After decades of relying on low-paying services jobs that come with few benefits, the coronavirus has made clear the nation needs to take care of its workers.
A shock to the system
Economists believe this is the biggest shock to the labor market since World War II prompted a shift in labor force participation as more women entered the work force. But unlike 75 years ago, the labor force participation has fallen as a result of the pandemic.
Restaurants and some retailers raised wages or offered sign-on bonuses to fill their staffing needs. In some places in America, fast food chains advertised paying only a few cents more than the competition across the street to attract workers.
Yet economists worry that some of the enticements employers currently offer to get staff in the door won’t improve the pay of lower wage earners in the long term.
Paying workers their due
Wages are rising in America because businesses’ need for workers is forcing them to pay up. That’s unlikely to change any time soon.
“It’s a sticker shock when you actually have to pay the real value of something,” said Kate Bahn, interim chief economist at the Washington Center for Equitable Growth.
This is especially true given the sheer number of services jobs Americans interact with every day, from food deliveries and coffees to go to various cleaning or janitorial services.
“Wages were not set based on market forces but based on power disparities,” said Bahn, meaning that people at the lower end of the income spectrum traditionally didn’t have the means or power to ask for just pay.
But the pandemic may have fundamentally changed this dynamic: The old power mismatch “reflects an unhealthy and fragile economy,” said Bahn. “We have this once in a lifetime chance to do something about it.”