Today’s entry: I have a question about your research on the $15/Hr minimum wage issue. In my career, I have heard that union contracts are also tied to the minimum wage. If the minimum wage goes up, then their wages are automatically increased. I am not sure of this link, however, I believe it is something that you would be able to look into with regards to the $15/Hr minimum wage.
Bottom Line: There’s no hard answer to your question but the premise you’ve discussed is correct. When it comes to union contracts, we don’t know what we don’t know. The only union contracts which can be evaluated are those which are voluntarily shared and commonly that type of disclosure occurs once it’s expired. For this reason, it’s hard to know in real-time what the specific impact is to most union workers, however, we do know from what has been made available previously. Most union contracts do include “kickers” tied to the minimum wage. The terms of those kickers vary but the bottom line is that far more often than not, a financial incentive exists for them.
Historically about 90% of union contracts have language tied to changes in minimum wage policies despite union contracts necessarily paying above minimum wage. The median union wage entering 2021 was $32.68. Examples of kickers in union contracts include:
- Whenever the federal legal minimum wage is increased, minimum wage [in the agreement] shall be increased so that each will be at least fifteen (15%) percent higher than such legal minimum wage.
- In the event, the State or Federal minimum wage increases during the term of this Agreement to a rate greater than eight dollars ($8.00), each rate will be at least twenty cents ($0.20) above the minimum wage and each rate will be at least ten cents ($0.10) higher than the previous rate in the progression schedule.
- Upon the increase of a federal or state minimum wage, all wages would be at least 25 cents higher than the new minimum wage.
- The minimum hourly wage rates shall exceed any statutory applicable minimum wage rate by fifty cents.
These details also help explain why unions have actively campaigned for specific targets like $15 per hour. Due to existing wages for employees far exceeding the federal minimum wage and most state minimum wages, there wouldn’t be much if any benefit if the minimum wage were raised to $10 or even $14 per hour. The “fight for $15” was a specific target in Florida and federally because it’s where the real benefit to entry-level union employees would come into play with many of the kickers, especially in typically lower-paying careers like the service sector and hospitality positions. That’s why unions have spent over $100 million over the past decade pushing for minimum wage increases.
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