Employers are raising wages to attract workers

Partly due to higher-than-normal unemployment benefits, people are reluctant to return to their jobs. Numerous employers are, therefore, finding it hard to recruit workers. Consequently, some have resorted to raising wages to attract applicants.

According to the Star Tribune,

As it struggles to staff up ahead of its May 22 opening, Valleyfair is boosting the starting pay for some positions to $15 an hour.

The wage increase at the amusement park in Shakopee is for food and beverage workers who are at least 16 years old. The park also hires some 14- and 15-year olds, but they are not allowed to handle some machinery, such as fryers.

In recent weeks, Valleyfair had already bumped up the starting wage from $11.25 to $13.50 for food service workers. But executives decided they needed to go even further to $15 to compete against other employers in the Twin Cities. With a little over two weeks until opening for 2021, Valleyfair is still looking to hire another 300 people.

Last week, Punch Pizza, the Twin Cities-based chain of about a dozen restaurants, raised its starting wage to $15 an hour. And in March, Shooting Star Casino in northwest Minnesota raised its minimum wage to $16 an hour.

This should be concerning.

In a competitive market, it is the interaction between demand and supply of labor that dictates wages. When demand for labor exceeds supply, employers raise their wages to attract workers. Vice versa, when the labor supply exceeds demand, workers compete, driving wages down.

The current market is not competitive. Rather, government intervention is raising the price of labor more than it’s worth. This is bound to raise prices. On a positive note, employers responding to labor scarcity should tell lawmakers that the private sector is able to efficiently adjust to changes in demand and supply, and establish competitive wages without the need for harmful mandates like minimum wage laws.