Addressing racial health inequities includes addressing the minimum wage

Over the past year, we have witnessed the national outcry against our “race-based caste system,” the frailty of our social safety nets and economic precarity disproportionately affecting communities of color. This stems from barriers rooted in poverty and discrimination with downstream collateral of inaccessible housing, education, transportation, healthcare and job security with paid sick leave and a living wage. It is well established that poverty and low-income status are associated with worse health status and outcomes. 

Currently, there is a feverish inward focus on increasing inclusion, representation and research to challenge structural racism within healthcare systems. However, empowering patients entangled in this complex web of racially-driven societal structures and intergenerational poverty cannot be achieved with insulated healthcare initiatives and policy changes. One of the ways to do this is to support federal policy that affects one of the tenet social determinants of health: a living minimum wage.

The antiquated minimum wage — last raised in 2009 to $7.25 — and federal tipped minimum wage ($2.13 per hour) were established in 1938 as part of the Fair Labor Standards Act (FLSA) during the New Deal era. Since then, real wages have stagnated or declined for middle and low wage workers. Coupled with the rate of inflation outpacing the minimum wage hikes, purchasing power has diminished. To put this into context, two working adults need to work multiple full-time minimum wage jobs to support a family of four as per the MIT Living Wage Calculator. 

This eight decade-old federal legislation excluded occupations (such as food service, agriculture, nursing homes, domestic work) which disproportionately employed Black workers. The federal tipped minimum wage policy particularly affects minority workers, who make up 48 percent of the tipped work sector, and reinforces racial hierarchy. These racially-ignorant public policies compounded by lagging wages have contributed to racial wage inequality as evidenced by the widened Black-White wage gap over the past 20 years. 

While minorities only represent 23 percent of the United States labor force, they make up 45 percent of the low-wage workforce. Many are employed in essential services related to residential facilities and services, child and social care, transportation, food service, and agriculture. Disparagingly, Black workers are more likely to be paid poverty-level wages and have a higher poverty rate, almost double their White counterparts. Black women are particularly affected by the FLSA’s exclusionary policies; many are not protected by a minimum wage floor, hour restrictions, unemployment and retirement support. An increase in the minimum wage would benefit Black and Latinx workers, who contribute a significant percentage of the 53 million low-wage workers in the U.S.

While economic theory suggests that raising the minimum wage is associated with employment losses, the empirical findings in the real-world have been mixed. Per an Economic Policy Institute report, raising the minimum wage to $15 would benefit more than 30 million people. The potential, often small, short-term negative consequences can be mitigated by bolstering government assistance programs such as Medicaid, supplemental nutrition assistance program (SNAP), unemployment and child tax credits. As for potential long-term unemployment, this can be ameliorated by subsidizing education and retraining workers in specific sectors. While the earned income tax credit (EITC) is often proposed as an alternative antipoverty program, these two policies often work well in tandem. Other remedies such as unconditional cash transfers and reparations do not provide the dignity of valued labor compared to a raise of the federal minimum wage. Indeed, every policy will have trade-offs, but the benefits of raising the minimum wage outweigh the short-term costs.

In the absence of a unified national minimum wage policy, there has been an uncoordinated and inadequate increase in minimum wage across states. The Raise the Wage Act, introduced in the Senate in January 2021, proposed raising the federal minimum wage to $15 by 2025 and ending the tipped minimum wage. Recently, the Senate rejected the inclusion of any minimum wage measures as a part of President Biden’s $1.9 trillion pandemic stimulus package. As we plan for a post-pandemic phase, it is imperative we look beyond partisan politics to implement more inclusive labor legislation reform for living wages for all. 

The 1963 March on Washington for Jobs and Freedom advocated that equal civil rights would not be achieved if federal policies validate and perpetuate that labor of people of color is of lesser value. Economic equity is a critical step towards achieving social and health equity. The status quo of racial economic injustice is reinforced by racially-ignorant public policies. Healthcare policy and initiatives need to be matched with targeted upstream economic empowerment policies to improve health. We need racially informed policy-making to achieve antiracist healthcare.

Dr. Kashmira Chawla, MD MSc is an Anesthesiologist at Beth Israel Deaconess Medical Center and an Instructor of Anesthesia at Harvard Medical School. Previously, she was a Doris Duke International Clinical Research Fellow and CDC-Hubert Global Health Fellow. (Twitter @Kashmira_Chawla) Dr. Nancy Oriol, MD is an Anesthesiologist and Faculty Associate Dean for Community Engagement in Medical Education at Harvard Medical School. She is a founder of The Family Van and HMS MEDscience. She is also the recipient of the Gold Foundation’s Pearl Hurwitz Award for Humanism in Healthcare. Ashley O’Donoghue, PhD is an economist at the Center for Healthcare Delivery Science at Beth Israel Deaconess Medical Center. (Twitter @shley_odonoghue)