Raising Wages of Low Wage Workers: Does It Help?

Background and Purpose:

Attention to the difficulties faced by low-wage workers has increased over the last decade. Just under half of the U.S. workforce earns less than $15 per hour, despite evidence that this is not enough to meet the needs of most workers and their families. Workers earning low wages face multiple hardships, such as housing instability, food insecurity, inability to afford health insurance, medical care, and medications, and financial and work-related stress. While one strategy to increase wages is to raise the minimum wage, some locales have focused on putting pressure on large employers. This longitudinal study focuses on the latter strategy and takes advantage of a series of wage increases negotiated between hospital service workers and a large hospital in Western Pennsylvania, which increase wages to a minimum of $15 an hour over several years. The goal is to understand whether and how these wage increases affect the hardships experienced by workers and their strategies to manage these hardships.

Methods:

This presentation is based on a longitudinal study that includes in-depth interviews with 49 workers and structured surveys with 235 workers. Both interviews and surveys include questions about the hardships workers face, the strategies they use to negotiate these hardships (including use of public benefits and charity), perceived stress, health, life and job satisfaction, and demographic variables. Bivariate analyses were conducted to examine differences in hardships and strategies before and after the first wage increase. In-depth interviews were inductively coded and analyzed using NVivo 11.

Results:

Analyses reveal that workers experience substantial hardships despite working full-time and often overtime and/or additional jobs. Eighty-eight percent reported living paycheck-to-paycheck. Following their initial pay increase, workers’ financial hardships, food insecurity, and medical hardships all decreased. Thus, after the wage increase, they are better able to pay utility bills and the rent or mortgage on time, less likely to owe money for medical treatment, and less likely to worry about having enough food to eat. Workers utilized a variety of techniques to negotiate their hardships including borrowing money, using payday lenders, staying with friends and family, and relying on public and private assistance. Notably, use of these strategies and perceived stress both decreased following the initial wage increase. Not surprisingly, workers making more than $15 per hour experienced fewer hardships than those making below.  

Conclusions and Implications:

Debates over how to best support low-wage workers are often focused on the macroeconomic effects of minimum wage increases. Our findings indicate that, following an initial wage increase, workers experienced fewer hardships and relied less often on a range of strategies to make ends meet. These findings suggest that raising wages can make a difference, albeit small, in the lives of workers. They also indicate that paying workers more than $15 per hour can reduce the hardships they face and the degree to which they need to rely on a range of strategies to manage these hardships. Thus, our findings support multiple types of policy and advocacy efforts to raise wages for low-wage workers.