Minimum wage hikes may harm child health

On July 1, Los Angeles, Washington, D.C. and other parts of the U.S. increased minimum wages. These changes came amid rising pressure for the federal minimum wage to increase for the first time in 10 years.

Although it is well known that poverty and income inequality can have disastrous health consequences, knowledge about the effectiveness of minimum wages in improving population health is limited. By studying minimum wage increases in a global context, one can learn more about health implications for current and proposed increases in minimum wages on low-income populations in the U.S. and beyond. 

{mosads}To the extent that minimum wages influence parental wage income, they might affect parental investments in child health. For example, if wages were to increase, families might be more likely to avail themselves of health services and engage in other salutary behaviors that may be particularly effective around the time of birth.

However, parents may also be more likely to spend additional time in the labor market at the expense of care-giving activities. The time around birth is widely understood to be a critical period in shaping child nutrition and stunting levels; therefore, changes in parental economic conditions in the pre- and postnatal periods may have particularly large effects on child health and nutrition. 

Colleagues and I published a study last year in the journal, Social Science and Medicine, that is the first of its kind: It examined the impact of legislated minimum wages on children’s health in low- and middle-income countries (LMICs).

To carry out our analysis, we used a measurement known as the height-for-age z score (HAZ). This number indicates how a child’s height compares to the mean height of children his/her age and is an important proxy for progress toward malnutrition and hunger, prioritized by the United Nations Sustainable Development Goal 2 for 2030.

We obtained the HAZ scores of almost 140,000 children up to five years old who were born over a 14-year period between 2000 and 2013 in 49 LMICs­ across Africa, Asia and Latin America. The children were all from urban areas of those countries. We then combined that data with information on government-mandated minimum wages over the same time span and looked at the effects of changes in the minimum wages around the year of birth, widely understood to be a critical period in child development, on HAZ scores in the first five years of life.

After accounting for other variables, we found — perhaps counterintuitively — that an increase in minimum wages is associated with a decrease in HAZ scores in lower-income countries. This modest adverse effect was most pronounced in South Asian nations. There, a 1-percent increase in minimum wages led to a 0.8-percent decrease in HAZ scores. We also found that this adverse effect was greater among children whose parents engaged in manual labor and who lived in the poorest families.

Why would an increase in the minimum wage result in a negative health effect? Increasing the minimum wage can lead to higher unemployment, particularly women of childbearing age, who, in turn, may be less likely to avail themselves of health services around the period of childbirth, a time widely understood to be critical in shaping child nutrition and stunting levels.

We find suggestive evidence of increased maternal unemployment up to five years after an increase in minimum wages, which leads credence to this mechanism.

However, our study also found that some groups did benefit from an increase in the minimum wage. They include children born in Latin America, in richer countries and for those individuals whose parents work in skilled jobs. This suggests that minimum wages may be most effective among the more-skilled and richer groups, but can have unintended effects on the low-skilled and low-income groups who they are meant to support the most. 

That said, much more research is needed. We need to better understand the mechanisms at play: What is it about some regions and communities that makes minimum-wage legislation effective in improving early-life health? What causes unintended adverse effects in other communities?

This evidence base will help policymakers know better about the actual effect current minimum-wage legislation is having on population health and shed light on areas that need the most work. 

Farhan Majid, Ph.D., is the L.E. and Virginia Simmons Fellow in Health and Technology Policy. Majid’s research examines the effects of government policies to reduce poverty as well as social inequities related to hunger, health and well-being in low- and middle-income settings. He also studies the role of health and nutrition policy in global economic development.

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