A minimum wage increase can help but won't fix American workers' stagnant pay

American workers can’t get a raise. The economy is cooking along, the unemployment rate is down below 4 percent, employers are reportedly having difficulty attracting any qualified applicants and, still, wages aren’t going up. In fact, they went down in the second quarter of this year, according to one measure.
That’s not supposed to happen: Good old supply and demand dictates that, with fewer workers on the market, employers should just pay more to get the employees they want.
While economists ponder why the real world has defied Econ 101, the question remains what we can do about it. Progressives, for their part, have made a lot of progress in recent years by using America’s wage stagnation to push for minimum wage increases. The Fight for $15, as it’s generally known, has convinced some cities and states across the country pushing their own minimums well above the federal level of $7.25 per hour — but 21 states still use the federal minimum wage to set their own wage floor, which affects some 20 million workers.
image: Job Seekers Look For Open Positions At Career Fair In San Francisco
A job seeker fills out an application during a career fair at the Southeast Community Facility Commission in San Francisco, California on May 21, 2014.Justin Sullivan / Getty Images file
The federal minimum has been stuck there for nine years (as of this week) and, historically, Congress tends to raise it about every 10 years, so it’s reasonable to expect this anniversary to herald plenty of action from activists, and for good reason: The minimum wage’s buying power peaked decades ago. It’s high time for a hike.
However, minimum wage increases aren’t enough. While it’s been nearly a decade since the federal minimum went up, it’s been several decades since workers experienced an economy with sustained wage growth, so there’s only so much that mandated pay increases can do. In order to get wages rising again for everyone, lawmakers and activists need to look at something else: Reducing the power corporations have when bargaining with workers, which allows them to dictate substandard pay levels that employees simply have to swallow.
Doing so will require several steps. First, a reinvigorated labor movement will give workers more collective bargaining abilities. It’s no coincidence that the golden age for the American middle class coincided with a vigorous, powerful labor movement; and those benefits accrue to all workers, not just those who are union members.
Good old supply and demand dictates that, with fewer workers on the market, employers should just pay more to get the employees they want.
As I wrote in June, the teacher strikes that occurred across the country show that there’s an appetite for a revitalization of labor: Democrats need to not blow the opportunity. (Though the recent Supreme Court decision gutting the ability of public sector unions to automatically collect dues makes the task even harder.)
But that’s not all. A significant factor in America’s wage stagnation is corporate concentration: Fewer employers means fewer options for workers and thus fewer opportunities to bargain for higher pay. Numerous studies show that this dynamic is very real.
A recent paper from the Washington Center for Equitable Growth, for instance, found that every 10 percent increase in industry consolidation lowers wages by up to 1.3 percent. Another paper from that shop found increased employer power responsible for about 10 percent of the wage stagnation that’s occurred since the 1970s. Other studies have come to the same general conclusion: Fewer employers means lower wages, because there’s less competition for workers.
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