Conor Sen points out at Bloomberg that, if those pushing for a $15/hour minimum wage intended to kneecap the growth of low wage jobs, they’ve succeeded beyond their wildest dreams:
Even if the rate of U.S. job growth is slowing this year, there’s encouraging news hidden in that overall number.
A large chunk of the deceleration is attributable to a near halt in the growth of lower-paid jobs, despite those positions continuing to show strong wage growth – a sign that perhaps for lower-paid workers we are seeing dynamics approaching full employment. At the same type, the continued steady growth in higher-paid knowledge jobs should embolden those who believe this expansion can continue for quite a while longer. And along the way, more Americans in both categories are finding decent-paying jobs.
When people talk about the labor market slowing, what they’re really referring to is the past six months. The recent peak in the year-over-year pace in jobs growth occurred in January at 2.82 million. Since then it has slowed somewhat, largely shown in the weak jobs reports in February and May, in which both months resulted in fewer than 100,000 jobs being added in the economy.
But as the economic cycle has become more advanced, the composition of the labor market continues to change. Nowhere is this more evident than in the lowest-paid industries – retail and leisure/hospitality. From January 2011 through January 2019, those two industries added on average 600,000 jobs per year, or 50,000 per month, with the pace of growth beginning to slow noticeably in 2017. In the past six months, however, those industries have shown no growth. If they had grown at a similar pace as they did in 2017 or 2018, overall job growth would have shown very little deceleration.
I wanted to accomplish the same things with a tightening labor market, which I considered a more humane of accomplishing it, but it looks like setting prices by fiat works, too. It should also be noted that when “lower-paid workers” compete with “higher-paid knowledge jobs” something disastrous is going on. It’s probably more likely that the workers seeking jobs in the first group will have seriously straitened circumstances.
Only 7 states have passed $15/hr minimum wage laws. Is that enough to cause this or are there other factors at work?
Steve
Probably both. 22 states increased their minimum wages since the start of 2019, those states represent a disproportionate amount of U. S. population, and I think they were also where minimum wage jobs were increasing fastest so I think that the minimum wage was probably a factor.