It is a common myth that it is minimum wage hikes, not the shifting landscape of supply and demand, that lead wages to rise.
In 2023, more than half of states will be raising their minimum wage.
While this may sound like a recipe for disaster, recent reporting has demonstrated that it is not expected to have a significant impact on employment or wages. The reason is straightforward: wages for low-skilled jobs have risen in recent months amid strong labor demand, which has caused a labor shortage. Thus, the equilibrium wage for low-skilled jobs—precisely those jobs that would regularly be impacted by a minimum wage hike—is already above what the wage floor will be moved to in many cases.
A Wall Street Journal analysis of data compiled by MIT professor Nathan Wilmers found that “Through September, the lowest 10% of workers by income in each state earned hourly wages that were on average one-third higher than their state’s minimum wages.” The “one-third margin was the highest in at least a decade,” the Journal notes.
In some states, the difference is even more pronounced. In Minnesota, for example, the Journal found that the bottom 10 percent of earners are making about 40 percent more per hour than the state’s minimum wage would dictate. Additionally, a local paper in Michigan explained that even though their minimum wage is scheduled to rise to $10.10 per hour this year, most business owners are already paying $1 - $4 more than that for low-skilled jobs. Just one percent of...
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