Sen. Ron Johnson (R-Wisc.), who collects a $174,000 salary, thinks that there is a “downside” to paying workers a living wage enough to cover expenses such as childcare. Johnson made his remarks while appearing on WKOW-TV to defend his support of a bill in the Wisconsin state legislature that would end the $300 per week federal unemployment subsidy in the state — a bill the Democratic governor has said he will likely veto.
In calling for an end to enhanced unemployment benefits, Sen. Ron Johnson says he's worried wages are rising too much too quickly. pic.twitter.com/4Ko383rLev
— A.J. Bayatpour (@AJBayatpour) May 23, 2021
“People are literally making more money on unemployment with the plussed-up federal benefits than they made at their job,” Johnson said in an interview with A.J. Bayatpour on Sunday, adding that he worries that businesses cannot compete with the equivalent of a $16.75 wage provided by the government. “Wages are set in the marketplace and businesses pay what wages they can afford based on the competitive situation,” Johnson said.
And instead of arguing that businesses should pay higher wages, the senator argued that employees should accept less because inflation could occur in the future. “Increases in wage rates ratchet up and that creates permanent inflation so you may feel good about getting a five, or six, or seven percent raise but if general inflation is six, seven, or eight percent, that increase is just completely wiped out,” he said.
But there are ways to avoid those issues, for example by indexing a national minimum wage to inflation, as suggested by MIT economics professor David Autor, co-chair of the MIT Task Force on the Work of the Future. The current federal minimum wage in the U.S. is $7.25 per hour, and it has not changed since 2009. Many in Congress, most notably Sen. Bernie Sanders, have argued in favor of a $15 federal minimum wage.
Even if the minimum wage remains the same, businesses can choose to pay their employees less than a living wage, as Johnson endorses in this interview, but this could lead to issues finding people to hire. One Atlanta-area ice cream shop solved this problem by offering workers $15 per hour. Applications for jobs skyrocketed “practically overnight,” owner Jacob Hanchar told the Atlanta Journal-Constitution. He said after raising wages, he received “well over 1,000 applications” for 16 open staff positions.
In fact, paying his employees a livable wage has benefited Hanchar’s business, he said. He has noticed workers are treating customers better and showing up to work in a better mindset.
“Especially in the restaurant business, turnover is a big issue,” Hanchar told the Journal-Constitution. “The other issue is burnout, a lot of people work two or three jobs. And now they’re just working one job, so people are showing up on time now, they’re reporting to work in a better mood. Customer service has improved. Things like that, that you don’t always account for.”
So if businesses want to find employees, they could start paying a living wage. That’s just the “marketplace” speaking.