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Low-paid workers 'less depressed' after introduction of the national minimum wage

Wednesday, 13 April 2016

money and pillsLow-paid workers who received the national minimum wage in April 1999 reported a decline in symptoms of depression for at least 22 months afterwards, according to new research published in the journal Health Economics.

The study involved the London School of Hygiene & Tropical Medicine and was led by the University of Oxford. Through statistical modelling, the researchers found the improvement in the overall level of mental health of those receiving the national minimum wage was equivalent to the effect of taking antidepressants. The researchers conclude that wage rises for low-paid workers reduce feelings of anxiety and depression partly, at least, because they are under less financial strain. 

The study examined changes in health among those earning less than £3.60 an hour in 1998 after they receive an hourly wage of between £3.60 and £4.00 due to the introduction of the national minimum wage in 1999. This created a rare so-called natural experiment because some workers received the wage increase but others did not, either because they already received the national minimum wage or were slightly above, or because their employers did not comply. The researchers used this study design to compare workers' health before and after their wage rise with other low-paid workers whose wages did not increase at the time.

Researchers analysed data from the British Household Panel Survey, a nationally representative longitudinal survey of approximately 5,500 households and 10,000 individuals, covering 1991 to 2009. They focused on survey responses in the year leading up to the introduction of the national minimum wage and the months directly afterwards.

Respondents were asked to complete a General Health Questionnaire, a validated diagnostic tool for assessing common mental ill health, and score how they felt. The survey also asked whether respondents felt ‘constantly under strain’ or ‘unhappy and depressed’, as well as how many cigarettes they smoked.

The study found substantial mental-health improvements in workers whose wages increased due to the national minimum wage. The difference in the scores after the wage rise was measured using the General Health Questionnaire and was equivalent to the effect estimated for taking antidepressants. These improvements, however, were not seen in people with similar social and economic backgrounds who did not receive a wage rise.

Martin McKee, Professor of European Public Health at the School, was involved in interpreting the data and its implications for policy. He said: “The publication of the study coincides with the introduction of the national living wage and makes an important contribution to the debate on low pay in the UK. So far, it has focused on jobs and profits of employers but, as our research shows, increasing the income of the lowest paid can make an important contribution to their mental health at a time when the NHS faces unprecedented pressure.”

One argument against wage increases for the low paid has been that they could lead to a rise in health damaging behaviours, such as smoking, or worsen work conditions. The study finds no evidence to show that wage rises for this group in 1999 led to low-paid worker smoking more cigarettes than they did before. It also did not find workers had fewer hours of work or were more likely to lose jobs.

Lead author Dr Aaron Reeves, from Oxford’s Department of Sociology, said: “We found that the mental health of the low paid improved significantly in the months after wages rose because of the introduction of the national minimum wage. This has implications for the recent introduction of the new national living wage, suggesting that this wage increase will have a similar positive effect in the short-term for low-wage workers.”

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