Improving Health by Increasing the Minimum Wage

  • Date: Nov 01 2016
  • Policy Number: 20167

Key Words: Employment, Workers Compensation, Poverty, Minimum Wage

Abstract

There is international consensus that income is a determinant of health, shaping access to basic needs and social determinants of health such as housing, education, and job opportunities. Women and people of color—many of whom provide for families—are more likely to earn low wages and therefore disproportionately experience the adverse health effects of poverty. However, the minimum wage varies between and within states, and the current federal minimum does not keep pace with the costs of basic living needs. Furthermore, current metrics for setting minimum wages inadequately capture the basic necessities for living in full health. Therefore, APHA recommends actions at three levels of governance in support of ensuring livable wages. For example, the federal government should raise the federal minimum wage to allow a four-person household with a single wage earner to live above the poverty line, and individual states and municipalities should consider increasing the minimum wage and indexing it to inflation and the cost of living. In addition, all levels of government should ensure that minimum wage policies benefit the historically underserved populations disproportionately represented among minimum-wage earners, predominantly women and people of color.

Relationship to Existing APHA Policy Statements

APHA issued two policy statements between 1995 and 2000 related to the public health implications of low income (200020) and substandard employment opportunities (9508). Also, in 2013, APHA issued a policy statement on how lack of paid sick and family leave through employment affects the health of individuals (20136). APHA supports the right of all people to earn a living wage sufficient to support a dignified existence. Meaningful and safe work, properly compensated, is key to public health. The policy statement proposed here builds on previous APHA statements while articulating the ways in which a sufficient minimum wage can protect health. APHA policy statements related to income and other employment benefits and public health include the following:

  • APHA Policy Statement 200020: Raising Income to Protect Health
  • APHA Policy Statement 9508: Full Employment and Public Health
  • APHA Policy Statement 20136: Support for Paid Sick Leave and Family Leave Policies

Problem Statement

Global public health entities have long held that income is a critical social determinant of health outcomes. In fact, the final report of the World Health Organization Commission on Social Determinants of Health and the Centers for Disease Control and Prevention (CDC) Health Disparities and Inequalities Report identified income as a key factor influencing the health outcomes of individuals, families, and communities.[1,2] This is because finances are strongly linked to a person’s ability to access healthy food and other resources, creating a link between poverty and a series of chronic diseases including obesity and diabetes.[3] Income inequality is also a contributing factor to poorer health outcomes. For example, poor health outcomes are more prevalent in countries with higher Gini coefficients, or higher levels of measurable inequality, than in peer countries with lower levels of income inequality.[4] This is significant when considering the United States, as its Gini coefficient has increased by nearly 6% since 1993.[5] Lastly, as APHA presidents past and present have acknowledged the role of racism in undermining health improvements in the United States, it is necessary to recognize the role of structural racism in creating disproportionate representation of minorities within low-income populations.[6,7] The minimum wage can be an important tool for undoing racial inequities and improving health outcomes for all. It is critical for federal and state policymakers to strongly consider the potential health improvements afforded by increasing minimum wages.

Demographics of low- and minimum-wage workers: In 2015, the US Census Bureau reported that 13.5% of the country’s population (43.1 million people) was living at or below the federal poverty line.[8] For the purposes of this statement, the term “low-income wage earners”—or simply “low-wage earners”—refers to workers who remain below, at, or just slightly above the federal poverty level because they earn low wages or work part-time. “Minimum-wage earners” refers to the group of low-income wage earners who receive the federal, state, or municipal minimum hourly wage. A common mischaracterization of low- and minimum-wage workers is that they are mostly teenagers earning supplemental or optional incomes for their families. In reality, 88% of those earning the minimum wage in the United States are older than 20 years. The average age of minimum-wage earners is 35, and, according to the US Bureau of Labor Statistics, more than one third are older than 40 years.[6] Among all minimum-wage workers, about 56% are women.[6,9] Low-wage and minimum-wage work is often unpredictable and inconsistent, which limits people’s ability to control their schedules in order to meet their health needs. Most low-wage jobs are part time, so many low-income wage earners hold multiple full- and part-time jobs to maximize paid hours. This can trap people in cycles of part-time work, since they have limited control over their time and ability to search for more consistent work.[10]

Many low-wage earners are the main providers for their families. About 28% have children, which puts many children at risk of living in poverty. Indeed, one in five children in the United States live in poverty, one of the highest rates among Organisation for Economic Co-operation and Development nations.[11,12] Finally, Black and Hispanic individuals and families are disproportionately represented among those making minimum wages (20.5% and 19.8%, respectively) and, overall, among the poor.[6] Therefore, minimum-wage earners and low-wage earners often represent the most marginalized communities, with overrepresentation of women and people of color in these difficult and low-paying jobs. Historically underserved populations experience the health effects of low income at inequitable rates.[13]

Poverty and the price of health: As described in the Healthy People 2020 report from the US Department of Health and Human Services, financial capacity shapes individual and population health, not least by influencing the degree to which an individual’s basic needs are met. Other social determinants of health, such as safe housing, educational achievement, and job opportunities, have close ties with financial resources.[14] Those earning lower wages face significant barriers to safe and healthy environments and resources.[14] By contrast, the concept of a “living wage,” or a wage reflecting the actual income needed to meet minimum standards of living, allows people to meet an array of basic needs such as food, shelter, clothing, transportation, child care, and medical needs.[15]

While directly attributing changes in minimum wage policies to health outcomes can be challenging due to the large number of confounding factors, widespread consensus remains that populations with low incomes have worse health outcomes.[16] According to the latest information from the Kaiser Family Foundation, individuals with low incomes disproportionately experience adverse health outcomes, including higher rates of chronic illness and disability and lower life expectancies, because wages directly affect a person’s ability to access resources such as healthy foods.[17] Diabetes, heart disease, and hypertension are also more common among low-wage earners, and individuals with low incomes have as much as a 25% lower life expectancy than those with higher incomes.[17] In addition, poverty can create poorer health outcomes through limited access to basic primary care or health insurance.[18] The adverse health experiences of low-income earners trigger a cycle of poverty and poor health by reducing their capacity to work, which can negatively influence their wages, labor force participation, and job choice.[17]

Low-wage workers might also experience negative health outcomes because they tend to not have sick leave, and their working conditions are more likely to be unsafe as a result of exposure to dangerous substances or other hazards.[18] Negative health outcomes affect not only wage earners themselves but all members of a household throughout their life course. For example, babies born in low-income families are twice as likely to have a low birthweight as babies in higher-income families. Also, children in low-income families are 40% more likely to have asthma and four times as likely to drop out of high school.[18]

Minimum wage policy landscape and health effects: Despite overwhelming public health consensus on the adverse health effects of low income, a wide variety of political and economic issues have served as barriers in reaching a consensus among the general population on the benefits of increasing the minimum wage. There is no political consensus on how much the minimum wage should be increased or whether it should be increased at all, and there is wide variation between states and municipalities in their policy choices. As of January 1, 2016, 29 states and the District of Columbia had set their minimum wage above the federal minimum wage, leaving 21 states using the federal minimum wage.[19] At least 42 American municipalities have independently adopted policies raising the minimum wage above the federal level.[20] In some states, such as Oklahoma, local municipalities are legally prohibited from increasing their minimum wages above the state level.[21]

Examining health outcomes across the varied policy landscape supplements a limited body of evidence about the health effects of minimum wage increases. For example, among the 21 states paying wages at the $7.25 federal minimum level, 14 have life expectancies below the US average of 78.9 years.[22,23] In fact, the states with the lowest minimum wages (or states that have left the minimum wage at the very low federal standard) have the worst health outcomes and highest levels of poverty. Three of the five states with the highest obesity rates use the $7.25 minimum wage (Mississippi, Tennessee, Kentucky), as do three of the five states with the highest child poverty rates (Kentucky, Mississippi, North Carolina). The five states with the highest rates of low birthweight (Mississippi, Louisiana, Alabama, South Carolina, Georgia) all use the federal minimum wage. Of the states ranked in the bottom five of these health indicators, only Arizona indexes its minimum wage to a consumer price index.[24] Conversely, states with higher minimum wages tend to have the lowest rates of obesity, child poverty, and low birthweight.[24] Evidence indeed indicates that greater financial resources from earning a higher wage contribute to better health outcomes. States using the federal minimum wage, for example, report an increased likelihood of workers having unmet medical needs.[25] In addition, a recent study published in the American Journal of Public Health supports the link between wage increases and improved health; researchers estimated that there would be 2,790 fewer low-birthweight births and 518 fewer postneonatal deaths annually if all states raised the minimum wage by one dollar.[26]

Diminishing purchasing power of the minimum wage: Although the federal minimum wage has increased 22 times since its inception in 1938, its purchasing power continues to diminish. The minimum wage has not kept pace with increasing prices for goods, services, housing, and transportation, which are at all-time highs.[27]

The widely used Consumer Price Index for All Urban Consumers (CPI-U) represents the rate of change in daily living expenses (e.g., food, housing, transportation, medical care, education, and communication services, as well as other goods and services) for 87% of US consumers. The CPI-U has been increasing rapidly since the 1970s.[28] Increases in both inflation and the cost of living have led to significantly decreased purchasing power for the minimum wage.

Among low-wage earners struggling to meet their daily needs, decreased purchasing power is problematic in a variety ways. Of the 93 metropolitan areas in the United States, all but two saw a 3.2% rise in rent in 2014, more than double the CPI-U.[29] As high-wage earners are increasingly drawn to city center living, rents increase, further undermining the value of the minimum wage. As another complication, low-wage earners often work “variable shifts,” making access to safe and affordable child care more challenging than for their higher-wage peers. A 2013 report from Restaurant Opportunities Centers United showed that 15% of restaurant workers (approximately 2 million individuals) are mothers, and more than half (1.2 million individuals) are single mothers with children younger than 18 years.[30] Women make just 79 cents for every dollar their male colleagues earn and lose an additional 4% across all industries on average when they become mothers.[30] Mothers working in restaurants spend an average of 35% of their weekly earnings on child care; for approximately one third of mothers, child-care costs represent 75% of their weekly earnings.[30] Overall, of the mothers surveyed, nearly two thirds reported that paying for child care is a “concern.”[30]

Minimum- and low-wage earners often struggle to access safe and affordable housing. In most states, affordable housing is located at ever-increasing distances from city centers with high concentrations of goods, services, and employment opportunities.[31] The increasing distance between jobs and housing proves costly to workers; low-income families typically pay more for transportation than their higher-paid counterparts, spending on transportation to work what they might otherwise save thanks to affordable housing.[32] People who live closer to jobs are more likely to find and keep employment, and their periods of unemployment are shorter, both of which are indicators of better health.[31] This evidence suggests that a focus on the minimum wage should also include an understanding of the rising cost of living and related factors concerning housing and transportation. Not accounting for these other social determinants of health may result in missed opportunities to adequately improve the economic resources of people in low-income households and advance health equity among the most historically disadvantaged low-wage earners.

Homelessness is increasing in many urban centers as affordable housing becomes less accessible, intensifying the struggle of minimum- and low-wage earners and their families to maintain stable housing. King County, Washington, one of the most prosperous areas of the country, declared a state of emergency in 2015 due to rising homelessness and began a process of changing local policies to combat the rise.[33] Nationally, about 1.6 million children experienced homelessness in 2010, with 650,000 of them younger than 6 years.[34] Overall, homelessness is a well-established cause of poorer health outcomes, including increases in communicable diseases such as tuberculosis and chronic diseases such as asthma and diabetes.[34] Homeless children are more likely to experience hunger and poor mental and physical health than their stably housed peers.[34] Approximately 97% of homeless children have moved at least once in the preceding 12 months, causing interruptions to schooling and creating additional stress in their home lives.[34] The adverse effects of homelessness can begin even before a child is born. For example, inadequate maternal nutrition and insufficient prenatal care can contribute to an increased risk of infant mortality and to future chronic health conditions among children born to women experiencing homelessness.

Metrics of poverty and financial need: The current approach to identifying the necessary financial resources for living above the poverty line presents major challenges in setting a minimum wage that is sufficient for workers to meet their basic needs and achieve full health. Policymakers at all levels of government use the federal poverty level as the basis for a myriad of policy decisions, including the setting of minimum wages. The federal poverty level, however, inadequately accounts for the range of goods and services individuals and families need to achieve full health, nor does it reflect regional variations in cost of living.[35] Many working households living at or near the federal poverty level are struggling to survive, particularly in high-cost communities.[36] According to the US Department of Transportation, under the federal housing affordability measure, 70% of US renters have affordable housing; if the regionally specific housing and transportation affordability threshold is used, however, only 40% of renters are living in affordable housing.[37]

The US Census Bureau acknowledges the inadequacy of the official poverty line measure and has therefore established an alternative, the Supplemental Poverty Measure, that also considers tax payments, work expenses for families, costs of basic necessities (e.g., food, clothing, and utilities), and geographic differences in the cost of housing. Unfortunately, the Supplemental Poverty Measure is intended for descriptive purposes only and does not replace the official poverty measure for policy-making or public assistance program implementation.[35,38] By using metrics that do not fully capture financial need and geographic variation, policymakers fail to adequately understand who is living in poverty and experiencing the adverse health outcomes of having a low income. In turn, current policies do not reflect a minimum wage that would provide individuals and families with the financial resources needed to live in good health.

Evidence-Based Strategies to Address the Problem

Minimum wage increases: Research on the connection between income and health illustrates the consistently positive health benefits of increasing wage earnings. For example, the life expectancy for individuals with earnings above the federal poverty line is 5 years longer than the life expectancy for those with earnings below the poverty line.[39] The Economic Policy Institute has demonstrated how raising the $7.25 federal minimum wage would increase the purchasing power of low-wage earners, boost the economy, and increase people’s capacity to spend new earnings on previously unaffordable basic needs or services to protect their health.[40] Lifting individuals out of poverty is only one of many mechanisms through which raising the minimum wage can improve public health. Increasing wages can improve psychological well-being and job satisfaction, improve delay-of-gratification ability, and increase the opportunity costs of engaging in unhealthy habits.[41]

More than a decade’s worth of research indicates that increasing the minimum wage is an effective means of improving public health across many settings. In a quasi-experimental study, Komro and her colleagues analyzed more than 200 legal changes to the minimum wage in the 50 states over 30 years. They found that for every $1 increase in the minimum wage, low-birthweight births decreased by 1% to 2% and postneonatal mortality decreased by 4%.[26] In 2001, a California research team projected that San Francisco’s minimum wage increase to $11 would have benefits for adults and children living in low-income households: the risk of premature death among adults would decrease by 5%, the risk of premature birth would decrease by 22%, and children in these families would have a greater likelihood of completing high school.[15] In 2014, the same research team found that increasing California’s minimum wage to $13 per hour would prevent nearly 400 premature deaths among lower-income residents each year.[39] Similarly, statistical modeling showed that a hypothetical minimum wage increase to $15 in New York City from 2008 to 2012 could have prevented between 2,800 and 5,500 premature deaths during that time frame by lifting more than 400,000 individuals’ earnings from below 200% of the federal poverty level.[42] This 4% to 8% decrease in premature deaths would have predominantly occurred in lower-income communities—comprising primarily people of color—helping to close the life-expectancy gap between the richest and poorest neighborhoods in New York City.[42]

The Robert Wood Johnson Foundation recommends establishing a “realistic minimum wage” as a strategy for increasing the economic status of, and thus expanding access to resources among, poor populations in the United States, which are predominantly composed of people of color.[18] Indeed, the previously cited New York City study revealed that many of the positive effects of minimum wage increases would be felt among historically underserved individuals, families, and communities. The Economic Policy Institute found that raising the minimum wage would primarily benefit women and people of color.[27] The National Council of La Raza supports increasing the federal minimum wage to $12, which would benefit 8.5 million Latino workers.[43] The National Women’s Law Center advocates for an increase in the federal minimum wage to address fair pay for women, especially women of color.[44]

International examples of minimum wage increases: Elsewhere in the world, minimum wage studies reflect similar health implications. Although comparisons between the United States and other countries are complicated because of the differences in economies, cultures, and other contextual factors, the key takeaway remains that minimum wage increases successfully serve as a mechanism to improve social determinants of health across many different contexts. In the Dominican Republic, workers at a factory that paid well above the minimum wage reported better health status and subjective social status (both validated predictors for future health) than workers at another factory that paid only minimum wage.[45] In Nova Scotia, the minimum wage increased by 79% between 2002 and 2012; during this time period, most minimum-wage-earning households were better able to afford nutritious foods.[46] Finally, an investigative study conducted in London assessed the effects of the London Living Wage campaign among low-wage employees in the service sector. The results showed that employees who received the campaign’s living wage scored higher on psychological well-being metrics than those who worked for average-paying employers.[47]

Improving or maintaining the purchasing power of the minimum wage: Research suggests that minimum wage increases are most successful in decreasing poverty and improving health when they are paired with other structural improvements that maintain or increase the purchasing power of wages.[46] A systematic review of the health effects of different social policies on low-wage earners showed positive, yet weak, effects of minimum wage interventions on health status and outcomes.[48] Increases in the minimum wage improve health outcomes by increasing financial access to resources and opportunities necessary for full health, including safe and affordable housing, nutritious foods, safe and supportive neighborhood conditions, transportation, educational attainment, and employment options; however, this assumes that the purchasing power of the wage is adequate.[49] Enacting structural policies to prevent increases in the cost of these goods and services in excess of wage increases ensures that they are economically attainable for low-wage earners.

Adjustments to social benefit eligibility policies: Income is a primary eligibility criterion for public benefits programs, so policymakers must consider social benefit receipt when instituting a minimum wage increase. In some cases, increasing the minimum wage makes low-income households newly ineligible for public benefits they previously received, but the increase itself does not provide financial resources equivalent to lost benefits. For example, a 2014 analysis of a hypothetical increase in the Seattle minimum wage from $9.32 to $12.12 revealed that a family of three would lose $121 in monthly public assistance for food through the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and an increase to $15 would result in a loss of $273 in monthly nutritional assistance benefits.[50] With a minimum wage increase from $9.32 to $12.12, the same family of three would see a rise in monthly income of $448, and an increase to $15 would result in an additional $908. While these income increases initially seem to be more than enough to make up for the loss in nutrition assistance, income increases can also negatively affect subsidized health insurance, housing, and other public benefit eligibility. Furthermore, eligibility levels for these programs vary widely across the country, so while a family may be able to absorb the loss of benefits in Seattle, a family in Springfield, Illinois, will experience greater financial losses due to more stringent eligibility requirements.[51] Harvard economists have observed that for every 10-percentage-point decrease in the fraction of the population receiving public assistance, the fraction of food-insecure households increases by about 5 percentage points.[3] Policymakers should assess whether minimum wage increases would harm the low-income populations they mean to help by making individuals and families ineligible for valuable benefits, and they should adjust eligibility requirements as necessary.

Integrated public health programs: Without addressing work-related health threats common in low-income occupations and improving local health-promoting factors (such as neighborhood walkability, healthy food access, physical safety, and safe and affordable housing) that tend to be inadequate in low-income communities, increasing the minimum wage may not have the desired effects.[52] Integrated public health programs can address the complex interaction of these occupational and non-occupational factors by using a social-ecological framework to target risk and protective factors in the workplace, home, and broader community. A review of integrated programs suggested that reducing silos in funding, regulations, data and research, training, and programmatic operations can facilitate a more integrated approach. The same review highlighted participatory engagement of communities and stakeholders as a key element of successful integrated public health programs.[52] A few successful programs have been implemented at worksites, state and local health departments, community health centers, and community-based organizations. For example, as part of a collaboration between California Department of Public Health occupational and environmental programs, Latino community health workers are developing an environmental health curriculum that will include an occupational health module.[52] In New York, the Occupational Health Clinic Network assists health care providers and patients in addressing work-related illness and injuries and navigating the worker compensation system.[52] These promising examples point to the potential for future integrated program development, evaluation, and translational research to elicit important improvements for low- and minimum-wage workers.[52]

Recent movements toward increasing the minimum wage: Increasing the minimum wage has captured the attention of policymakers, low-wage earners, and advocates. A movement across the country to increase minimum wages is evidence that this strategy is politically and economically feasible. In his 2015 State of the Union address, President Barack Obama urged Congress to raise the federal minimum wage from $7.25 to $10.10 an hour. Across the country, 12 states and at least 125 municipalities have adopted policies raising the minimum wage above the federal level—from $9 to $16 an hour—most of which apply only to businesses that receive contracts or subsidies from local governments.[20] The District of Columbia has the highest state minimum wage at $9.50. San Franciscans approved a ballot initiative that will raise the minimum wage to $15 in the coming years, the same rate approved by the Seattle City Council.[53] Other cities such as Los Angeles; Chicago; Portland, Maine; and Louisville, Kentucky, are weighing the evidence as they consider proposals to raise their own minimum wages.[54] At least six other states are in the process of gathering signatures and advocating to state legislatures to raise their minimum wages.[20] A movement to improve the purchasing power of the minimum wage by indexing it to inflation is gaining momentum; Washington was the first state to index its minimum wage to inflation in 2001, giving it one of the highest minimum wages in the country. In total, 10 states index their minimum wages to inflation.[22] Although states that do index to inflation are using the CPI-U, the Economic Policy Institute and the Massachusetts Institute of Technology, among others, have developed alternative indices that capture the cost of living more accurately. As noted earlier, data on the effects of these recently enacted policies are not yet available, although research is under way.[55,56]

Opposing Arguments

Business advocates and others have argued against increasing the minimum wage, largely as a result of concerns regarding the ability of small businesses to pay higher minimum wages while staying in operation, maintaining employment levels, and accommodating growth. However, recent research has shown that minimum wage increases have very little effect on these measures.

Studies of local minimum wage increases in San Jose and San Francisco revealed little or no measurable effects on employment or hours worked in the most vulnerable sectors: food service, retail, and other low-wage industries.[57] Opponents argue that a sharp increase in the minimum wage could result in fewer job opportunities for entry-level workers. However, a 2009 meta-analysis of 64 US minimum wage studies showed an insignificant employment impact (both practically and statistically) from minimum wage raises, suggesting that any resulting employment effects are “too difficult to detect and/or are very small…and policy-irrelevant.”[58] A 2016 study of Seattle’s increase in minimum wage to $15 revealed that the number of persistent jobs at single-location businesses rose 10.5%, which is more than three times the growth rate in the United States as a whole. The research team concluded that there was no compelling evidence that an increase in minimum wage caused significant increases in business failure rates in Seattle.[56]

It seems logical that for businesses employing significant numbers of low-wage workers, higher minimum wage requirements could lead to a rise in prices if owners choose to pass these costs to their customers. These higher prices could theoretically dampen sales or even force owners to close their business. Two studies investigated these ideas. The first, which examined operating costs associated with a minimum wage increase in the San Francisco Bay area, showed that a 26% increase (for example, from $9.25 to $11.65) would result in 82% of businesses “experiencing an increase in operating costs of less than 1% or more” and 95% “experiencing an increase in operating costs of less than 5%.”[59] The second study compared the number of retail businesses operating in San Francisco and Santa Fe before and after their city minimum wage policies were implemented. The researchers found that the number of top retailers grew, along with the total number of stores. In this example, overall retail business did not decline in San Francisco or Santa Fe, nor did employment in specific retail sectors such as grocery, clothing, and accessories.[60]

Regarding the cost of minimum wage increases to businesses and consumers, research has revealed “only modest impacts on consumer prices, such as restaurant meals, which are predicted to rise by about 2.5 percent.”[59] In fact, higher wages may serve to reduce costs for small businesses in the long run by decreasing employee turnover and, thus, reducing recruiting and training costs.[61] Dube and his colleagues measured the effects of the minimum wage on labor turnover among teens and restaurant workers at the county level and reported “striking evidence that separations, new hires, and turnover rates for teens and restaurant workers fall substantially following a minimum wage increase.”[62]

Another argument against raising the minimum wage is that it reduces the capacity of employers to offer benefits such as health insurance or paid time off. Some fear employers might cut benefits to offset the higher cost of wages, leading to more limited access to health insurance. Researchers from the University of Washington examined whether minimum wage policies are associated with access to medical care among low-skilled workers in the United States and found that “higher minimum wages were associated with a reduced likelihood of experiencing unmet medical need among low-skilled workers, and do not appear to be associated with uninsurance.”[25] Regardless of effects on employment benefits, workers are still better able to meet their health care needs when they are making a living wage. This argument is also negated if minimum wages are increased such that workers can afford to purchase their own insurance.

In summary, opponents of increasing the minimum wage point to the potential negative economic effects for businesses without recognizing the benefits of healthier workers for businesses and the overall economy.

Alternative Strategies

Earned income tax credit (EITC): Since 1975, the federal EITC has served as a fully refundable credit for workers, self-employed people, and farmers earning $51,567 or less after filing taxes.[63] The amount of the credit is based on earnings and family size. On average, qualified tax filers in 2013 received $2,300. In 2009, the EITC lifted approximately 6.6 million people—about half of whom were children—out of poverty.[63] The EITC has public health effects similar to those achieved by increasing the minimum wage, including improved infant and maternal health, increased employment rates and earnings among children of filers, increased Social Security benefits in retirement, and improved children’s academic achievement.[64] One potential drawback of the EITC is that qualified earners seeking reimbursement must understand how to properly file for the credit, which can lead to errors among people seeking to claim it.[63]

Guaranteed annual income: In an attempt to simplify the Social Security and income tax bureaucracy for low-income individuals, the US government introduced a series of negative income tax experiments in the 1960s and 1970s.[65] Under these experiments, families of four with no income were granted a minimum of $2,400 based on a calculation of what they would have earned through other public benefit programs. This would eliminate the need for a minimum wage and reduce the number of people falling into the “welfare trap,” wherein individuals moving off welfare and into the labor market face a strong disincentive to continue working due to high marginal tax rates and wage garnishments (such as child support payments and legal financial obligations following incarceration).[65] Fears about implementing a guaranteed income (fraud, high enforcement costs, and low incentive to find work) led to the discontinuation of this strategy in the United States.

Cash transfer programs: These programs aim to break the cycle of poverty by providing low-income families with direct transfers of cash. Unconditional cash transfer programs transfer cash to households without eligibility requirements,[66] while conditional cash transfer programs transfer cash to participants who meet certain requirements, such as meeting benchmarks in education, employment, or receipt of preventive health care services. Mexico pioneered the use of conditional cash transfer programs with the Oportunidades (formerly Progresa) program. These models are now operating in most Latin American countries and several countries in Africa, and strong evidence exists that they can reduce poverty, improve maternal and infant health, reduce alcohol use and smoking, and increase children’s school enrollment.[67]

Evaluators are studying similar programs in the United States, including New York City’s Opportunity NYC-Family Rewards program and the revised “Family Rewards 2.0” model in Memphis, Tennessee, and the Bronx, New York.[66] Families participating in Opportunity NYC-Family Rewards earned just over $3,000 per year on average and experienced less material hardship, including housing and hunger hardship.[67] Children of families in the program were 8% more likely than those in a control group to graduate from high school within 4 years and subsequently enroll full time in a 4-year college (if they started ninth grade as proficient readers).[67] Although the Opportunity NYC program showed success in meeting short-term goals, effects diminished once the reward period ended.[66] Early results of the Family Rewards 2.0 programs show that most families earned at least some rewards, with an average reward of about $2,160, and forthcoming findings from Memphis and the Bronx will provide further insight into the public health effects of the model across different contexts.[68]

Action Steps

To further its mission to advance health equity, APHA recommends the following actions from three levels of governance in support of the national movement toward ensuring livable wages that apply to all workers (including those working in restaurants, agriculture, and without documentation).

The federal government should:

  1. Raise the federal minimum wage so that a four-person household with a single minimum-wage earner can live above the federal poverty level.
  2. Develop criteria for determining a federal living wage, which would allow a single earner in a four-person household to access a comprehensive set of basic needs. This federal living wage would be based on a national average of annual costs of housing, food, transportation, child care and health care, similarly to how Los Angeles County calculates a living wage for its region.
  3. Develop a policy of regularly updating the federal minimum wage indexed to inflation and cost of living calculations.
  4. In recognition that wages alone are not the only cause of health disparities between low- and high-income populations, develop and evaluate integrated public health programs that address the complex interrelationships among community factors (such as transportation, public schools, affordable housing, and recreational facilities), occupational hazards, and local labor policies (such as sick leave and parental leave).
  5. Fund CDC, the National Institutes of Health, and other federal agencies to contract with academic researchers to study the health effects (and evaluate the effectiveness) of minimum wage policies.
  6. Direct the Congressional Budget Office and state budget analysts to examine the effects on federal and state budgets of reducing public assistance budgets due to low-wage workers’ increased earning capacity.
  7. Adjust eligibility requirements for SNAP, WIC, and other safety net programs to accommodate recipients whose minimum wage increases create a discrepancy between their benefit eligibility and their ability to maintain their previous standard of living.

Individual states should:

  1. Consider increasing the minimum wage and indexing it to inflation and the cost of living (using calculations such as those described in Item 2 above).
  2. Oppose preemption of municipal minimum wage policies, thus allowing municipalities to set their own policies.

Local municipalities should:

  1. Consider increasing the minimum wage and indexing it to inflation and the cost of living (using calculations such as those described in Item 2 above).

Finally, all levels of government should ensure that minimum wage policies benefit the historically underserved populations disproportionately represented among minimum-wage earners, predominantly women and people of color.

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