EDITORIAL: Bearing minimum: Wage floor is a mixed bag: It helps some, hurts others

Sam’s Clubs recently announced that it is raising its minimum salary to $15 an hour. Several months earlier its affiliated company, Walmart, upped its bottom wage to $11. Similar increases are being seen across the economy as employers struggle to regain workers they had lost to the COVID-19 pandemic. Many people who lost jobs during the pandemic have decided not to return to work unless conditions are better.

This has led to an interesting standoff: Millions of jobs are available, and millions of unemployed workers are available to fill them. Employers are raising wages hoping to attract workers, through simple market forces of supply and demand.

The Bureau of Labor Statistics reports show that 8.7 million Americans were jobless in the month of July. For the same month, 10.1 million job openings were reported.

In addition, a full 55% of people who already had or were actively seeking jobs reported that they planned to look for a different job within the next year, according to a Bankrate jobseeker survey released in August. All this suggests a high level of worker discontent. While other factors contribute to such dissatisfaction, often it is driven by pay and other benefits.

With the Democratic Party in control of the White House and Congress talk of raising the minimum wage was inevitable. The current $7.25 minimum was set in 2009. Labor and social advocates say inflation has eroded the buying power of that level of pay. Valley Interfaith, for example, has insisted for at least a decade that a “living wage” is at least $15 an hour.

Economists show ambivalence about minimum wage laws. They note that employers already have to create wage schedules that will attract new workers and retain good workers. At the same time, competition imposes pressure to keep prices low. Companies must offset higher wage expenses either by raising prices or lowering costs.

The latter often hurts workers. Many companies jettison workers if they can. In an economy of nearly 160 million workers, about 1.6 million make minimum wage or lower, most of them food service and other hospitality workers who are expected to earn tips to make up the difference. The Congressional Budget Office predicts 1.4 million Americans will lose their jobs to a $15 minimum wage.

A prime example is fast-food outlets such as McDonald’s. As they have raised wages, they also have installed self-order kiosks and released thousands of workers.

Many of those who aren’t fired will be hurt in other ways. Many businesses already are reducing their full-time staff and replacing them with part-time and contract workers, in order to escape employee-provided insurance and other benefits mandated for full-time workers. The pay is better, but fewer people are getting it.

With so many unfilled jobs amid a high availability of workers, increased wages are inevitable, with or without government action. We expect a new minimum wage law, however, if only so that incumbent lawmakers can use it as an accomplishment to strengthen their campaigns. The question remains: would a free market — companies and workers negotiating their own terms — be more equitable, less painful, and keep more Americans employed?