$15 minimum wage without a federal mandate
President Joe Biden wants to boost the federal minimum wage to $15 an hour. If he can’t get there via a COVID-19 relief package, he’ll try another way. Meantime, the marketplace seems to be skirting the discourse with its own course corrections.
Walmart, the largest employer in the United States with some 1.5 million workers, has announced that about a third of its workforce soon will see its hourly wages increase. Combined with previous paycheck boosts, about half of the retailer’s American employees will be earning at least $15 an hour. Target and Amazon already have hiked pay rates, establishing their salary floors at $15 an hour. Costco’s CEO announced last week that its new minimum wage would be $16, effective this week. Walmart’s minimum wage remains at $11 an hour, but rates of pay have been escalating for some positions within the company during the pandemic.
This shift in the jobs arena would seem a significant bit of evidence that the marketplace really is selfcorrecting — albeit slowly and with a push from a deadly virus.
The debate over minimum wage — how much it should be and whether there even should be one — is perennial and divisive. Mr. Biden had proposed a boost in his COVID19 relief bill, but pushback and politics have had their influence. Nonetheless, the idea is not likely to be dropped from the president’s agenda.
The business community tends to demonize salary floors as jobkilling price controls. Others see a livable minimum wage as economic justice; without it, America scripts a morality tale that tells a grim story of how its citizens are valued (or devalued, as the case may be).
The points and counterpoints on the issue are as passionate as they are endless. Basic economic theory purports that when the price of something is raised, less of that “something” will be purchased — and that goes for employees’ work. Still, many economists support the concept of a minimum wage.
Another standard economic theory portends that hiking the wages of low-skilled workers will lead business owners to reduce their workforces, one way or another: Employers will pass on costs to consumers which, in turn, will ultimately reduce purchases and, in turn, result in lower levels of employment. And, again and still, many economists support the establishment of a livable minimum wage. And the beat goes on ...
The nonpartisan Congressional Budget Office said in February that raising the minimum wage to $15 by 2025 would increase pay for 17 million people and lift 900,000 people out of poverty. At the same time, the new salary floor would kill 1.4 million jobs, the budget office predicts.
The pros and cons have been hashed over since a minimum wage first was passed in 1938. Nonetheless, America has one and has increased it many times, though the last raise was 11 years ago. If the president has his druthers, the minimum wage would be raised in increments, ending at $15 an hour by 2025 — more than double the current rate of $7.25 an hour.
As the debate proceeds, the marketplace is showing what it will bear. Moves by the likes of Walmart, Target, Amazon and Costco to increase wages may have a trickle-down effect that sparks an upward percolation in wages overall. If Costco pays $16 an hour for entry-level work, maybe the office manager down the road will have to think about a pay bump for an administrative assistant. And so on ...
In an ideal world, employers will see — without a federal mandate — the benefit of good pay for good work at all levels of an operation and at all ranges of businesses: less turnover; happier and, therefore, more productive employees; and a clear conscience for striving toward economic justice. If that happens, discussion of a federal mandate on pay would be moot.