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Is $15 the New De Facto Minimum Wage?

Sigma Investment Counselors

January 3, 2018

Over the last several months, several major employers have announced increases in the minimum hourly rate they plan to pay during 2018 (see our blog from November 3).  These planned wage increases have tended to anticipate that their lowest pay rate would approximate $11.00-12.00 per hour in 2018 with additional increases in future years.  Subsequently, several large employers, including AT&T, Comcast and several banks, have announced that their lowest hourly rate in 2018 will be $15.00.

With a current unemployment rates at near record lows, employers are evidently having to review pay policies and are making decisions based on the realities of the market place.

Supply and demand remain an economic truism.  Federal, state and local minimum wage requirements are largely irrelevant in a tight labor market.  Employers are going to set wage rates that are sufficient to support their work-force requirements.

To the extent that major U.S. employers are now planning to pay $15 per hour, it is likely that wages in general are likely to drift upward to meet, what now appears to be the new, de facto minimum wage.

All comments and suggestions are welcome.

 

Walter J. Kirchberger, CFA®

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