Wage hikes are on the way for some Florida workers. Back in November of 2020, we Floridians passed an amendment to change minimum wage rates in the state.
At the time, minimum wage in Florida was $8.56 per hour, but last year, on September 30th, it increased to $11 per hour.
The amendment called for an annual increase every September 30th starting in 2021 and going until 2026, when a top out of $15 per hour will be achieved. Accordingly, this September 30th the minimum wage will rise by $1 to $12 per hour.
Beginning in 2027, thereafter the minimum wage will then be adjusted annually for inflation.
An increase of this magnitude will no doubt come as a welcome relief to many Floridians. Still, valid concerns have been raised that the measure still doesn't go far enough to help the plight of workers impacted by the lower wage bracket in Florida.
The Living Wage Factor
Issues with the Florida minimum wage arise when considering the standard living wage in The Sunshine State.
The Living Wage Calculator, devised by Amy Glasmeier, professor of Economic Geography and Regional Planning at MIT, is designed to go beyond the federal poverty threshold. Poverty thresholds account for a very basic standard of living and do not take into account many living expenses like health care, childcare, clothing and other such expenses.
"The living wage is the minimum income standard that, if met, draws a very fine line between the financial independence of the working poor and the need to seek out public assistance or suffer consistent and severe housing and food insecurity. In light of this fact, the living wage is perhaps better defined as a minimum subsistence wage for persons living in the United States."
Still, the living wage does not account for things like entertainment, vacations, dining out in restaurants or anything else that goes beyond subsistence living.
According to this calculator, the living wage for a single person in Florida is $17.72 per hour. For a single person supporting one child this rises to $35.98 per hour while two adults with two children with only one person in the household working is $39.04.
Understandably, this may vary, though, depending on where a person resides in the state.
With its heavy influence from the tourism industry, the living wage for the Orlando metro area is calculated to be higher than of the state average at $18.64 per hour while the living wage for the heavily populated Miami-Dade County is $18.94 per hour.
At the same time, the living wage for Jacksonville is calculated to be lower, at $16.36 per hour.
Compare this with a national average of $16.54.
Does Minimum Wage Drive Up Inflation?
According to Investopedia.com, there are conflicting views amongst economists on whether or not raising the minimum wage also increases inflation.
At first glance, it does seem like every time there is a wage hike, the cost of things seem to rise as well.
Many businesses, instead of drawing from existing profits to pay for the wage increase for their employees will instead raise the price of their goods or services to offset the expenditure.
This is known as wage push inflation.
Then again, some small businesses may have no choice but to raise prices as they may not be able to afford to pay employees without also increasing the price of their goods and services.
Generally, according to Investopedia.com, minimum wage is not thought to be tied to inflation as the cost of consumer goods tends to rise at a faster rate than the federal minimum wage.
However, Florida's annual minimum rate hikes may be designed to offset this, but will it work in the long run?
Closing Thoughts on Minimum Wage and Inflation
As mentioned in this recent article from The Palm Beach Post, Florida currently has the highest inflation rate in the country. While this may be due to many complicating factors outside of minimum wage hikes, like a burgeoning population, a spike in interest rates and the ongoing insurance crisis, there is still a general impact on wages.
In short, while the minimum wage may increase, so too may inflation. Whether there is a direct correlation or not, if inflation rises the value of the current minimum wage will then tend to have a decreasing effect.
A sobering thought, although with minimum wage rates being adjusted annually in Florida, hopefully this will be enough to help wage earners who are at the lower end of the pay scale keep up, financially speaking.
What do you think?