A new study from the Friedman School of Nutrition Science and Policy shows that insurance premiums are holding back wage growth, especially for people of color.

The rising cost of health insurance is an ongoing concern in the United States. New research shows that increasing health insurance costs are eating up a growing proportion of worker’s compensation, and have been a major factor in both flattening wages and increasing income inequality over the past 30 years. 

In a study from the Friedman School of Nutrition Science and Policy at Tufts University, researchers found that the cost of employer-sponsored insurance (ESI) health care benefits increased much faster than workers’ wages since the late 1980s, and likely reduced wages by an average of about $9,000 per year by 2019. They also found that the percentage of worker compensation going toward premiums was substantially higher for Black and Hispanic workers and lower-income workers, and likely contributed to income inequality.

“Employers are spending more on insurance premiums instead of that money going to workers as wages,” says Dariush Mozaffarian, cardiologist and director of the Food is Medicine Institute at the Friedman School, and senior author of the study, which was published on January 16 in JAMA Network Open. “These hidden costs of increasing health care are even worse for people of color and low-wage workers, leading to less wage growth, heavier insurance premium burden, and greater income inequality.” 

In the study, researchers examined national insurance data from individuals covered by ESI family plans in every year between 1988 (44.7 million individuals) and 2019 (44.8 million individuals), bringing together data from the Kaiser Employer Health Benefits Survey and the Bureau of Labor Statistics’ Consumer Expenditure Survey. They combined these with data on earnings of families with ESI from the Census Bureau’s Current Population Survey.

Read more on Tufts Now