Food insecurity is a critical problem in the United States, and the COVID-19 pandemic has only made it worse. Current Population Survey estimates from 2020 show nearly one in four households with children are food insecure, lacking access to a sufficient amount of affordable and nutritious food. Nutrition is key, as healthy food combats conditions such as diabetes, obesity, and low cognitive functioning.
Recent research presents evidence that may suggest some potential policy solutions. They include combining minimum-wage increases with targeted promotions and marketing, as well as addressing the financial distress that creates headwinds for healthy eating.
University of California at Davis’s Mike Palazzolo and Georgia Tech’s Adithya Pattabhiramaiah examined whether minimum-wage hikes could help alleviate food insecurity. Some public-policy advocates and politicians have branded the $7.25 federal minimum wage a “starvation wage,” but would raising it actually affect the amount of food consumers purchase—and, crucially, its nutritional value?
Palazzolo and Pattabhiramaiah tackled this question by looking at the effects of both national and local minimum-wage hikes. Minimum-wage amounts across states, cities, and counties in the US can differ widely. For example, California had a statewide minimum wage of $10 at the start of 2016, but San Francisco had a higher rate of $13.
The researchers tracked 309 hikes made between 2007 and 2016. In the data studied, the median minimum-wage increase was 50 cents an hour, which equated to an extra $80 per month for full-time minimum-wage earners.
By combining data from the Nielsen Homescan panel, provided by Chicago Booth’s Kilts Center for Marketing, with a proprietary data set containing nutritional labels for the food purchased, the researchers were able to measure both the amount of food bought as well as its nutritional value. To estimate the impact of the wage hikes, they compared the purchase behavior of households earning below and just above their locality’s minimum wage.
When wages go up, households whose key earners make the minimum wage do, on average, purchase more food, the researchers find. However, the food is not necessarily any healthier.