this post reviews the connection between increased wages and better business and employee health. for more on the topic, listen to february’s cohealth checkup, for which we’re joined by economist jan zilinsky and restauranteur bobby fry. this show will be available here beginning february 4th at noon EST.
in 2014, the movement to increase wages for low-paid jobs continued, with companies such as ikea, gap, and starbucks moving on their own to raise their employees’ pay. they joined other businesses—costco being an oft-cited example—that have made this move already, and were joined by connecticut and seattle, which voted to raise their minimum wage while legislation in congress stalled.
early in the new year, aetna became the first health care company to jump on the bandwagon. mark bertolini, aetna’s CEO and a thought leader on employee health and business performance, quoted the economist thomas piketty’s book on inequality as a key reason for this policy change. yes, improving its compensation and benefits package would make aetna a more attractive employer—critical as insurance becomes a more consumer-facing product. but bertolini spoke of higher intentions*:
“It’s not just about paying people, it’s about the whole social compact [sic]. Why can’t private industry step forward and make the innovative decisions on how to do this?”
bertolini is not alone in his thinking. making an equal splash early in 2015 is the leader of a much smaller outfit: bobby fry of bar marco’s in pittsburgh. bobby and his partners decided to eschew the typical low wage and tips recipe for waiters and moved all restaurant workers to a salary plus benefits model. what’s more, employees at bar marco will be guaranteed full-time hours, be given paid sick leave, and become owners.
fry, bertolini, and these other leaders recognize the connection between a living wage and higher profits. justin wolfers and jan zilinsky, two economists at the peterson institute for international economics, gathered up available evidence on the link between wages, productivity, and profitability immediately after aetna made news.
toward the bottom of their list is a bullet item on the connection between higher wages and better health. (this connection is one i pointed out in a white paper for virgin pulse, 8 considerations for increasing health engagement. and just for the record, by no means am i putting myself on par with wolfers or zilinsky.) financial woes are connected to presenteeism, absenteeism, delayed or declined health care services, discontinuation of necessary prescriptions, depression, and so much more.
after 2014–a contentious year for workplace wellness where article after article after article asked one thing: do workplace wellness programs work?—it is reenergizing and reinvigorating to see the question move from the use of money (incentives) to cajole people into actions that may have no value to the use of money in a recognized and mutually beneficial way.
* in the same announcement regarding its increased wages, aetna also announced the intention to offer an enhanced medical plan to reduce out-of-pocket costs. scant details for the plan design were made available, but there was a reference to required wellness program participation. this play-or-pay design raised shackles at the EEOC in 2014, resulting in three suits questioning the use of incentives in a way that implied wellness plan participation was mandatory. lest i be accused of wearing too rosy a set of glasses, i wanted to point out this open issue.