The Minimum Wage and Consumer Nutrition

Abstract

The U.S. Department of Agriculture estimates that one in nine U.S. households is “food insecure”: unable to purchase sufficient, or healthy food. Public policy advocates and politicians have pointed to the prevailing federal minimum wage as a culprit, labeling it a “starvation wage.” This study examines whether and to what extent increases to the minimum wage have improved the quantity and nutritional quality of food purchased by minimum wage earners, and what implications these potential changes in consumer behavior have for marketers. The authors show that households likely to be earning the minimum wage increase their calories purchased in response to minimum wage increases, and that these gains are predominantly found among households purchasing the least amount of food prior to the minimum wage rising. Although the authors do not find evidence that the average household improves the nutritional content of calories purchased, they do find evidence that the least healthy households (as measured by past purchases) buy more healthy foods in response to rising minimum wages. Overall, the findings suggest that higher minimum wages may not only help households afford more calories but also encourage some households to purchase more healthy calories. In addition, the authors find an increased openness among minimum wage households to purchasing new grocery items. This openness to trying previously unpurchased products offers promotion and product line planning opportunities to manufacturers. It also offers retailers with a nutrition-friendly brand image an opportunity to nudge consumers toward purchasing more healthy foods.