Efforts to increase the federal minimum wage from $7.25 to $10.10 have sparked a range of reactions and opinions. Some fear that the pay hike will raise prices or reduce jobs, for instance, while others say the higher pay could reduce employee turnover and help the working poor.
But how will this issue pan out in healthcare? Here are three core thoughts.
1. Martin Regalia, the chief economist for the U.S. Chamber of Commerce, was quoted in the Wall Street Journal today (May 21) as saying a raise to the minimum wage would force businesses to increase prices or cut jobs. This is the traditional viewpoint among business owners.
2. Almost half of workers who earn the minimum wage or less work in food service. The median wage there is $8.83 per hour. We estimate that the average wage in healthcare is much higher and that any raise in minimum wage would have little direct total impact on the expenses of hospitals and health systems. This assumes the increase in minimum wage is still below the average pay of almost all new hires to hospitals and health systems. This does not account for the overall impact on the economy and the creeping number of regulatory changes that may make it more difficult to profitably run a business in this country.
3. Thus, the impact of raising the minimum wage and its impact on hospitals and health systems can be categorized in one of three ways.
- We don't really know the impact on health systems and the economy. We expect it is not huge.
- It may lead to higher unemployment. This would indirectly harm hospitals and health systems, as less people will have the ability to pay for care.
- It may be viewed as an inartful attempt to support the working poor by forcing businesses to pay low-wage workers more. This can have a negative impact on business owners. Unless it leads to higher unemployment, it is not clear that this has a very direct impact on hospitals and health systems.
We would love to hear your thoughts on this issue. If you have a comment or thought, please email Molly Gamble (mgamble@beckershealthcare.com).
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