Minnesota’s Economic News – W/E 6/18/21
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Due to numerous factors, one of them being higher than normal unemployment benefits, workers are reluctant to go back to their jobs. Numerous employers are, therefore, finding it hard to recruit workers. Consequently, some have resorted to raising wages in order to attract applicants.
According to 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.
In a competitive market, the interaction between demand and supply of labor dictates wages. When labor demand is higher than labor supply, employers are incentivized to raise their wages. Viceversa, when labor demand is too low for current labor demand, workers are usually eager to accept jobs with low pay in order to compete with other job applicants.
While unfortunately, the low supply of labor is not due to free-market competition but rather government intervention, this is a good illustration of how the market set wages ––when labor demand is higher than labor supply, wages move up. It should tell our policymakers that the labor market is well able to efficiently adjust to changes and establish competitive wages without the need for harmful mandates like minimum wage laws.