South Carolina is one of 23 states that increased the minimum wage between late 2023 and January 1, 2024. The state minimum wage increased from $7.25 to $11 per hour in 2022, $13 in 2023, and $15 in 2024. While this appears to benefit low-wage workers, it has had unforeseen implications in one of the state’s most important sectors—health care.
The Impact of a Minimum Wage Increase on Health Care Workers
According to a recent South Carolina Hospital Association analysis, almost 10,000 healthcare workers have been put off or had their hours decreased since the minimum wage increase went into effect in 2024. The paper gives various causes for this conclusion, including:
Increased labor costs have harmed the profitability and viability of many healthcare providers, particularly those in rural and disadvantaged areas. The increased minimum wage has resulted in a wage compression effect, in which workers with greater skills and credentials are paid the same or less as those with lesser skills and qualifications. This has diminished the incentive and desire for workers to pursue more education and training, resulting in increasing turnover and discontent among healthcare personnel.
Read more: North Carolina’s Minimum Wage Increase Causes Massive Health Care Layoffs
The rising minimum wage has also raised demand for healthcare services since more low-income workers can afford health insurance and preventative treatment. However, the supply of healthcare professionals has not kept up with demand, resulting in a scarcity of skilled and experienced staff, as well as a reduction in healthcare quality and accessibility.
Response of Health Care Providers and Policymakers
In reaction to the minimum wage raise and its impact on healthcare workers, certain healthcare providers have adopted the following measures:
Also read: New Jersey’s Minimum Wage Increase Causes Massive Layoffs for Health Care Workers
We are expanding the use of automation and technology, such as telemedicine, artificial intelligence, and robots, to lessen reliance on human labor while increasing efficiency and production.
Consolidating and combining with other health care providers to obtain economies of scale while lowering overhead and administrative expenses.
They outsource and offshore certain of their services, including billing, coding, and transcribing, to lower-cost nations or regions.
Meanwhile, some officials and campaigners have offered alternatives as follows:
Subsidies and tax credits are being provided to healthcare providers to help offset some of the rising labor expenses and encourage them to retain and employ additional healthcare professionals.
Also read: Michigan’s Minimum Wage Increase Causes Massive Layoffs for Health Care Workers
Creating a tiered minimum wage system in which minimum pay levels vary by industry or location based on cost of living and market factors.
Implementing a universal healthcare system in which the government provides all people with health insurance and healthcare services while also regulating healthcare pricing and earnings.
Conclusion
South Carolina’s minimum wage rise, which will reach $15 by 2024, has unforeseen implications in the healthcare industry, resulting in fewer hours for over 10,000 employees. The pay rise raises labor expenses, which reduces provider viability, exacerbates wage compression, and impedes workforce education and retention.
An increase in demand for healthcare services puts pressure on supply, stressing the importance of creative solutions such as technology adoption, consolidation, and regulatory measures such as subsidies or a tiered minimum wage.