How raising the minimum wage can help the pandemic labor crisis


  • Paul Constant is a writer at Civic Ventures and co-host of the “Pitchfork Economics” podcast.
  • Amid the ongoing labor crisis, Constant says raising the minimum wage could be a key solution.
  • The wage hike has proven to be good for workers and businesses, but many states are stuck at the federal minimum of $ 7.25.

This year will mark the 10th anniversary of the first step towards a minimum wage of $ 15. Over the past decade, the Fight for $ 15 has been a huge success. On January 1, 56 cities, counties and states in the United States raised their minimum wages, with more than half of those jurisdictions reaching or exceeding $ 15 an hour.

It’s hard to remember now, but the fight for $ 15, which has escalated with votes to raise airport employee wages in the small town of SeaTac just outside of Seattle, n was never won in advance.

Pitchfork Economics host Nick Hanauer’s early support in combat for $ 15 has been called “almost insane” in Forbes. Opponents threatened the salary increase to $ 15 would be catastrophic – restaurateur predicted a quarter of Seattle restaurants would close, seafood market owner warned of ‘devastating’ employers’ wages , forcing small businesses to automate their entire workforce or even relocate. in Texas in response.

Last week, the Seattle minimum wage hit $ 17.27 an hour, while the Washington state minimum wage rose to $ 14.49, and neither of those threats came true. Researchers took a close look at every step of the Seattle minimum wage increase and found in 2016 that workers’ wages and the number of hours worked had increased. Studies in 2017 found Seattle’s adoption of the $ 15 minimum wage had “almost zero” impact on restaurant employment. And a 2019 study found that prices in restaurants and grocery stores had not increased due to the higher minimum wage.

In the years since Seattle’s adoption of the $ 15 minimum wage, the body of research on the minimum wage continues to grow, with studies concluding that a wage increase “can play a critical role in reducing disparities. racial economic issues ”, that it would fight poverty and employment. in low-wage areas, and that increasing the minimum wage increases tax revenues. Last year, the Nobel Prize in Economics was awarded to David Card, Joshua Angrist and Guido Imbens for their extensive work refuting the fallout threat that raising the minimum wage is killing jobs.

So, to put it as clearly as possible: Seattle’s decision to raise the minimum wage to $ 15 was good for workers, good for businesses, and good for consumers. Despite threats and warnings that jobs would be cut and businesses closed, the opposite is true: when companies pay workers more money, the latter spend that money on local businesses, which hire more workers to respond. to increased consumer demand.

Leaders across the country paid close attention to Seattle and saw the sky was not falling. Now dozens of other cities, counties and states across the country are raising their minimum wages to $ 15 and beyond. And more minimum wage increases are on the horizon: Last year, the Biden administration passed legislation that will raise the minimum wage of some 327,000 federal contractors to $ 15 on Jan.30.

But despite this progress, the federal minimum wage is still stuck at $ 7.25 an hour for employees without tips and $ 2.13 an hour for employees with tips. The Economic Policy Institute recently found that the federal minimum wage of $ 7.25 is worth 21% less today than it was when it was established in 2009.

This week’s job openings and workforce turnover study found that an all-time high 4.5 million Americans left their jobs in November, even as 6.7 million workers were hired in the same month – and many of those quits and hires were in the low-paying hospitality industry.

The figures indicate that many workers are leaving low-paying jobs for better-paying positions in the same industry, suggesting that the “labor shortage” is in fact a shortage of wages. Raising the minimum wage would then probably be an effective economic policy to tackle the labor crisis in the era of the pandemic, as increasing wages have been shown to encourage employee retention and create a workforce. more attentive and productive.

A quarter of a million workers in states that adhere to the $ 7.25 minimum wage – including Alabama, Idaho, Kansas, Utah and Texas – will likely never see their wages increase without the intervention of Congress through a federal salary increase. Declining consumer demand is slowing the entire US economy. It’s time for all of America to take advantage of the economic growth and prosperity that dozens of states and cities have experienced in the aftermath of the $ 15 struggle. In 2022, America desperately deserves a raise.

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