US, Federal Minimum Wage Coming?

After decades of sluggish growth, wages in the US are finally starting to rise this year with a record number of job openings remaining.

Joseph BrusolasThe chief economist at RSM US LLP said Tuesday that the era of surplus labor in the United States is coming to an end and the minimum wage of $15 an hour is becoming the new norm in a post-pandemic economy.

Brusolas said the pandemic lockdown measures have given workers the opportunity to rethink whether their low-paying jobs are worth their time. The increase in online shopping and salary starting at $15 per hour you provide Amazon.com, Inc. (NASDAQ:AMZN) is poised to end 40 years of a buying monopoly, the analyst said.

Stop monopoly buying

Buying monopoly is a consolidation of occupational choices that results in a non-competitive environment; The economist said that one of the greatest historical examples of monopoly purchases are the coal-mining towns of West Virginia.

In recent years, modern retail and restaurant companies have established purchasing monopolies in small towns across the United States, forcing local competitors to undersell and fail.

Companies like Wal-Mart Corporation (NYSE: WMT), Right Aid Company (NYSE: RAD) and McDonald’s Corp. (NYSE: MCD) has created monopolies in several areas of the United States, Brusolas said; The RSM analyst said that in many cases, small-town workers had no choice but to work at the giant corporation’s local office for whatever salary they were willing to pay.

Minimum wage date

When the minimum wage was first established in 1933, it was 50 percent of the national average wage of $0.50 an hour. By 1964, the minimum wage remained at 50 percent of the national average of $2.50 an hour, Brusolas said, adding that by 2019, the minimum wage in the United States had fallen to just 30 percent of the average wage. by the hour.

When manufacturing jobs began to disappear from the American economy in the 1980s, employers faced less competition for workers; Because lower-income families lacked the means to move to higher-wage areas, there were many workers willing to work as long as their new jobs paid more than minimum wage.”

The effect of a wage increase

Now that dynamic appears to be shifting in favor of employees, but the minimum wage of $15 an hour could have some side effects: Higher wage costs can be passed on to consumers in the form of higher prices. However, Brosolas said raising the minimum wage should have a net positive effect on the economy, as lower-income families are more likely to spend their extra earnings on food, shelter and other necessities than higher-income families.

Think of it this way: While the cost of a Big Mac may have to go up and the bill to pay at the local restaurant may go up to account for the high cost of paying custodians, the cost to society of maintaining a decent standard of living standards for low-income workers must go down through Government aid payments.

Benzinga’s point of view

Earlier this month, the US Department of Labor reported that wage growth in the US continued to accelerate in September, up 4.6% from a year ago; Since the beginning of the yearSPDR S&P 500 ETF Trust (NYSE:SPY) yielded a total return of 17.4%, which is an indication that the increase in wages does not currently matter to investors.

The upcoming third-quarter earnings season will provide investors with some important insights into the magnitude of the impact of rising labor costs on corporate earnings.