Do Minimum Wage Increases Impact Employment and Health Insurance Coverage for Older Adults?

• In Event: A New Perspective on Minimum Wage Effects

Abstract

This study examines the impact of minimum wage increases on employment and health insurance coverage for older Americans. Previous studies on minimum wage policies have largely focused on younger populations. However, given that the proportion of individuals earning near the minimum wage increases among those transitioning into retirement, it is crucial to assess how these policies affect older adults.

Older workers—particularly those earning low wages—often rely on employer-provided health insurance. Given the strong link between employment and health coverage in the U.S., changes in wage policy may indirectly affect insurance access. These effects are likely to be salient for the near-elderly (ages 55–64), who are especially vulnerable to gaps in insurance coverage as they may be excluded from both employer-sponsored plans and Medicare, while also experiencing worse health and higher medical costs.

This study addresses three research questions: 1) How do minimum wage increases affect the employment of the older population aged 50 to 69? 2) How do minimum wage increases affect health insurance coverage for the population aged 50 to 64? 3) Are the effect of minimum wage increases heterogeneous across age groups, particularly considering interactions with Social Security and Medicare?

The study uses the CPS ASEC from 2001 to 2018 for its main dataset. The employment analysis focuses on individuals aged 50 to 69, with outcome measures including employment status and full-time, full-year employment. For the health insurance coverage analysis, the outcomes include own-name employer-provided insurance and dependent coverage, as an indicator of employer-provided health insurance access. In addition, the analysis includes Medicaid enrollment to assess potential spillover effects to public health insurance programs, as well as a composite measure of any insurance coverage, capturing both private and public sources. The sample for the health insurance analysis is limited to individuals aged 50 to 64, except in the Medicaid analysis, which includes individuals up to age 69 to account for potential interactions between Medicaid and Medicare eligibility.

Findings show that minimum wage increases are associated with higher rates of own-name employer-provided health insurance among low-wage workers and increased Medicaid enrollment among non-workers in the 50 to 61 age group. For those aged 62 to 64, non-workers experience decreases in both own-name employer-provided health insurance and overall insurance coverage, but an increase in Medicaid enrollment. Among those aged 65 to 69, I do not find any significant impact, possibly due to near-universal Medicare eligibility in this group.

In conclusion, the overall evidence suggests that minimum wage increases crowd out private health insurance and shift older non-workers toward public health programs such as Medicaid. On the other hand, the results show that minimum wage increases do not affect employment among older adults in the retirement transition phase. These findings suggest that wage policy reforms may have broader implications beyond labor market outcomes, particularly for non-wage compensation. Policymakers should consider how changes in wage policy affect older populations and their access to health coverage during the transition to retirement.

Author

• Soohyun Kim, Syracuse University
  Presenting Author