Saving Health Insurance from Minimum Wage Increases

John Goodman and Richard McKenzie are raising a point worth consideration by policymakers in their paper “Saving Health Insurance from the Minimum Wage,” published by the National Center for Policy Analysis.

They say, in part:

Political support is growing in Congress for another increase in the federal minimum wage. A bill now under consideration would raise the minimum hourly wage from $5.15 to $7.25 over the next two years……But a number of studies point to an even more serious consequence: fewer fringe benefits, including health insurance.

An unintended consequence of a minimum wage increase would likely be a rise in the number of Americans without health insurance…

I’m sure many employees realize how expensive health insurance is for employers. Here at the National Center, the health coverage we purchase for employees with families is equal to $6.70 per hour.So, if we paid any employees the minimum wage (we don’t), and provided health insurance for their family, their actual pay would be $11.85, more the double the $5.15 they’d see on the pay stub. And that figure would not include the “employer’s contributions” (earned by the employee) to Social Security and Medicare, or the value of other benefits, such as retirement plans.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.