Minimum Wages and Workplace Injuries

• In Event: How Minimum Wages Work: Activism, Organizational Responses, and Worker Outcomes

Abstract

Minimum wage research has predominantly focused on wages and employment, giving relatively little attention to other dimensions of job quality along which firms may adjust. Workplace health and safety is one such dimension with potentially first-order consequences for worker welfare: nearly three million workers are injured on the job each year in the United States, with injury rates in low-wage industries such as leisure and hospitality running six to nine times higher than in higher-wage sectors.

This paper asks whether minimum wage increases affect the rate of workplace injuries. Whether minimum wages help or harm workplace safety is theoretically ambiguous: higher wages might lead employers to intensify the pace of work to recover costs, increasing injury risk, but could alternatively improve safety by reducing turnover or incentivizing capital investment.To study this question, we use restricted-access administrative data covering over 13 million workers' compensation insurance claims from California, the largest workers' compensation system in the United States, over the period 2000 to 2019. We estimate causal effects by exploiting two independent sources of variation simultaneously: geographic variation in the size and timing of state and city minimum wage changes across California metro areas, and occupational variation in exposure to those changes within metro areas, based on the share of workers in each occupation earning close to the local minimum wage. This two-dimensional identification strategy allows us to control flexibly for time-varying local confounders and occupation-level trends.

We find that a 10% increase in the minimum wage raises the injury rate by 7.2% in an occupation fully exposed to the minimum wage change, equivalent to approximately two additional injuries per 1,000 low-wage workers per year. Effects span both acute accidents and cumulative physical strain injuries, and are not limited to minor incidents but extend to injuries severe enough to cause disability. The pattern of results is most consistent with employers responding to higher labor costs by intensifying the pace of work. A back-of-the-envelope calculation suggests the increase in injury risk offsets approximately 19% of the welfare improvement workers receive from higher wages, suggesting that standard evaluations of minimum wage policy may substantially overstate net benefits to workers.

Author

• Anna Stansbury, Massachusetts Institute of Technology
  Presenting Author