Arguments for and Against the $15 Minimum Wage for Health Care Workers

Himmelstein and Venkataramani (p. 198) point to the irony that the health care industry could be inadvertently causing sickness and injury by paying low wages to a large and growing number of workers. Health care, with approximately 18.6 million employed, recently became the largest industry in the United States, surpassing both retail and manufacturing (see Appendix, available as a supplement to the online version of this article at http://www.ajph.org, for additional references). Moreover, of the 10 projected fastest-growing occupations, five are in health care, and two of these—personal care and home health aides—are poorly paid (Appendix). Approximately 18.2% and 5.1% of employed women and men worked in health care in 2017 (Himmelstein and Venkataramani). Approximately 5.0 million (34.9%) women and 0.2 million (23.4%) men and disproportionate numbers of African Americans and Hispanics employed in health care earned less than $15 per hour in 2017 (Himmelstein and Venkataramani).

ARGUMENTS FOR

Himmelstein and Venkataramani estimate that a $15-per-hour wage would reduce the number of health care workers living in poverty by half, assuming no reductions in employment. But raising households above the poverty line should not be the only measure. Incomes would also be higher among those remaining below the line. Although the authors do not provide any estimates, the $15-per-hour wage would reduce the number of health care workers taking taxpayer money for food stamps, Medicaid, the Earned Income Tax Credit, housing vouchers, and other antipoverty programs. For the entire economy, Reich and West¹ estimated that an increase in the federal minimum wage from the current $7.25 per hour to $10.10 per hour would save $4.6 billion per year in spending on food stamps. Himmelstein and Venkataramani could also have mentioned studies linking increases in minimum wages to increases in productivity and lower turnover (Appendix).

There are additional arguments for a $15-per-hour minimum wage. Given the large size of the health care industry, a $15-per-hour wage would put economic pressure on markets outside health care to raise wages and would support political initiatives to raise economy-wide minimum wages. Economy-wide increases would have at least three benefits. First, increases in minimum wages can improve the health of low-wage workers and their families.² Second, with better aggregate public health comes lower health care costs. There is considerable evidence, for example, that rising wages lead to lower occupational injury rates and corresponding workers’ compensation costs.³ Third, these wage increases can begin to address the growing income inequality and stagnant wages that have plagued the United States over the past 40 years.^4, Growing income inequality and stagnant wages have been cited as partially responsible for a plethora of maladies including rising animosity toward immigrants and minorities, voting for unconventional candidates, the opioid crisis, crime rates, and the 2008–2009 Great Recession (Appendix).

ARGUMENTS AGAINST

One opposing argument is that the health care sector cannot afford $15. Yet this industry has been expanding for decades as measured by employment, revenue, and profit. Not only has total employment and spending in health care rapidly expanded, but the employment share of health care out of total US employment has also grown by 19.8% from 1998 to 2018 and spending as a share of gross domestic product by 32.6% from 1998 to 2016 (calculations in Appendix). Stock prices for health care companies—as measured by the Dow Jones Health Care Index—are up significantly since 2008. But even more telling, health care stocks have outperformed the Dow Jones Industrial Average for years. The Dow Jones Health Care Index increased 80.2% faster than the Dow Jones Industrial Average from October 2008 to October 2018 (Appendix). The annual pay for chief executive officers of 70 of the largest US health care companies averages $20 million and has soared since the passage of the Affordable Care Act 8 years ago (Appendix).

And it is not just private companies. Every academic medical center with which I am familiar contains nearly as many buildings and certainly newer buildings than the corresponding university. At academic medical centers, the shortest distance between two points is under construction. Inflation-adjusted wages for surgeons grew 32.8% points faster than inflation-adjusted wages for nursing aides from 1999 (oldest year available) to 2017 (most recent year available; Appendix). Finally, proponents for raising wages will argue that a booming health care sector and economy, as we now have, can more easily absorb $15 per hour than a shrinking sector and economy. Amazon recently announced that $15 per hour would be its new minimum wage.

But opponents will point to other counterarguments. First, a $15-per-hour wage could cause unemployment among low-wage health care workers. Himmelstein and Venkataramani wisely allow for some increase in unemployment in a sensitivity analysis. Assuming a 9.4% decrease in total workhours, poverty rates would be reduced by 27%, not 50%. But considerable economic research suggests that unemployment effects are minimal for the economy at large and even less for industries like health care that face inelastic demand.⁵

Second, workers earning, for example, $16 to $20 per hour may feel cheated, and their morale and productivity might suffer. One way to ameliorate this problem would be to allow for modest but increasingly smaller increases in wages for everyone up through $20 per hour.

Third, health care prices for patients, governments, and insurance companies might rise. But the majority of health care workers would not receive this increase in wages and the total wage-bill for this majority is far higher than the total wage-bill for low-wage health care workers. Moreover, the $15-per-hour wage could be financed with slight reductions in wages for persons at the top of the wage scale or profits of health care firms so that prices would not increase.

Fourth, a $15-per-hour wage would be more difficult to implement in regions with low versus high costs of living. But the wage need not be $15 for all regions; it could be reduced to reflect regional costs of living.

Finally, one argument raised against economy-wide (rather than simply one industry) increases in the minimum wage pertains to adolescents who, presumably, have less need for higher wages because they typically do not have families to support. This argument carries less weight in health care. Nursing aides, attendants, and other low-wage health care workers require training beyond high school and many have families. More than one million children of health care workers live in poverty (Himmelstein and Venkataramani).

LOW WAGES AS DETERMINANTS OF HEALTH

Low wages can be viewed as social determinants of health. First, there are compelling theories linking low wages to poor health and health behavior.² For example, low wages could lead to low job satisfaction that, in turn, could lead to poor mental health. Low wages also constrain budgets so that families cannot afford safe neighborhoods, clean water, or nutritious foods. Second, there are numerous empirical studies relying on “natural experiments” linking low wages (independent of other income) to higher prevalence of smoking, self-rated poor health, depression, and work absenteeism, among other health measures.² Third, wages comprise the lion’s share of income for poor working adults, and low income is widely appreciated as one of the most important determinants of health. Fourth, falling inflation-adjusted wages for low-wage workers are responsible for a substantial amount of rising income inequality over the past 40 years and rising income inequality—independent of the level of average income—is a significant public health problem.^4,6 Finally, unlike some other social determinants such as culture or marital status, wages are directly altered by government, industry, and union policies involving, for example, personnel wage scales and minimum wages, every year. The health care industry should not be causing sickness and injury.