Health effects of an increased federal minimum wage among US low-wage-earning adults: a difference-in-differences...

The current US federal minimum wage (US$7.25) translates to incomes below the poverty limit for full-time workers. Prior studies do not provide clear evidence that increasing wages can improve health, but there are limited long-term findings from the low-wage workers directly affected.

We estimated the health effects of the most recent increased federal minimum wage policy change, which was fully implemented in 2009, comparing residents of states that did and did not rely on the change. Low-income Panel Study of Income Dynamics participants between 1999 and 2019 were included if they were interviewed both before and after the policy change, and they or their partner relied on an hourly wage that was ≤150% of the minimum wage. Adjusted two-way fixed effects difference-in-differences models compared residents of states that relied on the federal minimum wage change in 2009 (1472 observations, 20 states) to those in states with higher minimum wages (1854 observations, 24 states).

Participants were, on average, 29 years old in 1999 and typically followed for 9.6 years (n=699). Most were female (73%) and Black (50%). The federal policy change temporarily narrowed the mean minimum wage gap between exposed and comparator states. In adjusted fixed-effects models, the federal minimum wage policy change reduced psychological distress (difference-in-differences coefficient=-1.027, p<0.01). There was no effect on body mass index, self-rated health or number of chronic conditions (difference-in-differences interaction term p values >0.05).

These results provide timely evidence suggesting that increased federal minimum wage policy changes may advance mental health equity by reducing psychological distress over 10 years.