Yet many employers are dragging their feet in raising wages to make their job offerings worth taking, given the economic climate and the risks of service work. Much of the “wage growth” evident in recent statistics is due to high-wage workers being much less likely to have lost their jobs than low-wage workers; once you account for that fact, wages have not risen much at all. This is part of what accounts for the “labor shortage.” The issue isn’t workers. It’s employers.
The country’s generous UI is likely playing a role too. In a recent survey by ZipRecruiter, job seekers reported feeling far less financial pressure to take the first job they were offered, likely because UI and stimulus checks buoyed family finances. But a large body of research has shown that UI has a more moderate effect on job-acceptance rates than one might think, because it offers only the lowest-paid workers more incentive to say no.
Moreover, UI helping drive wages up by giving workers the option of saying no to a bad job is not a bad thing. Ample UI improves what is sometimes called “job match,” because it gives job seekers the ability to wait for the right position to come along. It also has disproportionate benefits for Black and Latino workers, who have borne a disproportionate burden of both the health crisis and the economic crisis of the past year.
A more philosophical point needs to be made here, too: The job of the government is not to ensure a supply of workers at whatever wage rates businesses set. And workers’ having the power to say no is not a policy problem that the government needs to solve. For decades, though, Washington and America’s statehouses have helped rig the country’s policy infrastructure in employers’ favor.
The federal government has set the country’s wage floor below its poverty line, for instance, and has not increased the minimum wage to account for improvements in productivity and output over time. The current federal minimum is just $7.25 an hour, compared with roughly $10 an hour in Ireland and Canada, $11 in the Netherlands, $12 in France and Germany, and $12.50 in Australia and Luxembourg. Indeed, the United States has the lowest minimum wage compared with typical or average wages of any country in the Organization for Economic Cooperation and Development. That helps explain why the United States has the highest share of low-wage work among the OECD countries. Fully one-quarter of American workers earn less than two-thirds of the median wage, compared with just 5 percent in Belgium and 12 percent in Japan.
Read: Wages are low and workers are scarce. Wait, what?
The government has also proved complicit in the collapse of unionization and collective bargaining, making it easy for businesses to beat back organizing efforts and difficult for workers to band together to demand raises, benefits, and safe working conditions. The country has half, one-fifth, one-ninth of the collective-bargaining coverage of many of our peer countries. This has increased inequality in America, holding down wages while bolstering corporate profits.