Column by Jack Ryan
You should apply the Mississippi Effect to the following figures — meaning our state’s lesser-skilled work force and lower cost of living results in lower wages — but it is still noteworthy that the national average for pay in restaurants and supermarkets has exceeded $15 per hour for the first time.
To repeat, it is all but certain that the average pay in restaurants and supermarkets in Southwest Mississippi remains below $15. But it also is certain that workers at these businesses are earning more money than they did a year ago.
The Washington Post website reported Sunday that wages are rising rapidly because many businesses are not able to hire enough workers. This is a classic example of supply and demand: When there are too few people to supply the necessary labor, employers raise their wages to attract more workers.
“Overall, nearly 80 percent of U.S. workers now earn at least $15 an hour, up from 60 percent in 2014,” the Post reported. “Job sites and recruiting firms say many job seekers won’t even consider jobs that pay less than $15 anymore. For years, low-paid workers fought to make at least that much. Now it has effectively become the new baseline.”
The biggest surprise about rising pay is that some of the largest increases have gone to workers in traditionally low-wage industries.
A chart with the Post story tracked pay over the past two and a half years, since January 2019. These are changes in average hourly pay for non-management employees: restaurants are up about $2 to $15.50, grocery and liquor stores are up $1.40 to $15.00, and gas stations are up almost $2 to $13.95.
Larger companies continue to set the trend of higher wages. CVS recently announced that its starting pay will increase from $11 per hour to $15 next year. The Post reported that when large companies do this, smaller ones tend to raise their pay to keep up.
This has created one of the fastest periods for rising rank-and-file wages in the last 40 years. Economists believe that once the Covid-19 pandemic subsides and labor markets return to normal, these higher pay rates will remain, since history indicates wages rarely fall after they increase.
One obvious side effect is inflation. When business expenses rise, they are passed on to customers. Higher prices are most evident in grocery prices and perhaps restaurant prices as well. That’s not ideal, but workers who stuck it out through the pandemic have proven their value.
