The universe of the minimum wage – Kommersant

David Newmark, one of the most respected economists on the effects of the minimum wage, has examined the new data collected over the past 15 years on how minimum wages affect anything other than economic relations. When viewed in detail, raising the minimum wage comes with a whole universe of unintended effects. It appears to increase smoking, prevent depression, lower grades in school, prevent suicide, worsen restaurant hygiene, and lead to obesity and dieting.

David Newmark of UCI in California co-authored a classic book on the effects of minimum wages on the economy in 2008 with MIT’s William Washer, The Minimum Wage. It summed up the results of several decades of studying the effects of introducing and changing the minimum wage in relation to unemployment, wage levels in industries, income and savings. The debate about the minimum wage did not stop after the publication of the book, and now Newmark decided to repeat the work of 2008, but in an unexpected aspect. Since that time, apparently, tens of thousands of studies have been published, one way or another related to this topic, and the economist analyzed those that do not concern purely economic effects – debate continues on them – but are devoted to the indirect impact of changes in the minimum wage on other aspects of workers’ lives. Newmark focused mainly on the impact of the minimum wage on health and family relationships. The results are published in the NBER preprint series.

In part, the data obtained by Newmark are interesting not by the discovery of general patterns of minimum wages in the “non-material” sphere – apparently, at least now, economists cannot claim this, but by demonstrating the extent to which “economy-centrism” in matters related to human activity in a wide sense of the term, is not the only possible lens when making politicized decisions in the economy. Dozens of serious studies from 2009-2022 in the United States alone have shown that if there is an area that the minimum wage does not affect, then it simply has not yet been addressed.

With varying degrees of confidence, Newmark believes that raising the minimum wage has a slightly negative effect on health indicators. Thus, the increase in the minimum wage seems to improve the health of children in families, but it contributes both to an increase in obesity and adherence to diets – which sounds logical. Increasing the minimum wage seems to significantly reduce the suicide rate. The increase in the minimum wage apparently worsens the school grades of children, although the family itself strengthens: both fathers and mothers in a situation of increasing the minimum wage pay more attention to children. At the same time, the question of whether the minimum wage changes rudeness towards children does not have a clear answer – influences in both directions are noted. A high minimum wage is likely to increase the prevalence of smoking; there is no clarity with alcohol on this issue. Whether the minimum wage increases the level of crime is impossible to say for sure, but, presumably, there is an impact in both directions. It is possible that a high minimum wage reduces the number of depressions and mental illness, in any case, nothing suggests that it increases this number. At the same time, the increase in the minimum wage in the population, apparently, does not change the volume of requirements for the healthcare system.

Finally, raising the minimum wage (mechanism unknown) reduces, on average, people’s desire to exercise and attend fitness clubs and impairs the neatness of people working in restaurants – in the latter case, they are less concerned about hygiene standards when the minimum wage is raised. There is no doubt that further research will bring new interesting results: they will only confirm that the economic way of thinking is only an analytical practice, and in human existence, to completely separate the “economic”, no matter how it is defined, from “everything else” in the human activities beyond the reach of even an economist.

Dmitry Butrin