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Utah economist weighs in on minimum wage debate

Utah economist weighs in on minimum wage debate

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Estimated read time: 3-4 minutes

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SALT LAKE CITY — Campaigns to raise minimum wages have spread across the nation but are showing no signs of making significant headway in Utah.

Los Angeles recently became the largest city to raise minimum wages to $15 by 2020. Seattle and San Francisco have also passed similar measures. Also, a $12 federal minimum wage has been proposed to Congress as part of the “Raise the Wage” bill.

Salt Lake City Mayor Ralph Becker made a budget proposal to increase the minimum wage for all city employees to $10.10 earlier this month. The proposal would affect 150 city employees— mainly seasonal maintenance workers, said Art Raymond, deputy director of communication for the Salt Lake City Mayor’s Office.

However, Utah cities do not have the legislative authority to increase minimum wages. Utah's Legislature has made the decision to keep the state’s minimum wage the same as the federal minimum wage of $7.25.

Previous attempts to increase the minimum wage in Utah have been met with pushback. Most recently, the Utah Legislature rejected a proposal to increase the minimum wage for tipped workers in February.

Increasing the minimum wage for Salt Lake City employees is a small step in the right direction, Raymond said.

“Our efforts are to ensure that we as a city are doing what we can to ensure the employees of Salt Lake City are earning a livable wage,” Raymond said.

Utah is among the 14 states with the lowest minimum wages in the nation, according to the National Conference of State Legislatures. A poll by the National Employment Law Project earlier this year found that 75 percent of Americans, including 53 percent of Republicans, support an increase in the minimum wage.

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But raising the minimum wage in Utah will not be without consequences, said Natalie Gochnour, chief economist for the Salt Lake City Chamber of Commerce.

Gochnour said an increase in Utah’s minimum wage is unlikely to happen before the federal minimum wage is increased.

“There’s an old saying in economics that goes, ‘there’s no such thing as a free lunch,’ ” Gochnour said. “Labor is a commodity. A modest increase in minimum wages would not affect the economy. But a large increase in minimum wages would make business’ profits fall and prices rise.”

Gochnour said if minimum wages are increased too much too soon, it may force companies to turn to technology more, and therefore, the unemployment rate could increase.

Even though Utah has one of the lowest minimum wages, it has the third lowest unemployment rate in the nation, according to a recent survey by the Bureau of Labor Statistics.

Less than 3 percent of all workers in Utah get minimum wages, including both part-time and full-time workers, Gochnour said.

Gochnour said a much better way to help those that rely on minimum wage is to improve skills by investing in education.

Supporters of the “Raise the Wage” bill say that raising the minimum wage would in turn increase how much people consume, which would eventually increase the economy as a whole.

Gochnour said that logic is flawed because “there’s no such thing as free money” and therefore, raising the minimum wage in large increments would hurt businesses and the economy.

“Competition in the marketplace is what drives wages up,” Gochnour said. “When government increases minimum wages artificially, it can have drastic consequences on local businesses and the economy.”


Spencer Ricks is a KSL.com news writing intern and student at Dixie State University from Snoqualmie, Washington. Contact him at newsintern@deseretdigital.com.

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Spencer Ricks

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