Raising the Minimum Wage
In last Tuesday's State of the Union Address, President Obama made it clear he intends to raise the minimum wage for governmental employees to $10.10 and hour. While few would argue that everyone, including low-skilled workers, deserve a wage they can live on, the analytical side of me wonders what effects such a move might have on skilled workers, like respiratory therapists and others in the healthcare industry.
Common pricing theory suggests that as the costs of producing a product or service increases, so does the price. That shrinking Dollar Menu at McDonald's, for instance, which has already been converted to the "Dollar and More" menu, may do away with dollar priced items altogether, because the person flipping the burger for you has received a $3 per hour increase. McDonald's will have to make the extra costs up somehow, so guess where the price is going to go? My question is how will it affect those of us who make a comfortable living in respiratory care? The cost of our food will rise, but will our pay?
The Bureau of Labor Statistics says that a respiratory therapist made a median salary of $26.86 per hour in 2012. A shift from the current minimum wage of $7.25 to the President's $10.10 an hour represents an increase of almost 40%. By that logic, to keep up, the median pay of a respiratory therapist with an associate's degree would need to raise to over $37 per hour. Can your department afford that? I think many would struggle. Factor in the costs of nursing, occupational, physical, and other therapies, and other staff, and the costs could spiral to the point that only corporations with virtually unlimited budgets could afford to run hospitals, and those budgets could become limited very quickly. Corporate hospital groups are already common; my concern is for the rural county hospitals or the privately owned and nonprofit facilities. Are we really going to ask patients to pay even more for their health care to make up the difference? Standard procedure is for a general across-the-board 300% markup on products we use to care for others; are we going to charge another 40% to keep afloat?
There are many variables to consider. The oversimplification of my case does not include those, but you can see that such a move is a little troubling for those who are thinking into the future of healthcare. When a producer of goods or services experiences high costs, they naturally look for lower cost means to accomplish their goals. In automobile manufacturing it has resulted in robotics to produce cars rather than people. Now, I do not believe that robots will roam the hallways of our hospitals dispensing Albuterol, but producing a ventilator that makes changes to a patient's condition automatically based on feedback from a motherboard connected to the patient rather than requiring the skills and insights of a respiratory therapist would be much less expensive than a living person making those same changes. I feel scenarios like that are not all that far-fetched. We already have electronic charting to enhance our information flow and security of PHI, and use automatic pharmacy machines to replace real people, reducing the number of staff that have to be paid to hand out medicines. Will increased expenses make hospitals look further to reduce costs and increase their profit margins? It is not all bad. Pixis machines used in hospitals have decreased medical errors; electronic charting has helped us comply with HIPAA requirements, and even the automatic ventilator would likely be more responsive than many therapists, but the more machines we use, the less people we need. A lower-skilled worker can input information into an automatic ventilator, rendering the respiratory therapist an expense that is no longer considered vital to a hospital's staffing budget.
Obviously, these are worst-case scenarios. Years away, though someone has to think about them now. In my opinion, everyone certainly deserves a wage they can live on, though it is also up to each individual to strive to improve their situation and live within their means. Still, one has to consider the long-term effects of increasing the price of our workforce for companies, and the resulting ramifications 20 years from now, not just tomorrow. Though raising the minimum wage may be great for the fine folks at McDonald's and other industries where minimum wage is earned, I think more thought needs to be put into how it will affect those who do not work for minimum wage. Will our value be decreased as unskilled workers' values are increased, or will corporate America respond in kind by raising the price of everything to balance the books and maintain profits? I believe the long-term effects of this move have not been adequately considered, and should be studied now, rather than later, because of their potential to affect the costs we all have, as well as the wages we all earn.
That's just my opinion,
Jim Thacker, MBA, MHA, CRT, AE-C