Kansas City needs to join Los Angeles, San Francisco, Oakland, Calif., and Seattle in raising the minimum wage to $15 and not worry whether businesses will flee to the suburbs. Market forces will likely cause the exact opposite to happen.
Some people have expressed concerns that the jump in wages will prompt companies to increase the cost of the goods and services they sell, lay off workers to hold down the extra cost or close their doors altogether.
What’s more likely to occur is higher wages in the cities that have taken the bold step with the increase will draw workers away from the $7.25 an hour jobs in surrounding suburbs, forcing those locations to also increase wages to remain competitive. It’s not like there is an infinite supply of minimum wage workers.
Many companies are competing for the same finite set of job-seekers. The 78 million baby boomers, who swelled the U.S. labor force, is starting to retire, and there aren’t as many people to fill the positions that boomers are vacating.
That will make the labor shortage more acute in the near future. The federal minimum wage for nonexempt employees has not been changed since 2009.
It also hasn’t kept up with inflation. Today’s minimum wage would be close to $10 an hour if it had been increased to match the $2.65 an hour federal minimum wage set in 1978. Cities that have increased the minimum wage have done it so that it’s phased in, reaching $15 an hour by 2020.
The low pay for minimum wage workers means that companies and executives are pocketing the money that should go to workers. What’s worse is many minimum wage workers have had to rely on government assistance just to get by, which means that taxpayers are heavily subsidizing the profits that companies paying the minimum wage are taking in.
That back door of corporate welfare has to close.