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Utah News

Should The Minimum Wage Be Tied To Productivity?

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americanprogressaction.org
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Attempts in the recent past to increase the minimum wage in Utah have gone nowhere.

According to a new study, minimum wage workers should be making nearly $19 an hour. The report from the Economic Policy Institute found that tying the minimum wage to productivity would raise pay to $18.67 per hour. That’s an increase of over $11 an hour from Utah’s current hourly rate of $7.25.

Until the 1960’s, the minimum wage generally rose with the levels of worker productivity. David Cooper, the author of the report, said that gradual increases in the minimum wage have almost no effect on employment.

“Had that trend continued since 1968 and we had continued to raise the minimum wage pretty regularly every year, we would have a minimum wage today of close to $19 an hour,” Cooper said. “The effect of increases in the minimum wage on employment is probably the most studied topic in all of labor economics. Modest increases in the minimum wage have little to no effect on employment. That debate is basically settled.”

According to the Living Wage Calculator from the Massachusetts Institute of Technology, a family of five with one full-time working adult in Salt Lake County would need to earn almost $30 an hour in order to provide for their needs. It is also estimated that such a family would pay on average nearly $13,000 a year on food and $6,000 a year on medical care. Cooper added that increased wages would help move more money through the economy.  

“Low-wage workers tend to spend every single dollar that they receive because they have to in order to make ends meet,” he said. “If you raise the minimum wage, you’re transferring income to folks who are going to go out and spend it right away. That can mean more customers coming through the door for most businesses.”

The federal minimum wage was last raised in 2009.