Health care costs are eating up workers’ raises
On November 3rd voters in Portland, Maine passed a ballot initiative paving the way for workers in the city to receive among the highest minimum wages in the country. In addition to a $15 minimum wage, essential workers will receive a time and a half minimum wage during declared states of emergency [which at the current $12 minimum wage comes to $18/hour]. This victory follows a nationwide movement dubbed “the fight for fifteen,” that has won increases in the minimum wage in other cities across America.
So why would a doctor write about an increase in the minimum wage? There are several fascinating connections between workers’ wages and healthcare which are important to understand and which put this historic legislation in context.
1. Our inefficient health care system has been stealing workers’ wages
It has been well documented that wages have been stagnant in the U.S. for decades. When you compare the increase in the cost of living and inflation to take-home pay, people are earning comparatively less year after year. This is despite our overall economy growing and many businesses doing quite well.
So, where is all this money going, if not to workers? It is not going to small business owners and not to the government. It’s not going to public resources like schools, parks, and libraries. It is going to health care costs.
As wages have remained flat, healthcare costs have skyrocketed. Money that could have been going into people’s pockets, instead is going into health insurance premiums that families, business owners, or the government end up paying.
Unfortunately, we are not getting a lot for our money. Despite increased spending, health outcomes are terrible compared to other developed countries. So, it turns out our wage problem is a health care problem.
2. Fairly paid workers are happier, healthier, and better at their jobs
Fight for Fifteen campaign poster
In cities that were early adopters of minimum wage increases, Seattle for example, there was controversy about whether increasing the minimum wage would hurt the economy. Fierce debates ensued. One side argued that businesses would shut down, workers would need to be fired, stores would move away, and prices for consumer goods would increase.
Fortunately, after legislation passed these things were either very minor or did not happen. Seattle, and many other cities, still have thriving economies despite a $15 minimum wage. It turns out that low wages were a major cause of worker turnover. This turnover costs businesses money in efficiency and re-hiring. Also, wages are not a net loss for the economy. They are spent on other goods and services, often near where they are earned.
3. Our health care system still needs work
While increasing the minimum wage is a huge step towards supporting the working class, it does not by itself address the underlying issue of health care costs. It’s unfair to small businesses to ask them to face the double burden of supporting a living wage and supporting a massively dysfunctional healthcare system. Right now, insurance premiums are increasing every year, squeezing employers and families. In the short term, we need health care options that are affordable to whoever is paying for them. In the long term, we need to rework our health care system so we can spend a reasonable amount of money for good health care and great health outcomes.
This is not a zero-sum game. We can have it all: living wages, a thriving economy, and excellent health care. America is prosperous enough that there is money enough to go around. Though, for this to work we need to make some major changes. Increasing the minimum wage is a powerful first step.
A Version of this article appeared in the December edition of the West End News
https://thewestendnews.com/health-care-costs-are-eating-up-workers-raises/