Minnesota’s Economic News – W/E 4/9/21
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Yesterday, Minn Post carried a story titled ‘Study links increases in minimum wage to decreases in state suicide rates‘. It read
Raising the minimum wage by $1 an hour could lower the suicide rate among people with a high school education or less by up to 6 percent, according to a study published Tuesday in the Journal of Epidemiology & Community Health.
Well, that is one interpretation of the findings. Another, equally valid one, is that eliminating the federal minimum wage would minimize suicide deaths.
Minn Post explains that the study’s authors
…gathered data on the hourly minimum wage that was in effect in each of the 50 states and Washington, D.C., during every month from 1990 to 2015, as well as each state’s monthly unemployment rates. They also obtained month-by-month data on suicide rates for each state for adults aged 18 to 64. Information on educational attainment was collected from death certificates.
So, the study’s ‘dependent variable’ – that which we want to explain – is the suicide rate for people of various levels of educational attainment. But what is its ‘independent variable’ – that whose effect we want to investigate? The study explains that
The exposure was the difference between state and federal minimum wage in US$2015, defined both by the date the state law became effective and lagged by 1 year. [Emphasis added]
In other words, what the study’s authors have found is that the suicide rate among people with a high school education is responsive to differences between their state’s minimum wage rate and the federal minimum wage rate increases.
This is an odd way to look at it. As Figure 1 shows, between 2009 and 2014, the minimum wage rate in Minnesota was lower than the federal minimum wage (so the federal rate was binding). According to this study’s methodology, this should have increased suicides.
Figure 1: Minimum wage rates in Minnesota and the United States (2018 dollars)
Source: Department of Labor
And, going with this methodology for a moment, since it is the difference between their state’s minimum wage rate and the federal minimum wage rate which is influencing the suicide rate among people with a high school education, we could eliminate this difference – and, hence, this source of influence – by eliminating the federal minimum wage. I am not for a second suggesting that eliminating the federal minimum wage would have that effect, but it is just as valid a reading of this study as it is to say that ‘increases in minimum wage [rates lead] to decreases in state suicide rates’.
To really gauge the effects of minimum wage increases on suicide rates, the researchers would have been much better off using the effective minimum wage rate in a state as their independent variable. There is a suggestion for a further research.
John Phelan is an economist at the Cr of the American Experiment.