The Bare Minimum Series: Wage Compression

Shutterstock | Kryuchka Yaroslav

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Raising the federal minimum wage to at least $15 an hour will lift millions of Americans out of working poverty – and it’s scaring a lot of special interests who profit from keeping people poor. In this series, we’re dismantling the myths, one by one, that Raise the Wage opponents use to try and stop 40 million workers from making the money they deserve. 

This week, we’re tackling wage compression.

In this country, a registered EMT paramedic can typically expect to earn somewhere between $12 and $16 an hour, depending on which state they live in. New York state has the highest rate, at $16.50 an hour, and it also has the distinction of being one of a handful of states that recently raised the minimum wage to $15 an hour. That means a fast-food worker flipping burgers makes almost the same amount of money per year that the EMT does.

Stop us if you’ve heard this trope before. It’s as ubiquitous as it is ridiculous, because the problem isn’t a fast-food worker earning more – it’s that wage compression makes EMTs earn less. 

But what’s wage compression? 

Wage compression is when there are few differences in pay according to experience, seniority, or skills in a given workplace or industry, such as is the case with EMTs. Opponents of raising the minimum wage to $15 like to use the out-of-context EMT/fast-food example because they believe that a job that requires a lot of skills, training, and high-stakes, such as an EMT, should be making more money than a low-skill job such as a fast-food worker. Well, we agree! But that means that we should be paying EMTs more, not paying fast-food workers less.

Certainly, wages should be commensurate with the level of experience and expertise required. It is, however, a complete non-sequitur to suggest that someone else working a completely different job should be paid a starvation wage simply because that job is low-skilled. No one should be earning less than $15 an hour, because anything less will very soon be unlivable in this country. 

By 2024, $15 an hour will be the bare minimum workers in every single locality in the country will need to achieve a baseline standard of living – and workers in expensive metropolitan areas will need even more. Raising the wage isn’t about a competition between skilled and unskilled labor. It’s ensuring that all labor is compensated a wage that affords human dignity. This shouldn’t be that hard. The minimum wage should be the minimum amount a person needs to earn to live – anything less is absurd.

The EMT/fast-food worker example is outlandish because it frames raising the wage as a zero-sum game, when in reality, it’s a win-win for the EMT and the fast-food worker. Raising the wage to $15 will give a raise to two-thirds of the working poor, pumping billions of dollars back into the economy and enabling a more robust job market through consumer demand. If fast-food workers suddenly start earning $15 an hour, because people naturally compare themselves and their pay to others, employers in other industries (like EMTs) will be forced to start paying more to attract new workers. Employers have long done this to avoid the problem of wage compression and retain workers, so raising the wage for some workers almost always has positive ripple effects for other employees. 

Here’s the bottom line: raising the wage to $15 is the bare minimum baseline we need for all workers in this country, at each and every skill level. EMTs should get a raise, and so should fast-food workers. An argument that tries to pit them against one another forgets the real problem: an economy that rewards the rich at the very top and incentivizes wage compression for everyone at the bottom.

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