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Shawn Vestal: Rising wages associated with healthier infants

Shawn Vestal (Dan Pelle / The Spokesman-Review)

Do bigger paychecks help produce bigger babies?

Some recent research suggests they might. That was one of several interesting and unexpected results of a recent attempt to check on the state of research and rhetoric about the minimum wage.

Here’s some of the results:

Raising the minimum wage is correlated with higher birthweights, healthier infants, and lower infant mortality. A team of economists from the University of Illinois, University of Iowa, and Bentley University analyzed federal birthweight data in states that had increased the minimum wage and states that had not between 1989 and 2012. Researchers said they were able to screen out other factors, and found an association between bigger paychecks and bigger babies:

“The effect size is meaningful and plausible,” according to the working paper, which was published by the National Bureau of Economic Research. “We also find evidence of an increase in prenatal care use and a decline in smoking during pregnancy, which are some channels through which minimum wage can affect infant health.”

Infant health is no trivial matter. Researchers say poor infant health is associated with lifelong problems that help lock families into intergenerational poverty. Here’s how a different research project summarizes it: “parental economic status influences birth outcomes, birth outcomes have long reaching effects on health and economic status in adulthood, which in turn leads to poor birth outcomes for one’s own children.”

Another team of scientists found an association between higher wages and fewer infant deaths. Published in August 2016 in the American Journal of Public Health, their paper concluded, “If all states in 2014 had increased their minimum wages by 1 dollar, there would likely have been 2,790 fewer low birth weight births and 518 fewer postneonatal deaths for the year.”

The number of people employed in Seattle restaurants is rising. New data from the Federal Reserve Bank of St. Louis indicates that employment in the bar and restaurant sector of the Seattle metro area has risen by more than 6 percent since it began raising its minimum wage. The seasonally adjusted figures show employment in food service rose from about 135,000 in April 2015, when the city began raising its wage floor, to about 144,000.

Writing about the new data in Forbes, Erik Sherman noted that food-service employment has been much less vulnerable to changes in the minimum wage than critics suggest. He writes that one might argue that growth would have been greater without the minimum wage, but that historically in Seattle, employment in food service has risen at the same pace since the Great Recession, and the first year of Seattle’s higher minimum wages has not reduced the number of people employed in restaurant work. Sherman concluded that the rising wage was mostly absorbed by Seattle’s booming economy.

Which might not be similar at all, of course, to what happens in Spokane or Airway Heights or Davenport.

More than doubling the federal minimum wage would add about 16 cents to the cost of a Big Mac. Economists at Purdue University published a study in 2015 that estimated the effect on prices at fast-food restaurants from a rising minimum wage. They measured the effect of raising the wage to $15 an hour from the current federal minimum wage of $7.25, which is the wage floor in Idaho and other states. They estimated a 4.3 percent increase in prices at those restaurants – 16 cents on a $4 Big Mac.

Washington’s minimum wage is a different story, of course. It’s been the nation’s highest for several years, and went to $11 this year, with annual, significant increases in the years to come. The Purdue team did not research Washington specifically, but did estimate the price effect much larger increase – to $22 an hour, the national average hourly wage for the private sector. Such a whopping increase would likely raise prices by 25 percent, making that hypothetical Big Mac cost $5.

Not a small effect, by any means. But perhaps smaller than you’d expect when tripling the minimum wage.

Raising minimum wage might offset public spending on social programs. Researchers at the University of California Berkeley Labor Center studied the use of federal and state safety-net programs by fast-food workers. Their 2013 study focused on non-managers working 11 or more hours each week.

They found those workers were more than twice as likely as the average to rely on a government program, at 52 percent. Just 13 percent of those workers had health benefits. Researchers estimated that public spending on those workers amounted to $7 billion a year from 2007 to 2011.

There’s not really a roadmap for where we’re going. Economists Dale Belman of Michigan State and Paul Wolfson of Darmouth evaluated 200 minimum-wage studies and published “What Does the Minimum Wage Do?” in 2014. Their summary: “Evidence leads us to conclude that moderate increases in the minimum wage are a useful means of raising wages in the lower part of the wage distribution that has little or no effect on employment and hours.”

But what about when the increase is not so moderate, as one might argue is the case with Washington’s oncoming experiment?

“Our suspicion is that large increases could touch off the (job losses) that are largely absent for moderate increases, but evidence for the United States is lacking because there have not been large increases in the last generation.”

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