Many miles of newsprint have been filled with dire reports of labor shortages and anecdotes from business owners about not being able to find willing workers. The real story, though, is more complicated.
“The reason they’re raising wages is they’re seeing stronger demand,” said Ron Wirtz, regional outreach director for the Federal Reserve Bank of Minneapolis to the Star Tribune. “And there may be some situations where they’re going to have pay higher because maybe they weren’t particularly good paying to begin with.”
Minimum wage for tipped employees varies between $8.21/hr and $10.08/hr for small and large businesses respectively. This comes out to approximately $17,076 to $20,966 annually, which is under the federal poverty line for a family of 2. Increasing this wage has put millions of dollars into the hands of our most vulnerable citizens, and in many cases has led to an influx of applications. Target, which raised its minimum wage to $15 last year, isn’t feeling a worker shortage, its chief executive, Brian Cornell, said recently to the Star Tribune.
When wages go up, retention goes up. As any business owner knows, good people are hard to come by. So when faced with a choice to increase employee churn or to raise wages, the decision was easy for Jon Halper, owner of Top Ten Liquors. “They feel like they can continue to work for us rather than looking for other jobs,” he said to the Star Tribune. Increased wages aren’t just for the bottom of the pay scale, it has a knock-on effect for those higher up as Mr. Halper reported higher wages for assistant managers as well. “They feel we’re now a lot more viable for them to work for us [long term].”
Higher wages, better quality employees, and more familiar faces around the local shops and businesses that we all love to frequent are all potential results from this increase in worker pay.
Well, isn’t that nice?