True math: Wages ris­ing for bot­tom earn­ers

Wage growth — even for work­ers at the bot­tom of the scale — is mak­ing a sub­stan­tial dif­fer­ence in the U.S. econ­omy. That’s not pop­py­cock, the math fac­tu­ally con­firms it.

Antelope Valley Press - - OPINION -

Now check this out: Slow wage growth has been brak­ing bad, but the math shows that salaries at all lev­els and, par­tic­u­larly for work­ers at the bot­tom, are now ris­ing na­tion­wide.

Amer­ica’s low­est-paid earn­ers are see­ing their pay­checks rise at the fastest pace in more than a decade.

That’s not just po­lit­i­cal talk, it’s fac­tual.

A Wash­ing­ton Post anal­y­sis nailed the num­bers that showed that pay­checks grew be­cause of a na­tion­wide move­ment of ris­ing min­i­mum wages in var­i­ous states and cities over the past cou­ple of years.

Last week, Gary Cohn, for­mer di­rec­tor of Pres­i­dent Trump’s Na­tional Eco­nomic Coun­cil and Kevin Has­sett, for­mer chair­man of the Trump’s Coun­cil of Eco­nomic Ad­vis­ers, wrote a Wall Street Jour­nal op-ed mak­ing the case that Trump’s tax cuts paved the way for ris­ing wages for those in lower-pay­ing jobs.

The Novem­ber un­em­ploy­ment rate was at its low­est since 1969 at 3.5%, ac­cord­ing to the La­bor Depart­ment. Com­pe­ti­tion for work­ers at all lev­els, in­clud­ing low-skilled ones, has in­ten­si­fied.

But can it re­ally be a co­in­ci­dence that the boom in wage growth came at a time when around half the states raised their min­i­mum wage? The data sug­gests that changes to min­i­mum wage laws also played a role.

Post re­porters An­drew Van Dam and Rachel Siegel wrote that min­i­mum wages have risen in more than 20 states. Many of them are the in­creases that have been im­ple­mented in phases over the past few years, or in­dexed to in­fla­tion.

Nearly 7 mil­lion work­ers be­gan 2020 with higher wages, ac­cord­ing to the Eco­nomic Pol­icy In­sti­tute, a left-lean­ing think tank. This past week, New Mex­ico’s wage floor rose from $7.50 an hour to $9 and Wash­ing­ton state’s rose from $12 to $13.50.

Ernie Tedeschi, head of fis­cal anal­y­sis at Ever­core ISI, cal­cu­lates that state and lo­cal poli­cies pushed the coun­try’s “ef­fec­tive” min­i­mum wage rate to its high­est rate ever. Tedeski finds that an av­er­age hour of work sub­ject to a min­i­mum wage was about $11.80 an hour in 2019.

The ex­perts agree that a hot la­bor mar­ket helps, but poli­cies that in­crease the min­i­mum wage growth are a “re­ally mean­ing­ful part of wage growth for low- wage work­ers,” said Heidi Shier­holz, se­nior econ­o­mist at the Eco­nomic Pol­icy In­sti­tute. “That is ab­so­lutely, un­de­ni­ably true.”

In fact, the data sug­gests that peo­ple are not get­ting paid more be­cause there is more com­pe­ti­tion for their ser­vices. They are get­ting paid more be­cause laws now re­quire em­ploy­ers to pay them more.

The Post re­ported that when you break those low-wage work­ers into two groups — those who live in states that have raised their min­i­mum wage in the past three years and those in states that have not — the re­la­tion­ship be­tween pol­icy changes and wage gains be­comes clearer.

The news­pa­per’s anal­y­sis of La­bor Depart­ment data shows that be­fore 2016, wages for lower-paid work­ers rose across the coun­try at more or less the same pace. In 2017, things be­gan to change. Wage growth in states that in­creased min­i­mum wages be­gan to ac­cel­er­ate.

The in­flu­ence of a higher min­i­mum wage on low-wage work­ers is clear, econ­o­mists say, even if its mag­ni­tude can be hard to mea­sure.

The of­ten-maligned leg­is­la­tors in state houses can make a dif­fer­ence, even for work­ers at the bot­tom of the ladder. That’s a les­son worth learn­ing for fu­ture law mak­ing.

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