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Last spring, the 18-member 2020-21 class of Institute Visiting Scholars was named. Some established, some emerging, they bring a diversity of backgrounds and research interests as they examine what sorts of policies work to improve economic opportunity and inclusion, and why.
How can increases in the minimum wage benefit people who are not part of the labor force? Here’s one striking example: Caregiver wages can be a matter of life or death for nursing home residents.
So says visiting scholar Krista Ruffini, who acknowledges that measuring the effects wage increases have on the quality of goods and services is a challenge. Answers to questions like, “How did this restaurant experience compare to another?” or “Was this salon visit better than the last?” are hard to quantify.
But nursing homes are far different. They’re held to federal reporting requirements about the status of their patients and facility conditions. Ruffini says these data are key to uncovering the relationship between wages and service quality.
During her time at the Council of Economic Advisers and the Center on Budget and Policy Priorities in Washington D.C., Ruffini observed firsthand how economics research could shape and inform public policy. The inspiration to pursue a degree in public policy came from examining research on the earned income tax credit. Not only did the tax credit increase employment and earnings, but the additional family income improved health and academic outcomes.
The magazine of the opportunity & Inclusive Growth institute
These indirect effects of wage and income increases prompted new questions for Ruffini. Using 25 years of nursing home reporting data alongside changes in the minimum wage, Ruffini found that having an experienced and knowledgeable caregiver can make a vital difference. As the minimum wage increases, nursing assistant pay at long-term care facilities also goes up. In turn, these caregivers are more likely to stay in their jobs for longer periods of time.
“This facility-specific expertise translates into improved outcomes for patients: fewer health inspection violations, fewer infections, and fewer deaths,” Ruffini said.
For these firms, better outcomes for patients mean actual dollars saved and sometimes earned. As the quality of care increases, there are fewer patient hospitalizations and inspection violations. Residents are also more likely to live in the facility longer.
Minimum wage research has historically focused on how raises affect employees directly and on how related increased costs affect consumers. But Ruffini says there’s more to learn by zooming out to take in the larger picture.
“There’s pushback on minimum wage policies and income assistance policies in general,” Ruffini said. "I think my work shows the overall net cost isn’t as big as the gross cost would make it seem.”
This article is featured in the Fall 2020 issue of For All, the magazine of the Opportunity & Inclusive Growth Institute
More Scholar Spotlights from this issue
Alyssa Augustine oversees social media and digital engagement, leads the Bank's content strategy, and manages media relations for President Neel Kashkari and other Bank leaders. An experienced TV journalist, Alyssa also contributes articles to the Bank's website and publications.
