Biden on the worker shortage: Pay $15 an hour or 'be in a bind for a little while'

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President Biden
President Biden speaking to reporters on July 8. Alex Wong/Getty Images
  • In a CNN Town Hall, President Joe Biden was asked about the labor shortage plaguing restaurants.

  • Biden said restaurants and tourism will be in a "bind" for a while, but higher wages could help.

  • Biden backs a $15 minimum wage, but the measure doesn't have full party support.

  • See more stories on Insider's business page.

In a CNN Town Hall, President Joe Biden weighed in on the labor squeeze hitting restaurants and other low-wage sectors.

John Lanni, an Ohio restaurant-group owner, said his industry continued to struggle with finding workers. "How do you and the Biden administration plan to incentivize those that haven't returned to work yet? Hiring is our top priority right now," he asked the president.

In response, Biden said the restaurant and tourism businesses were going to be in "a bind for a little while." Biden said a lot of workers who had been working service jobs were now taking advantage of new opportunities and higher wages as job openings surged.

Biden also suggested that something else could be contributing to shortages: low wages.

Some of those jobs might be offering "$7, $8 an hour, plus tips," he said, but workers could be making upwards of $15 an hour in other positions (he added that Lanni's workers could be making $15 or more). The federal minimum wage is still $7.25 an hour, and the tipped minimum wage is $2.13.

Read more: Compare more than 250,000 salaries from top companies like Amazon, Google and JPMorgan with Insider's Salary Database

But Biden's remarks do speak to one of the drivers of the labor squeeze: Workers simply want to be paid more.

In June, leisure and hospitality wages surged even higher, a 7.1% increase from the year prior. But even those wages are not much higher than pre-pandemic levels, tweeted Heidi Shierholz, a former Obama administration economist and the director of policy at the Economic Policy Institute. Those wages still remain lower than in other industries.

As Insider previously reported, the so-called Great Resignation is driven in part by workers switching into other jobs or recognizing a wider net of opportunity. They might not even be switching into much "better" jobs, but simply ones with more consistent hours and wages.

Shierholz previously told Insider that one solution for addressing the labor shortage could be simply raising the minimum wage, a policy proposal that the president backs, but that some Democrats have shot down. Indeed, The Washington Post's Eli Rosenberg reported that businesses that boosted wages to $15 an hour were able to lure in workers and keep morale up - but turnover down.

"And, lastly, if you make less than 15 bucks an hour working 40 hours a week, you're living below the poverty level," Biden said in the town hall. "You're living below the poverty level."

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