Floridians earning minimum wage will be getting an extra dollar an hour starting this weekend.
The state’s minimum wage increases to $12 an hour on Saturday, September 30.
Anca Voicu is a Professor of economics and head of Rollins College’s Women in Finance Program.
She tells WMFE's Talia Blake that even with the increase, minimum wage is not matching the rate of inflation.
Listen to the full conversation in the player above.
Anca Voicu: The rate of inflation has been stubbornly high, particularly in the state of Florida. I believe we are currently a hot spot for inflation and we have been so for a while. This is due to the fact that there has been an increasing influx of population into the state of Florida right after the pandemic, and they keep coming, which increases the demand for real estate and therefore the price for real estate. Now, unfortunately, the supply of houses in the state of Florida is not keeping up with the demand. So there is a disequilibrium, an imbalance, between demand and supply, which leads to an increase in prices. So high demand, less supply. So the answer to the question is really, no, it doesn't.
Talia Blake: Right, and that housing issue is something that's very unique for Florida and why our inflation remains so high above the rest of the country. So with that said, will hourly workers actually feel that increase given the current state of inflation, high housing costsand food prices?
Anca Voicu: It will certainly help. The increase in the minimum wage will help them, but given that inflation is still high, we are at about 5% and 7% in metropolitan areas as compared to 3% overall at the level of the United States. If in the state of Florida inflation keeps staying stubbornly high, the real purchasing power of the population is going to go down and this is going to particularly affect minimum wage earners.
Talia Blake: Obviously, an increase in minimum wage is welcome among a lot of people, but is there a cost to raising the minimum wage here in Florida?
Anca Voicu: Absolutely, there's a cost to raising minimum wage in Florida. When minimum wage is increased, that is going to make businesses more cautious in hiring workers because of the increased prices of labor. This increased cost of labor is going to be passed on to consumers and it will result in higher prices, which will further increase inflation.
Talia Blake: So I know you said that this could have some businesses hesitant when it comes to hiring because of the increase in minimum wage, but how else might this affect businesses in our region?
Anca Voicu: This might result in a reduction in hiring. There could be an adjustment period to this new minimum wages. Businesses will need time to adapt to the new wage requirements, and this might lead to temporary disruptions and a lot of uncertainty for workers. There will be job displacement, that's a possibility, as businesses may reduce staff or automate certain tasks in order to reduce costs.
Talia Blake: We were talking about some of the costs to a raise in minimum wage given everything with inflation and high housing costs, but other than the obvious benefit of putting a little extra money in people's pockets, what is the benefit of the increase in minimum wage right now given that everything is still so expensive in Florida?
Anca Voicu: Well, higher incomes will lead to financial well-being and a better quality of life for the minimum wage earners. They can result in a poverty reduction because it can lift workers out of poverty and reduce their reliance on welfare programs. We might see an increase in consumers spending, although that's a bit debatable given the high inflation rate in the state of Florida and probably even higher inflation with the increase in minimum wages. But if this happens, then this is going to be certainly beneficial to local businesses and the economy as a whole. The higher labor force participation with a higher minimum wage would encourage more people to enter the labor force as it creates financial incentives.
Talia Blake: I know there's no 'one answer fixes it all,' but what needs to be done in regards to Florida's minimum wage? I know we previously talked about how high housing costs are uniquely affecting inflation here in Florida, but what needs to be done so that minimum wage is something that people can live off of?
Anca Voicu: Under the current economic circumstances where inflation is still stubbornly high in the state of Florida, there might be a need for policymakers to periodically increase the minimum wage. This will ensure that minimum wage workers can maintain a certain standard of living.
Talia Blake: When you say periodically increase, do you mean increase past what the current increases are to get us to $15 an hour? Are you talking past those current increases?
Anca Voicu: No, not necessarily. As you know, there's been a November 3, 2020 statewide referendumthat stipulated that Florida minimum wage will gradually increase to reach about $15 per hour in the year 2026. We are now at $11 per hour. We'll be at $12 on the 30th of September. So, I don't know exactly if that's going to change because there has been a change in a constitution amendment. So I'm not sure that that's gonna change. It really remains to be seen based on how inflation will be doing in the short and medium term in the state of Florida.
Talia Blake: This minimum wage increase, as you just said, originally came in 2020 and inflation was not nearly as high. Do we need to go back to the drawing board to figure out what Floridians need to be making as far as minimum wage so that way they can live with the current state of things?
Anca Voicu: We might need to do that because under the current circumstances, and as I said, if inflation remains stubbornly high in the state of Florida, Florida will certainly have a problem regarding minimum wage. I will say that the impact of minimum wage increase in Florida will depend on the specifics of the policy changes and the economic conditions at the time of change. Now, we know exactly what the economic conditions are for this increase that's due at the end of the month of September. But for the future, let's say for 2024 or for 2025, we are still uncertain about that. Also it will depend on the way businesses and workers adjust to the new wage levels. I will say that research on minimum wages is ongoing, and results can vary based on different factors.
