Health for all: the reason we talk about
minimum wage

Korea Institute of Labor Safety and Health

2022

In 2023, the minimum wage in South Korea
will be 9,620 won per hour (~USD$7.38 or €6.96). Compared to 2022, this
reflects an increase of 460 won per hour (~USD$0.35 or €0.33) – or about 5%.
Advocacy for a minimum wage of 10,000 won per hour began 10 years ago, but
still has not been reached. To make matters worse, fringe benefits such as
meals and transportation expenses which had been paid in cash and not included
in the minimum wage before 2019 are now included in the minimum wage. This
further diminishes the effect of the increase.

Experts emphasize that the level of minimum
wage does not only affect workers with the lowest wages. The level of minimum
wage has a widespread influence because it is a standard for various items of
domestic spending, such as unemployment benefits, compensation for workplace
injury, maternity leave benefits, and benefits for people of national merit
(for example veterans), among others.

In the USA, the increase of minimum wage
to $12 per hour in 2020 raised the wage of 35 million workers or 25% of all
workers. Among those workers, seven million who had been paid higher than
minimum wage also got their wage raised as an indirect effect.

The effects of minimum wage on health

The main issues pertaining to minimum wage
have been employment, working hours, poverty, economic inequalities,
automation, and quality of jobs. The typical debate is whether an increase in minimum
wage has a negative impact on employment or not. In South Korea, the discussion
about minimum wage is limited to this topic. However, the minimum wage is one
of the important social determinants of health.

Professor Marmot (University College, UK) explains
three ways that income influences health: gross national product, personal
income, and inequality of income. Income can direct influence the quantity and
quality of people’s lives by affecting the material conditions required for
survival. At the same time, income influences social participation and the
capacity to control the living environment. A minimum wage increase contributes
to improving the overall health of society by increasing the capacity of people
to obtain material requirements, and by minimizing income inequality.

In fact, the association
between the minimum wage and health is not as simple as it seems. This is
because there are not many studies on the topic compared to other indicators of
health. In addition, there are complex relationships with other factors such as
working hours. Finally, the magnitude of the impact of minimum wage on health
can be obscured by differences in class, jobs, or industries. 

Despite these difficulties, a
comprehensive study in 2019 which analyzed publications from English-speaking
countries found that an increase in minimum wage consistently lowered smoking
rates. When examining the long-term effects of changes in minimum wage, the
study show that an increase in minimum wage improved mental health and overall
health conditions. The effect of lowering the smoking rate was particularly
evident among low-income workers, especially women. There is no basis for the
argument that raising the minimum wage could be bad for health by increasing
income for unhealthy behaviors such as alcohol and cigarettes. Researchers
infer that low-income earners can easily purchase “inferior” consumer goods for
comfort and that higher incomes allow them to make better choices which lowers
the smoking rate.

The impact
is bigger on those with greater needs

Many studies show that the
minimum wage increase seems to have a greater influence on vulnerable social
groups, such as those with lower education and fewer skills. A study using
2015-2016 Korean Labor Panel data compared three groups: a group whose wage has
increased through the application of the minimum wage, a group earning near the
minimum wage, and a group whose wage is not affected by the minimum wage. The
results showed that satisfaction with their job and household income increased
significantly especially among those with high school education or lower and
subjective health status also increased significantly.

Increases in minimum wage have the
greatest impacts on women workers. According to the 2019 report by the Korean
Women’s Development Institute, 24.8% of all workers were estimated to be affected
by the minimum wage increase as of 2018. This reflects 16.1% of male workers
and 35.8% of female workers. The finding is relevant to many studies on the
positive relationship between increases in minimum wage and maternal and child
health among the low income class. However, an increase in the minimum wage will
also increase the number of workers paid less than minimum wage. Most of these workers
are more likely to be women because many women earn near the minimum wage. This
is why it is important to require employers to follow minimum wage rules to
reduce wage inequality such as the gender wage gap.

There
are also studies arguing that income has more direct effects on health in a capitalist
society where money is needed for everything. For example, money is needed for proper
nutrition, physical activities, psychological and social relationships, and
stress control. These are typical personal practices necessary for health
maintenance. The concept of ‘Minimum Income for Healthy Living’ (MIHL) combines
the minimum costs for health activities with costs for basic daily necessities
reflects this perspective. Instead of the minimum wage, MIHL is needed for a
healthy society and to decrease health inequality. A review of various attempts
to increase the treatment rate of mental illness in the low-income class showed
that the treatment rate increased when about 2.5 times the minimum wage was
paid. This indicates that the minimum income for everyone to live healthy can
certainly be higher than the current minimum wage.

Health for all

Increase of the minimum wage is not
sufficient. The smaller the supply of public goods and services, the more
important an individual’s income becomes to health. The minimum wage increase
is too weak a measure for living in a society in which all the goods and
services necessary for health can be obtained only through private consumption.
The society cannot enjoy the positive effects of a minimum wage increase if
overall prices increase at a higher rate than the minimum wage. This can be understood by examining Korean society where apartment
management offices will decrease working hours by increasing the rest time to maintain
the total amount of wages. Another example is when employers keep salaries the
same by just shifting bonuses to the salary covered by minimum wage. There are
also employers who pay less than the minimum wage in violation of the law. 

A significant increase in the minimum wage
and a decrease in wage inequality could be accompanied by increasing public
goods and services as well as decreasing the direct impacts of income on
health. This is the reason we should keep discussing why and how much we should
increase the minimum wage on a daily basis, not just for a while when the
minimum wage is decided.