimum wage and self-reported health. They found that wages were meaningful predictors of self-reported health.
“a $1 raise in the minimum-wage resulted in a 2.1 percent increase in the probability that workers would report themselves to be in good or excellent health.”
Dr. Leigh, who is a professor of public health sciences at UC Davis’ Center for Healthcare Policy and Research notes that much of the contentious debate about raising the minimum wage focus on economics. He notes:
“Our results support raising minimum wages because it can lead to previously unmeasured reductions in job absences and improvements in worker health. It is uncommon to see minimum-wage-effects research that focuses on difficult-to-measure factors such as worker health, even though a less healthy workforce can be a significant drain on productivity and finances.”
I read the study this way: Increasing the income of low-wage workers effects their health in positive ways.