Higher Minimum Wages Reduce Employer ‐​Sponsored Health Insurance Provision

Ryan BourneThe debate around raising a minimum wage typically centers on how it impacts both pay and employment. The higher hourly pay for beneficiaries is measured against any reduction seen in employment due to the higher labor costs for businesses (termed “disemployment”). In theory, policymakers then evaluate if the trade‐​off is worth it.Theoverwhelming majority of academic studies still find that raising minimum wages costs jobs, particularly for young, black, and low ‐​skilled workers. But in recent decadesa large minority of studies have found no significant job loss effects, suggesting there may be little downside to minimum wage hikes. The question then becomes: why?Advocates of higher minimum wages suggest that firms must have significant“monopsony power” in labor markets. In this world, a higher minimum wage could theoretically raise employment and pay concurrently. The evidence, they say, proves the theory.But there are other more plausible explanations. One is that these research papers are often too narrow in scope. WhenSeattle increased its minimum wage aggressively at the start of the last decade, for example, some research found no employment loss in the restaurant sector. But the standard trade ‐​off nevertheless still held when looking at low‐​wage work across all industries.Another explanation is that these papers ’ designs don’t capture well the impacts in real labor markets. A recent study by Priyaran...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs