UK economist discusses impacts of businesses potentially raising wages
LEXINGTON, Ky. (WKYT) - It’s hard to pass a business, restaurant, or store that isn’t advertising their efforts to hire workers. Many have told us they are struggling to get people to even apply.
Economic experts say this could force businesses to increase their wages, which in turn, would impact your wallet.
“If they’re struggling to find workers, the response to that will eventually be increases their wages in order to attract these workers,” said Dr. Michael Clark, UK’s director for the Center for Business and Economic Research.
Minimum wage in Kentucky sits at $7.25, but Dr. Clark says many businesses already pay above that rate, and if they go higher, it could ultimately cost the consumer.
“If they’re having to pay more to attract workers, than eventually that’s going to work its way into the prices and potentially increase the prices,” Dr. Clark said.
The last time Kentucky’s minimum wage was raised was back in 2009. Dr. Clark says the purchasing power of the rate has gone down. To be equal to today, he says minimum wage should be just under $9.
“We still have a lot of workers out there who could potentially fill these jobs, and over time what we hope is, that these workers and employers will get matched up so that maybe there won’t be as much wage pressure,” Dr. Clark said.
While more affordable wages is a nice potential, it could also lead businesses and companies to make some cost saving decisions, meaning depending more on machine sand less on people.
“If you increase the minimum wage at a time when you have so many people who are searching for jobs, what you’re potentially doing is making those workers more expensive to hire. So that could cause firms to look at alternatives to hiring workers, maybe they adopt more technology,” Dr. Clark said.
Another domino effect from the pandemic that Dr. Clark says isn’t likely long term, but could last several months.
Dr. Clark says it’s too early to tell how the job search requirement for Kentucky unemployment benefits is helping places fill positions, but he believes it will help.
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