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Another side effect of higher minimum wages: Lower health-care benefits

Tracy Pease of Hazel Park, Mich., spoke May 21 during a rally in Lansing, Mich., in support of the Michigan One Fair Wage group’s petition to raise the state’s minimum wage to $12 an hour. (Alice Yin/AP)

Although the national minimum wage remains stuck at $7.25 an hour, a wave of states and municipalities have taken it upon themselves over the past few years to raise the amount, in some cases to as much as $15 an hour. Advocates believe that paying a higher wage provides a better quality of life to workers and helps to spur consumer spending.

But many business groups that oppose it say a higher minimum wage limits their ability to hire more people and forces them to cut back on workers’ hours, hire part-timers, outsource or invest in more technology. A controversial study conducted in 2017 appeared to bolster that position when researchers at the University of Washington found that the costs of a minimum-wage increase in Seattle — the result of employer cutbacks in workers’ hours — outweighed the benefits of the increase by 3 to 1.

Now a new study further supports the anti-minimum-wagers.

A working paper released this week by researchers at the National Bureau of Economic Research looked at employee pay data from 2011 to 2016. It concluded that employers who were forced to raise minimum wages for lower-paid workers also raised the hourly wages of higher-paid workers to maintain parity. However, the same study also found “robust evidence” that employers who raised the minimum hourly wages also reduced the amount they paid for their employees’ health-care benefits to cover those added costs.

According to the research, workers whose minimum wage was increased by $1 found that 9 percent to 57 percent of their wage gains were offset by a decline in their employer’s health insurance coverage. The study also found that many workers who lost their health-care coverage went without insurance rather than seeking out subsidies from the Affordable Care Act exchanges.

The minimum wage debate is far from over. The study’s authors suggested that more research should be done to quantify the effects of raising minimum wages on benefits other than just health care, such as the flexibility of work hours and occupational safety.