Minimum Wages is Going Up Across America: Will the Trend Continue?

minimum-wages-is-going-up-across-america-will-the-trend-continueAmerica’s Great Recession may have officially ended 7.5 years ago but while job market health has been certainly growing, it appears that only now are we finally starting to see it apparent in wages.

Sure, whatever wage increases we might be seeing right now—and, more accurately, in the months to come—are mostly still modest, the United States Department of Labor reports that the average hourly earnings has, in fact, increased. Yes, it is only 2.8 percent but that is still the highest such rate since the middle of 2009. But the wage growth is slowing.

American Enterprise Institute director of economic policy studies, Michael Strain, notes, “The mystery has been that we’ve seen a decline in the unemployment rate, but we haven’t seen the kind of increases in wage growth that we would expect.”

His speculation imparts, simply, that perhaps employers just figured they did not have to increase any wages because, in prior years, so many people have simple stopped looking for work; the job market was, in fact, that bad.
He goes on to say, “Businesses kind of have the sense that [the missing workers] are out there — they are a pool of available workers — so that has, I think, suppressed wage growth.”
But all of that appears to be in transition, this year. With an unemployment rate at a health 4.6 percent, economists say the US job market is hitting its natural stride.

At the same time, new state and local minimum wage laws are pushing wages up too. Since only 2014, more than 20 states (and Washington DC) have increased their minimum wage. Just last month, Washington State, Arizona, Colorado, and Maine all voted to approve such initiatives and it looks like this is a trend which will continue.

Strain says that these increases continue to have a ripple effect throughout the economic framework. It goes beyond just the lowest paid workers, he explains: “There’s no question minimum wage increases cause wage growth to accelerate. How much of that can be attributed to minimum wage increases is an open question.”

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