The newly introduced “Raise the Wage Act” may be enacted by the end of March, but government officials are still deciding whether to proceed. If enacted, the federal minimum wage will likely be raised to $15 an hour.
On Jan. 14th, President Joe Biden released an economic stimulus plan which contained the objective to raise the federal minimum wage. Richard Roberts, Specialist Professor of Economics, said that at this point in the COVID-19 recovery, the costs of increasing the minimum wage outweigh the benefits. He said the pandemic has driven many businesses to close permanently.
“Adding the cost of a $15 minimum wage could force our most vulnerable businesses to forgo hiring, reduce worker hours, cut jobs, or simply close altogether,” said Roberts. “While those minimum wage earners who can keep their jobs would undoubtedly benefit from the increase, many others risk additional pain.”
Roberts said he sees hope with the economic landscape, but he knows we are not yet clear of the COVID pandemic. He said that the Federal Reserve estimates unemployment to be over 10 percent when individuals that have dropped out of the labor market are considered.
“Furthermore, data suggest that the industries with the highest unemployment levels also have the largest percentages of low-wage employees. An increased minimum wage may very well lead to longer unemployment, lower work hours or hiring, and increased layoffs for low-wage workers,” said Roberts.
He then said that the most appropriate time to weigh the cost and benefits of a minimum wage increase will be after the economy has recovered from the COVID-shock.
An anonymous business partner said that any time costs are increased it brings in challenges. They said the market for applicants becomes smaller, which makes recruiting more difficult.
“Retaining the great employees also becomes a challenge. Not only do the great employees require higher pay, but we also need to find other ways to engage and motivate like bonus rewards or other incentives,” said Anonymous.
They also said that every business is different, but they all must adapt and innovate to continue to generate sales. They said that automation and other forms of technology will play a huge part in who stays in business and who does not.
“Price increases can only get you so far when the store up the road has similar product for a cheaper price. The majority of consumers will flock to the stores with the lowest prices, who usually have the highest buying power, rather than visiting the local guy,” said Anonymous.
The anonymous source also said that they are planning to keep their business around for a long time to be able to support both their employees and their community. They said that they are lucky to be part of a company that shares the same values.
“Finding and keeping team members who have the same vison and core priorities will continue to be high priority moving forward. It always comes down to people,” said Anonymous. “Providing exceptional products and services every day will not change. How we provide those services and products will continue to evolve.”
However, some workers currently believe that the minimum wage should increase. Sarah Cooper, psychology student, works at Patient First, an urgent care in Pennsylvania. She said that the minimum wage should absolutely increase considering how much the cost of living increases annually and minimum wage does not.
“I’m not sure if this will really change much for my workplace. We make more than minimum wage and our wages change based on competitive salaries nearby at other healthcare facilities. It may help us if the other facilities raise their wages,” said Cooper.
Other student workers think otherwise. Timothy Foley, communication student, works in a warehouse and feel that the minimum wage increase would do more harm than good. He does not feel that that increase would really hurt workplace, though.
“Many people do not seem to realize that when the minimum wage increases, the price of everything else will go up as well,” said Foley.
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