Worker Earnings, Service Quality, and Firm Profitability : Evidence from Nursing Homes and Minimum Wage Reforms

This paper examines whether higher earnings for frontline workers affect the quality of services consumers receive. I leverage increases in the statutory minimum wage, combined with worker, consumer, and firm outcomes in the nursing home sector. I find that higher minimum wages increase income and retention among low-wage employees while improving consumer outcomes measured by fewer inspection violations; lower rates of adverse, preventable health conditions; and lower resident mortality. Firms maintain profitability by attracting consumers with a greater ability to pay and increasing prices for these individuals