Low-paid workers getting a boost
Years and years of salary stagnation are finally reversed.
Low-paid workers didn’t exactly declare their independence this past weekend but they did snag another round of minimum wage hikes as part of their yearslong rebellion against languishing earnings.
An unusual flurry of minimum wage increases took effect Friday in Maryland and Oregon, as well as in 13 cities and counties, including Los Angeles, San Francisco, Chicago, Washington DC, and Louisville, Ky., according to the conservative Employment Policies Institute and liberal National Employment Law Project. The initiatives will boost minimum pay to as much as $13 to $14.82 an hour in parts of California.
Studies show the efforts have been fruitful, with the pay of lowwage workers rising faster than higher earners. Meanwhile, employer advocates are taking a newly aggressive stance against the raises, running ads to argue they’re hurting firms and jeopardizing summer jobs for teens.
Kejioun Johnson, 20, who has worked at a McDonald’s (MCD) in Chicago the past year, has been earning the city’s minimum wage of $10 an hour, but typically puts in just 7 1/2 hours a week, often forcing him to skip meals. The extra 50 cents an hour he pocketed starting Friday “can be like an extra meal,” says Johnson, who also recently started a part-time job at Burger King.
Separately, workers at four of five Atlantic City casino hotels who threatened to strike Friday won higher pay, and kept healthcare and pension benefits on the eve of the deadline. Trump Taj Mahal workers walked off the job.
The past two years, more than a dozen states and dozens of cities and counties have voted to gradually increase their pay floors through legislation or ballot initiatives. Advocates largely credit the Fight for $15 movement, which has led fast-food worker strikes across the U.S. since 2012.
Nearly 30 states with 60% of the U.S. workforce now have minimum wages higher than the federal government’s $7.25 an hour, according to NELP. And after California and New York agreed early this year to boost their base pay to $15 an hour by 2022, joining cities such as Seattle and San Francisco, 20% of U.S. workers are in regions transitioning to that threshold, NELP says
“Now that the minimum wage increases are accelerating, we’re going to see much bigger gains at the bottom … that will start reversing decades of widening pay inequality,” says NELP General Counsel Paul Sonn.
In early 2016, workers in the bottom fourth of the pay scale notched annual average pay hikes of 4.2%, compared to 2.7% for median earners, according to a Moody’s Analytics review of Labor Department figures.
The bigger increases for lowwage workers partly reflect a tightening labor market that saw that group lag behind higher earners for years, but they mostly stem from the minimum wage hikes, says Moody’s Chief Economist Mark Zandi. Earnings gains for the 10th percentile of workers grew nearly twice as fast last year in states that passed minimum wage increases, an Economic Policy Institute study showed.
Many employers cite drawbacks. The Employment Policies Institute, which is backed by the restaurant industry, ran a fullpage ad in Thursday’s New York
Times that said unions’ call for a $15 wage “will kill the job market for young people” as employers seek experienced workers. The group’s research director, Michael Saltsman, says sharp pay hikes in California have led some businesses to close or cut staff.
Michael and Susan Iida shuttered Mokka coffee house in Berkeley last month as minimum wage hikes from $8 to $11 an hour the past few years cut profits 65%, Michael says. The couple raised prices but that hurt traffic, leaving revenue unchanged.