Worcester Business Journal

wbjournal.com | October 11, 2021 | Worcester Business Journal 11 Sandra K. Olson! Worcester Business Journal Outstanding Women in Business Award 2021 Honoree Thank you Sandra for your hard work and dedication! worcester.edu Congratulations It's true, he said – as did all economists interviewed for this story – raising, for example, restaurant employee wages, may ultimately result in increased restaurant prices. Wide- scale inflation, however, is unlikely, Baumann said. It's one piece of the economy, and the U.S. has checks and balances built in to respond to such a scenario, if it were to happen. "My counter for that is that's why we have monetary policy, to watch out for that. Even if [those who predict wide- scale inflation] are correct … we've got a federal bank and a central bank that knows how to deal with inflationary periods," Baumann said. Gray said wide-scale inflation could be an issue if the minimum wage were to be raised year aer year. But the federal minimum wage is $7.25, and it hasn't increased since 2009. e Mass. minimum wage is $13.50 an hour, and will hit $15 an hour in January 2023. At the current rate, a person working 40 hours per week at the state minimum wage for 52 weeks in a row would make $28,080 annually, before taxes. at will increase to $31,200 per year when the wage hits $15 an hour in a little over one year. "More broadly, low-income workers provide a lot of services in the community," said Smith, of WPI. "So pick your industry, you oen have Building Business. Building Excellence. Site Selection | Design | Engineering | General Contracting | Project Management 413.536.0021 | www.abuilders.com ASSOCIATED BUILDERS, INC. COMMERCIAL | INDUSTRIAL | INSTITUTIONAL | WAREHOUSING Animal Eye Care Clinic Northampton Volkswagen Berkshire Facial Surgery From Design to Grand Opening some people providing labor in that industry, and if they're just not making enough to enjoy decent lives, then the work they're able to provide will suffer." And in the long term, Smith said, a person falling into poverty is a bad economic outcome, and if they have children, will probably have a negative impact on their health and economic outcomes, as well. "is is a generational thing that does have long-term consequences," Smith said. Employers may be nervous to raise their wages, both Baumann and Gray said, because of long- and short-term consequences. ere's a risk they may lock themselves into paying higher wages when it's possible the economy may ease back, at its own pace, to previous norms, leaving employers either stuck paying higher wages than they'd prefer or deciding whether to prompt worker fury over decreasing rates. Regardless of how it plays out, Gray said the labor shortage among low-wage workers will level out in some fashion. A year from now, he said, he doubts we'll be having this conversation. W Robert Baumann, economics professor, College of the Holy Cross

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