Minimum wage increase wins in four red states

Yesterday was a big day for supporters of raising the minimum wage, which is the position of the South Carolina Small Business Chamber of Commerce. As the headline in the Politico story below screams, red states voted for a minimum wage increase. Let’s see what we can do in Congress and South Carolina to help our small businesses grow by increasing consumer demand when minimum wage workers have more money to spend on Main Street.


November 5, 2014

Minimum wage increase wins in four red states


The passage of minimum wage ballot initiatives in three red-leaning states — Arkansas, Nebraska and South Dakota — and an expected victory in Alaska provided some rare good news to Democrats in desperate need of some. But as a wedge issue, the minimum wage proved a disappointment.

The minimum increases won’t improve prospects that Congress will pass President Barack Obama’s proposed federal increase to $10.10, up from the current $7.25. But if Congress, as expected, fails to act, these four state victories may help push the Democrats’s 2016 presidential nominee to call loudly for an increase, as Obama notably did not in 2012.

Even so, opposition to a minimum wage increase was not particularly damaging to Republican candidates this year in those races where it was most expected to have an impact. In governors races in Illinois and Wisconsin and Senate races in North Carolina and Kentucky, Republicans prevailed. Only in the Iowa Senate race did the Republican winner, Joni Ernst, arguably ride the issue to victory.

In Arkansas, a measure to raise the state minimum was projected to win by 30 percentage points; in Nebraska by 24; and in South Dakota by six. Illinois’ non-binding advisory referendum to raise the minimum wage also passed by 12 points.

Strong popular support for raising the minimum wage is nothing new. According to the National Conference of State Legislatures (NCSL), over the past decade most state ballot measures to raise the minimum wage have passed by more than 50 percent. New Jersey’s 2013 ballot initiative to raise the state minimum to $8.25 passed by more than 60 percent, despite opposition from Gov. Chris Christie (whose reelection margin also surpassed 60 percent). In 2006, state initiatives to raise the minimum wage passed by large majorities in Arizona (65.6 percent), Missouri (75.6 percent), Montana (74.2 percent), Nevada (68.4 percent), and Ohio (56.5 percent).

The biggest gainers from this year’s ballot initiatives on minimum wage are the more than 600,000 workers who will receive raises to $9.75 an hour by 2016 in Alaska; to $8.50 an hour by 2017 in Arkansas; to $9.00 an hour by 2016 in Nebraska; and to $8.50 an hour by 2015 in South Dakota.

But the minimum wage wins also provide some solace to Democrats in an election year that gave them little. Republican candidates, usually opposed to increases in the minimum wage, were pressured into shifting their positions in key races. Alaska Senate candidate Dan Sullivan, Arkansas Senate candidate Tom Cotton, Illinois gubernatorial candidate Bruce Rauner and Arkansas gubernatorial candidate Asa Hutchinson, all Republicans, ended up coming out in favor of state wage hikes.

Arun Ivatury, senior campaign strategist for the National Employment Law Project Action Fund, predicted that Republicans won’t help themselves in 2016 if they continue to oppose the federal increase. “They’re going to create enormous headwinds for themselves,” he said, “if they’re seen as the party that opposes the minimum wage.”

An argument frequently raised against increasing the minimum wage is that it lowers employment. But a string of economic studies over the past two decades saw little or no employment impact when minimums were raised at the federal or state level, leaving most economists reasonably confident that the four state increases won’t be notably detrimental in that regard.

Economists are less sanguine about an increase to $15 expected to pass tonight for San Francisco. As with a similar measure passed in June by Seattle’s city council, the increase will be phased in gradually; in San Francisco, it will rise in four increments, reaching $15 in July 2018. Even so, “I would be reluctant to go above $10,” says Harry Holzer, an economist at Georgetown. “At that level you do create incentives for employers either to move jobs or job growth to a lower jurisdiction or to automate more.”

The Congressional Budget Office predicts that raising the federal minimum wage to $10.10 would create about 500,000 job losses. Holzer says that’s a small price to pay, since raising the federal minimum would increase wages for 16 to 24 million people.

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