Does a Minimum Wage Hike Lower the Suicide Rate?

This is a new one. The New York Times headline read: “Minimum Wage Raises Could Lower Suicide Rates, Study Says.” But there was a subheadline: “It was the latest study to suggest that effects of wage increases reach beyond economic welfare, but some experts pushed back on the findings.”

Let us “push back.”

The study was published in January in the Journal of Epidemiology and Community Health. The Times article noted that 47,000 Americans committed suicide in 2017 and said: “The new study examined suicide rates from 1990 through 2015 across all 50 states and Washington, and measured how they changed as the minimum wage increased. The researchers focused on adults between 18 and 64 years old with a high school education or less — a group more likely than others to be affected by changes in the minimum wage.

"When controlling for changes in a state’s economy and welfare policies, the researchers estimated that a $1 increase in the minimum wage corresponded with a 3.5 percent decrease in the suicide rate for those with a high school education or less. Without some of the controls, the decrease in the suicide rate was 6 percent. The effect was most pronounced during times of high unemployment.”

That’s quite an assertion, especially given the broad consensus among economists that minimum-wage hikes actually cause job losses for the least skilled. A Congressional Budget Office study examined the effect of the $15 minimum wage that enjoys broad support among the Democratic presidential candidates. The CBO said, “Under the $15 option, 1.3 million workers who would otherwise be employed would be jobless in an average week in 2025.” 1.3 million workers not working is the median estimate. The CBO estimates that job losses could be lower or as high as 3.7 million.

A study published in the British journal The Lancet Psychiatry, however, associated worldwide suicides to unemployment. “Our findings reveal that the suicide rate increases six months before a rise in unemployment,” said study author Carlos Nordt. “… Our data suggest that not all job losses necessarily have an equal impact, as the effect on suicide risk appears to be stronger in countries where being out of work is uncommon.” The study said there were estimated 233,000 suicides in 63 countries between 2000 and 2011, and that the number increased during the last recession: “While the number of unemployment-related suicides increased by about 5,000 during the recent economic crisis in 2008, this analysis shows the risk of suicide among jobless people is high even in good economic times.”

Liberal economist Jonathan Gruber of MIT helped design Massachusetts “Romneycare” and was heavily involved in the formation of “Obamacare.” In 2011, about the minimum wage, Gruber said: “Let’s say the government rolled in and set a minimum wage. … Workers want to supply more hours than firms want to hire. … You end up with excess supply. And we call that excess supply ‘unemployment.’” And, in 1998, The New York Times liberal columnist and economist Paul Krugman wrote: “The living wage movement is simply a move to raise minimum wages through local action. So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment.”

Economist David Neumark, a few years ago, looked at all the major minimum-wage studies over the previous 20 years, more than 100 studies. Eighty-five percent of those studies found that the minimum-wage laws create job losses, cause a reduction in hours worked and can cause businesses to shut down. In a paper on the effect of the minimum wage, Neumark wrote: “The potential benefits of higher minimum wages come from the higher wages for affected workers, some of whom are in poor or low-income families. The potential downside is that a higher minimum wage may discourage employers from using the low-wage, low-skill workers that minimum wages are intended to help. If minimum wages reduce employment of low-skill workers, then minimum wages are not a ‘free lunch’ with which to help poor and low-income families, but instead pose a tradeoff of benefits for some versus costs for others.”

Both the Journal of Epidemiology and the Lancet studies caution that many factors go into why someone commits suicide, and association is not necessarily causation. But the consensus among economists is the higher the minimum wage, the greater the job losses caused by the mandated wage hike. It certainly could be true that increasing the minimum wage decreases suicides among the so-called unskilled who work. But what about those who lose their jobs, or do not get a job, due to a minimum wage hike that prices of them out of the market?

The Patriot Post® · Does a Minimum Wage Hike Lower the Suicide Rate?