Detroit Today: How the US economy is improving for low-wage workers

The jobs market in the U.S. has changed dramatically since the COVID-19 pandemic started three years ago. Businesses like Starbucks, Target, McDonald’s and Subway increased the minimum wages they offer and added a more comprehensive benefits package. For the working class in America, the current economy has improved their jobs outlook.

As this trend stabilizes, wages are increasing faster for poorer workers than wealthier ones.

This is somewhat of a rare change in America’s economic story. The U.S. often runs consistently tight labor markets — where more employment options are offered to fewer available workers — during times of crisis.

What does a tighter labor market mean for American workers? Do they always yield better working conditions and higher pay?

Detroit Today host Stephen Henderson is joined by Prof. Katherine S. Newman and Elisabeth S. Jacobs to help answer these questions. Listen to the episode below.

Listen: How the U.S. economy is improving for low-wage workers

Guests

Professor Katherine S. Newman is the provost and executive vice president of Academic Affairs at the University of California. She co-authored “Moving the Needle: What Tight Labor Markets Do for the Poor.” She says employers need to seek employees who would have been considered “undesirable” because people are dropping out of the labor market.

“This is like a great American mobility machine — it enables people at the very bottom to look forward to a college education. McDonald’s never used to pay for a college tuition. The fight for 15 (dollars an hour) — that fight is over, and the workers won,” says Newman.

Elisabeth S. Jacobs is a senior fellow at the Urban Institute’s Center on Labor, Human Services, and Population. She is also a co-author of “Moving the Needle.” She says cutting off immigration to the U.S. has helped create a tighter labor market.

“The basic dynamics of what it means for (tighter) labor markets, for sure, is fewer workers and therefore employers are under some pressure to actually expand the offerings that they have to the workers available to them,” says Jacobs.