There is a correlation between wages and economic activity — mainly that people shop only in the measure they can afford, and the less they have, they less they shop. And the less they shop, the tougher it is for the economy to grain traction.
It should be a no-brainer that raising wages will make the economy gain traction. Yet the same businesses that wish for more demand are reluctant to raise wages. They all expect that someone else will be first — or that the economy will gain traction without the need for them to raise wages.
It is not going to happen. Waiting for someone else to go first is a way to be paralyzed. That’s why raising the minimum wage is crucial. Because it means that everyone will be doing it at the same time and other wages will rise too. And that means a lot more people willing to spend, and a lot more sales, and more vigorous economic activity.
And more cheerful economic reports.
Adriana I. Pena