Ireland has added some fresh heat into the question of whether countries should raise minimum wages to put their economies on a more stable footing in the aftermath of the Covid-19 pandemic, with Prime Minister Micheál Martin saying his government would look at increasing the level by a fifth.
Mr. Martin said such a move would be aimed at addressing income equality exposed by the pandemic, with many lower-income workers across the world bearing the brunt of lockdowns while better-paid people work from home.
“I think there is a clear message emanating from Covid that it has exposed the duality of the Irish economy in terms of low-paid workers,” Mr. Martin said during the prime minister’s customary Christmas news conference. “That’s something we’ve got to [consider]—not just a minimum wage, but a living wage, which would really deal to some degree with that issue.”
He suggested raising the current minimum wage of 10.10 euros an hour, equivalent to $12.30, to a living wage of €12.30, based on everyday living costs.
Some supermarket chains and other private employers in Europe have switched to paying living wages instead of lower minimum wages in recent months to encourage staff retention. But many employers still use minimum wages to set pay rates. A U.K. study conducted by the Resolution Foundation, a think tank, found around half of front-line care workers were paid less than the living wage, as calculated by the Living Wage Foundation.
The push toward enacting living wages is accelerating in the U.S., too.
Election Day last month also included a ballot initiative in Florida to raise the state minimum wage from $8.56 an hour to $15—matching that in parts of California—by 2026. It passed with the support of more than 60% of voters in a state with two Republican senators, a Republican-controlled legislature and a Republican governor.
In all, some 24 states and 48 cities and counties previously made plans to increase their minimum wages in 2020. President-elect Joe Biden has made a $15-an-hour federal minimum wage a policy priority for his administration, too.
The Brookings Institution research group in Washington, D.C., said Americans increasingly think minimum wages should be raised for workers such as grocery cashiers and delivery drivers, who have kept the economy moving during the pandemic. It found in an August survey that more than 70% of respondents favored raising the minimum wage.
“The Covid-19 pandemic has shone a harsh glare on the struggles of low-wage workers, and made the issue of increased wages even more urgent,” Brookings said in a research report. “Low-wage workers have suffered the pandemic’s worst job losses, resulting in deepening financial strain, growing food insecurity, and mounting difficulties to pay bills and rent.”
Debate continues over whether higher minimum wages will deter employers from hiring. But some studies, including one from the Center on Wage and Employment Dynamics at the University of California in Berkeley, suggest there aren’t significant negative employment effects associated with higher minimum wages, and that in some instances higher wages might help retain workers and reduce hiring costs in businesses where costs can be passed on to consumers.
Higher hourly wages don’t protect against jobs being lost during the pandemic, though.
While some countries subsidized jobs to keep people nominally in work, others saw unemployment rates soar as economies adjusted to the effects of the pandemic, with many of the lost jobs among low-wage workers, including a disproportionately large number of Black and Hispanic people.
In April, the worst month for job losses in the U.S., the unemployment rate in the leisure and hospitality industry hit 39%, with retail reaching 17%—some eight million people in all.
With vaccination programs now rolling out, at least in the wealthier parts of the world, the Irish leader’s remarks speak to how governments are taking another look at how they might rebalance their economies once they emerge from the pandemic.
“We have to keep at it, and I would think that coming out of Covid there’s a far greater degree of acknowledgment and respect for that issue,” he said.
Write to James Hookway at email@example.com
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