Minimum wage hikes might reduce suicide rates: study

(Image credit: Illustrated | Nastco/iStock, Serhii Borodin/iStock, syntika/iStock, Aerial3/iStock)

last updated 10 January 2020

Minimum wage hikes are a hot topic these days, particularly as a number of cities and states have ramped up their minimums to $15 an hour. Usually, the debate revolves around whether minimum wage hikes reduce employment, by making workers more expensive to hire. But now there's another twist we can add: It looks like higher minimum wages reduce suicide rates.

According to new research just published in the Journal of Epidemiology & Community Health, every $1 increase in the per hour minimum wage cuts the suicide rate among people with a high school education or less by something between 3.5 percent and 5.9 percent. The researchers found no significant impact on suicide rates among more educated Americans.

The authors of the study used state minimum wages as a kind of natural experiment: some state minimums are quite higher than the federal minimum of $7.25. As the authors put it, if you imagine the minimum wage as a medical treatment aimed at addressing the public health problem of suicide, then the federal minimum wage is the baseline treatment, and the state minimum wage hikes are experiments in higher "doses." And it sure looks like higher doses correlate with fewer suicides among people with less education — a population that is both more impacted by minimum wage hikes and that's at a higher risk of suicide.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Now, no study is perfect, and opponents of minimum wage hikes have already quibbled with the methodology. (We'll get to those objections in a minute.) But the real lesson here is less about this specific study than the general trend of the research: This is the third study in just the last year to suggest that minimum wage hikes could cut suicides. Another paper, looking at state-by-state variation in policy from 1999 to 2015, found a 10 percent hike in minimum wages cut suicides not related to drugs by 3.6 percent among Americans with just a high school education or less. That paper also found no effect for more educated workers. Yet more research, looking at these state variations from 2006 to 2016, found a $1 increase in the minimum wage went along with a 1.9 percent reduction in the suicide rate — though that study didn't break things down by education.

After falling for decades, suicide rates in the U.S. started climbing again after 2000, and are now higher than they've been at any point since World War II. The change is part of a rise in so-called "deaths of despair" — i.e. deaths from suicide, drug overdoses and alcoholism. As a result of that rise, there's been an unprecedented decline in overall U.S. life expectancy in recent years. And at this point, plenty of research points to personal hardships related to work and finances as one major cause of suicide. There's well-grounded logic for thinking that raising the floor for what people are paid by their jobs should lead to better outcomes for human well-being — more hope, more stability, more healthy behaviors, and less fear and stress — and thus fewer suicides.

On the first point, the authors theorize that wages are higher anyway when unemployment is low (because workers have more bargaining power in tight labor markets) so the protection for people's well-being offered by the minimum wage itself is less significant. But the second point is especially interesting, because it suggests the psychological effect on people of knowing the minimum wage is higher may count as much for their well-being as the raw material fact of getting more income. This could also circle back to the first point: When you don't have a job, maybe the stress and despair is lessened by knowing that, once you do find unemployment again, it will pay better.

Now, what about those aforementioned objections? The "dosage" methodology the study used is relatively unusual in minimum wage research. And critics of minimum wage increases pointed out it can lead to weird conceptual results: If the federal government increased its minimum to $14 an hour, for example, to match Washington, D.C.'s, then the "dosage" there — and the effect on suicides — would be the same as the current situation for Alabama, where $7.25 an hour is the state and federal minimum. Also, because the study specifies the dosage in dollars, that means a state-federal gap of, say, $7.25 to $8.25 would have the same effect as a $14 to $15 gap, even though those differences are quite different percentage-wise.

There are other more straightforward — and more modest — critiques. For instance, while the authors tried to control for confounding variables that might have influenced the results — like differences in state-level economic output, differing unemployment rates, and the benefits from the Temporary Assistance for Needy Families program — they weren't able to control for state-by-state variations in the food stamps program. Aparna Mathur, an economist at the right-leaning American Enterprise Institute, also argued that, because the study looked at aggregate trends at the state level, it's hard to tease out what the causal mechanism is for the reduction. She noted that disemployment effects from the minimum wage hikes could still leave people worse off, even if they aren't committing suicide as much.

At the end of the day, the objection to the minimum wage is the risk that it increases joblessness by making workers more costly for employers to hire. We can of course try to look at job effects directly, and the bulk of the research suggests that — at least where the minimum wage hikes we're attempting so far are concerned — the effects on employment are minimal. But ultimately, the reason to avoid increasing unemployment is that joblessness itself is decimating to people's mental well-being. Suicide is the most extreme outcome of the very despair and hopelessness that unemployment can cause. If minimum wage hikes do lead to more joblessness, then presumably they should increase suicides in the aggregate, especially for the less-educated Americans most exposed to the minimum wages' impacts.

Probably the most important thing to keep in mind here is the banal point that we could always use more research, such as adding controls for the food stamp program and other possibly-confounding variables. If the causal mechanism here is indeed that a higher minimum wage decreases the despair that can lead to suicide, then researchers should test that theory by looking into whether minimum wage hikes also decrease other trends, like rates of depression or of unsuccessful suicide attempts. "There's a lot of information that we would like to have to fill in the gaps," Kaufman himself admitted.

Explore More