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Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?

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  • Anne Beeson Royalty

Abstract

This paper investigates the effect of minimum wages on the probability that low-skilled workers in the U.S. receive employer health insurance, retirement benefits, and sick leave. Using cross-state variation in state minimum wages to identify minimum wage effects, the paper finds that increases in minimum wages are associated with decreases in the probability that low-skilled workers are eligible for pensions and health insurance, at least at higher levels of the minimum wage. For example, a $0.50 increase in the minimum wage from its 1999 level is estimated to decrease pension eligibility of less educated workers by 6.8 points and their health insurance eligibility by 3.9 points. No effect or small increases in pension and health insurance eligibility are found when the real minimum wage is very low. The reductions in total compensation that occur with large increases in the minimum wage, or even with smaller increases at higher levels of the minimum wage, lower the size of the employment response that would be expected in response to a given increase in the minimum wage. Such reductions clearly also have an impact on worker well-being that offsets, at least to some extent, the gains that individual workers may realize as a result of an increase in the minimum wage.
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  • Anne Beeson Royalty, 2000. "Do Minimum Wage Increases Lower the Probability that Low-Skilled Workers Will Receive Fringe Benefits?," JCPR Working Papers 172, Northwestern University/University of Chicago Joint Center for Poverty Research.
    • Handle: RePEc:wop:jopovw:172
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    Cited by:

    1. Jeffrey Clemens, 2021. "How Do Firms Respond to Minimum Wage Increases? Understanding the Relevance of Non-employment Margins," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 51-72, Winter.
    2. Vit Hradil, 2018. "Does Minimum Wage Affect Workplace Safety?," CERGE-EI Working Papers wp615, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers 0812, College of the Holy Cross, Department of Economics.
    4. repec:pri:crcwel:wp01-25-gibson is not listed on IDEAS
    5. Dieter Verhaest & Stef Adriaenssens, 2022. "Compensating wage differentials in formal and informal jobs," Kyklos, Wiley Blackwell, vol. 75(1), pages 106-126, February.
    6. Kosali Ilayperuma Simon & Robert Kaestner, 2003. "Do Minimum Wages Affect Non-wage Job Attributes? Evidence on Fringe Benefits and Working Conditions," NBER Working Papers 9688, National Bureau of Economic Research, Inc.
    7. John Schmitt, 2015. "Explaining the Small Employment Effects of the Minimum Wage in the United States," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 547-581, October.
    8. Du Juan & Leigh J. Paul, 2018. "Effects of Minimum Wages on Absence from Work Due to Illness," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(1), pages 1-23, January.
    9. Jeffrey Clemens & Lisa B. Kahn & Jonathan Meer, 2018. "The Minimum Wage, Fringe Benefits, and Worker Welfare," NBER Working Papers 24635, National Bureau of Economic Research, Inc.
    10. Otto Lenhart, 2020. "Pathways Between Minimum Wages and Health: The Roles of Health Insurance, Health Care Access and Health Care Utilization," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 46(3), pages 438-459, June.
    11. Christina Gibson, 2001. "Privileging the Participant: The Importance of Take-Up Rates In Social Welfare Evaluations," Working Papers 968, Princeton University, School of Public and International Affairs, Center for Research on Child Wellbeing..
    12. Mindy S. Marks, 2011. "Minimum Wages, Employer-Provided Health Insurance, and the Non-discrimination Law," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(2), pages 241-262, April.
    13. John Schmitt, 2013. "Why Does the Minimum Wage Have No Discernible Effect on Employment?," CEPR Reports and Issue Briefs 2013-04, Center for Economic and Policy Research (CEPR).
    14. Kandilov, Amy & Kandilov, Ivan T., 2018. "The Impact of the Minimum Wage on Health Insurance: Evidence from Agricultural Workers," 2018 Annual Meeting, August 5-7, Washington, D.C. 274175, Agricultural and Applied Economics Association.
    15. Kosali Ilayperuma Simon & Robert Kaestner, 2004. "Do Minimum Wages Affect Non-Wage Job Attributes? Evidence on Fringe Benefits," ILR Review, Cornell University, ILR School, vol. 58(1), pages 52-70, October.

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