By Aimee Picchi
CBS News MoneyWatch, Dec. 30, 2020
Workers in 20 states will get a pay hike on January 1 when the minimum wage increases, thanks to cost-of-living adjustments and other scheduled increases. Later in the year, another four states and Washington, D.C. will raise their baseline pay, which means that low-wage workers in almost half the nation could see higher pay next year. ...
The wage hikes in 2021 "are an indication that people understand how much the $7.25 federal minimum wage keeps people in poverty," said Holly Sklar, the CEO of Business for a Fair Minimum Wage, a network of business owners and organizations that advocates for a higher minimum wage.
Sklar added, "Consumer spending drives our economy, and boosting the minimum wage is a powerful way to boost the economy."
Some businesses say higher wages pay off long-term by decreasing turnover and creating higher satisfaction on the job.
"The direct costs of turnover are obvious — recruitment, interviewing, training," Kelly Vlahakis-Hanks, the CEO of ECOS, which makes ecological cleaning products, told CBS MoneyWatch. "The indirect costs are less obvious, but they're significant, and I think highly underestimated."
After her company boosted its starting wage to $17 an hour in 2014, its voluntary turnover decreased 50% from 3% to 1.5%, she noted. "We have employees who have been with our company 20, even 30 years," Vlahakis-Hanks added. ...
Lost buying power
Since the last federal minimum wage hike — to $7.25 an hour, starting July 24, 2009 — the cost of living has increased more than 20%, while the price of essentials such as housing and health care have increased even faster. That's created financial pain for many low-paid workers, who increasingly are paying a bigger share of their earnings toward housing and other expenses. ...
The minimum wage "came into being to help us recover from the Great Depression," Sklar noted. "It has a dual purpose: mitigating poverty for workers and boosting consumer spending." ...
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