Last updated on 2015.06.24
My readers at South Dakota Magazine may not think minimum wage workers deserve any consideration, but fortunately, they are in the minority. Thanks to the good sense of 55% of South Dakota voters, minimum wage workers will get a raise on January 1, from $7.25 to $8.50 an hour.
But what about all the jobs ALEC says we're going to lose? South Dakota's going to end up a wreck like Minnesota, where they raised the minimum wage even more this summer, right?
On August 1, Minnesota hiked its minimum wage for small employers from $5.25 to $6.50 an hour and for large employers from $6.15 to $8.00. Those are hikes of 24% and 30%, respectively. South Dakota's upcoming increase is 17%.
Let's look at what has happened to employment in Minnesota since then, with some numbers from the whole past year for context:
| Month | Labor Force | Jobs | Unemployed | Unemployment rate |
| 2013-07 | 2,969,376 | 2,818,339 | 151,037 | 5.1 |
| 2013-08 | 2,968,353 | 2,819,609 | 148,744 | 5.0 |
| 2013-09 | 2,968,482 | 2,822,623 | 145,859 | 4.9 |
| 2013-10 | 2,970,349 | 2,826,633 | 143,716 | 4.8 |
| 2013-11 | 2,965,982 | 2,828,347 | 137,635 | 4.6 |
| 2013-12 | 2,971,572 | 2,834,248 | 137,324 | 4.6 |
| 2014-01 | 2,985,354 | 2,843,982 | 141,372 | 4.7 |
| 2014-02 | 2,995,127 | 2,850,755 | 144,372 | 4.8 |
| 2014-03 | 3,002,431 | 2,856,843 | 145,588 | 4.8 |
| 2014-04 | 3,001,998 | 2,860,415 | 141,583 | 4.7 |
| 2014-05 | 2,999,601 | 2,860,560 | 139,041 | 4.6 |
| 2014-06 | 2,995,361 | 2,859,447 | 135,914 | 4.5 |
| 2014-07 | 2,987,768 | 2,854,409 | 133,359 | 4.5 |
| 2014-08 | 2,981,147 | 2,852,956 | 128,191 | 4.3 |
| 2014-09 | 2,983,397 | 2,860,969 | 122,428 | 4.1 |
| 2014-10 | 2,988,155 | 2,871,566 | 116,589 | 3.9 |
| Source: Minnesota Department of Employment and Economic Development | ||||
Three months after imposing a higher relative increase in costs on minimum-wage employers than South Dakota's increase will, Minnesota has 17,157 more jobs. Unemployment ticked down two tenths of a percentage point in August, in September, and again in October.
The last three months continue a steady upward economic trend in Minnesota that has taken place under a strong regime of Democratonomics that the Republicans are acknowledging they probably aren't going to overturn with their new State House majority.
Minimum wage goes up; job growth hums along. Minimum wage decriers, cry away.
Those folks in MN are going to regret allowing the republicans control of even one house, they are already plotting on how to undo a lot of the good things going on there.
The toothpaste is out of the tube Tim on this, so those plotters can just go ahead and plot on how they are going to get those wages to go back down. In the meantime, if they bitch and moan too much, the voters can give them a gentle kick in the arse on their way out the door.
So Minnesota's minimum wage is even less than ours?
Cory, almost every job in the uffda state pays better than SD so your argument makes no sense.
Oh Mike I'll bet the same voices that predict doom in SD are predicting doom in Minnesota.
I reject that reality and substitute my own.
I only predict that Mr. H feels comfortable there in libbieland, and would encourage more of that tip jar ringing so he can buy season tickets to one of those fancy sports teams they have there, or at least a season ticket to the train that takes you to the fancy sports team places.
The percentage increases aren't accurate. The vast majority of jobs are covered by the federal minimum wage of $7.25. So in reality, the only thing that MN did was raise the wage for large employers by $0.75. Wages for small employers didn't change.
Oh dear Grudz, it is wonderful here in Libbieland. Better than Disneyland. Come visit!
(But not in the winter.)
Our Libbieland economy just keeps ticking up, month after month. MN Republicans in the state house are claiming they will not act like their Congressional counterparts, AKA-the Party of No. They say they plan to be cooperative. We shall see.
How many of the employed are "under employed?"
We had conferences in the Brainerd area at a resort about two years back. I anticated blue eyed blondes and was surprised to see imports from many southern states and foreign countries. It seems to me, though different she may be, the same we are.
Heck Les, we have that here in Wall and the Hills. The tourism industry imports immigrant workers in on temporary visas who will work cheap rather than pay living wages to South Dakotans...go figure.
South Dakota seems to take pride in being a cheap vacation spot, just wondering what the real cost of doing that is.
But then their marketing is all subsidized by the state and their guests...you know...they're brave free marketeers who think taxes are a dirty word.
The Circle B where Paul LaRouche (Brule) performs is Minnesotan operated with a transient(appears to me) secondary work force for a place to camp and lite wages.
Cool story dude...is that what you lived on? Lite wages? Was that enough to be a contributing member of the local economy?
Sibby,ain't it about time you tear Grudz a new one about coveting and envy?
This is a long overdue demand-side initiative in a state that has been drifting sideways because of its supply-side fixation. 77,000 South Dakotas, half of them directly, the other half consequentially, will immediately see a $200/month increase in their disposable incomes. That's $15 million/month surging through this tiny state's economy. As a dues-paying member of the South Dakota Retailers Association, which fought this thing, I say to my fellow retailers: Are you nuts? Bring 'em on!
"Dakotans"
http://economix.blogs.nytimes.com/2014/02/18/the-impact-of-a-minimum-wage-increase/
Those that espouse lowering the minimum wage or getting rid of it entirely plan to have the poverty rate skyrocket and have the gubmint take on more social welfare to give wingnuts more ammo to use in coming elections. Doesn't work any other way.
Ms Deb G-from my few visits to Montgomery,Minn as a GBX thirsty teen I'd like to add that your state bird needs some obedience and sensitivity training about not attacking visitors on vacation. : )
Mike B, my argument makes perfect sense. I'm saying here that Minnesota just imposed a higher increase in the cost of doing business on employers paying minimum wage than South Dakota will on January 1. That increase has not stopped Minnesota from adding jobs. Those who say a state loses jobs when it increases the minimum wage are thus wrong. What part of that argument does not make sense?
The lower minimum wage in Minnesota apparently does not change the fact that Minnesotans generally make better wages than South Dakotans. I can get $110–$120 a day subbing in the Twin Cities. What's the full day rate at Madison Central?
In other economic news, according to MN DEED's comparison of Minnesota and South Dakota, Minnesota has...
—10% higher GDP per capita,
—5% higher per capita personal income,
—2.8 percentage points higher home ownership,
—2 percentage points less poverty,
—half a percentage point higher labor force participation,
—33.5% of its workforce with college degrees (SD has 26.6%),
—40 times more patents (2009–2013),
—the highest Internet usage rate in the country (77.1% vs. 69.4% in SD, which is 17th in USA),
...plus all those Minnesotans on that lower minimum wage pay no sales tax on food or clothing and enjoy the benefits of better-funded parks, schools, and other public goods.
Now, Mike B, tell me again, what part of what I'm saying doesn't make sense?
Thank you, John, for recognizing how economic stimulus works. Governor Daugaard had better not take credit for it!
Are there stats for the following? All I want are the percentage differences:
- Percentage of high school graduates from South Dakota going to Minnesota colleges and percentage of high school graduates from Minnesota going to South Dakota colleges. (Within two years of graduating from high school.)
- Percentage of graduates of South Dakota colleges who move to Minnesota (we assume to seek careers) and percentage of graduates of Minnesota colleges who move to South Dakota. (Within one year of graduating with bachelor, master and doctoral degrees.)
- Percentage of adults, ages 25 to 35, who move from South Dakota to Minnesota and who move from Minnesota to South Dakota.
- Percentage of adults, ages 35 to 45, who move from South Dakota to Minnesota and who move from Minnesota to South Dakota.
And so on through retirement ages.
Despite its INCOME TAX, which people point to as poisonous to jobs development, Minnesota appears to be a big magnet that has consistently absorbed South Dakotans who want to step up in the world.
I remember the Bill Janklow/Rudy Perpich folderol which produced nothing of consequence except to help their respective political careers with useless showboating. I’m sick of the “we got it so good here” advertising which seems aimed at people who still live in South Dakota to brainwash them that their elected leaders are getting anything done.
But if South Dakota (elected leaders and ordinary citizens – you are not powerless) is truly serious about elevating its status and attractiveness to produce bigger economic opportunities, it’s going to have to do a lot more than portray itself as the old home state that you don’t want to leave behind.
That strategy (it avoids strategic investments and the capacity to make investments for the common good, instead of the chosen few like Mike Rounds’ and Joop Bollen’s racket) is a failed strategy. People have found it too easy to say goodbye to mediocrity.
Most states can pay their can pay their teachers well and have much lower property taxes because they have a state income and corporate tax.
"my argument makes perfect sense"
So how many people will be lifted out of poverty at $8.50 per hour?
Steve - we agree, the minimum wage ought to be increased FAR beyond the paltry $8.50! The goal ought to be the elimination of poverty for ALL workers.
All workers are not equal, 0.
How many do you think will be lifted out of poverty with the wage increase?
Les, I absolutely agree. Educational and skill requirements, experience, all those ought to factor into a wage. I do hold that no matter the ranges of the more lofty salaries, anyone who works a full-time job ought to be out of poverty. We can always pick at the outliers, the what-if's, and the special circumstances, but as a general rule, do you believe that a person who is fully employed ought to have rising out of poverty as a reasonable expectation for their compensation?
96 tears-http://www.ohe.state.mn.us/fc/2109/pg.cfm
8% of Minn class of 2012 left for SD.
Rounds and Daugaard were staunchly against the minimum wage increase and it just sadly shows how truly out of touch they really are. They should spend a day with the people that clean their offices, take care of the elderly, teach high energy kids in a classroom. They really have no idea. There is a good book out there called Nickel and Dimed that came out a few years ago where the author went to work on the minimum wage and couldn't make it after budgeting and living very meagerly. There was just no money at the end of the month.
Fork lift Union jobs pay over $24 with experience in MN. Now that's a wage a boy could live on.
Sure, there are plenty of your Wal Mart and South Dakota like wages in MN, but if you have experience with things like fork lifts, welding, computer repair and no felonies or DWIs on you and a good work ethic, a boy can find a living wage job here.
First time I ever saw the boys wearing Teamster Jackets was when I came over to the Libbie State, union caps and stickers also, made me smile!
So what minimum wage would lift all workers out of poverty, including the ability to pay 100% of their healthcare costs?
The GOP wants to allow "market forces" set what wages are; they want to keep government out of the process (of setting minimum wages). But at the same time, the same party seeks to use government to keep unions out of the process as well. Market forces have to be seen as both the forces of labor and management - any true belief in "market forces" has to allow both and hinder neither. Otherwise you get what we have seen, a conspiracy to create low wages for profit maximization with no ability for labor to organize opposition.
So what maximum wage would lift all workers out of poverty, including the ability to pay 100% of their healthcare costs?
Steve, that is a fair question, and one that has a crucial assumption: that health care is not provided as a benefit to employment. One of the things the organized labor movement advanced for workers was not only compensation in wages but fringe benefits - items like health care and retirement plans. Because of cost increases and mis-management, most of those benefits have fallen by the wayside as companies sacrificed those benefits for profits.
I suppose it comes down to if one sees health care as a right or a luxury. Really, don't you think that was the core of the ACA - that government seeing health care as essential had to pick up the slack left by employers? I know you are not a fan of the ACA or big government, but when corporate interests abandon protections, what then? Do we just chalk it up to social Darwinism and leet the weak fall between the cracks?
Larry, yours and Sibson's question cannot be figured on a set dollar amount at present. The reason for that is because the ugly elephant in the room is health insurance costs. As you know, those costs are figured according to age, so a younger worker would have a smaller amount than that of an older worker. So if you figured the cost of the older worker into the equation as a maximum wage, then the younger one would have a huge surplus. This could make sense as the younger one could have family's to take care of. $8.50 is clearly not enough, but it is a start in the right direction.
A statewide boycott of Sanford works for me.
Sibson,
Did you vote against IM18 because a minimum wage of $8.50 per hour won't lift anyone out of poverty?
"And please, don't dismiss income inequality. The folks at the top accruing all the corporate profits while workers' wages stagnate are neither singularly responsible for gains in productivity nor uniquely moral and deserving of the rewards of a Prosperity-Gospel Jesus."
http://southdakotamagazine.com/defending-minimum-wage-initiative
MFI - You have that wrong. Here's the breakout:
- Minnesota's college-bound high school grads - 70 percent stayed in Minnesota and 30 percent went to other states.
- Of the 30 percent who went to other states, 8 percent of that group went to South Dakota.
"$8.50 is clearly not enough, but it is a start in the right direction."
It is now to be adjusted based on the rate of inflation. So if it is not enough now, it will never be enough.
What amount would be enough?
Cory, you of all people, being the debater you are, should know that "correlation does not imply causation". Three months is an incredibly short time frame to judge the efficacy of a minimum wage increase especially in light of employment numbers that have been known to shift under closer analysis. From your StarTribune link:
"The state’s monthly job report is an estimate that at times can deviate widely from more refined results the federal government releases several months later. That was clear in September when data released from the Quarterly Census of Employment and Wages, widely considered the gold standard for job numbers, showed that from March 2013 to March 2014, the state added less than half as many jobs as the monthly reports showed."
You can't suspend the Law of Supply and Demand. Placing a floor on the price of a commodity (labor) will only create less of a demand (jobs) and a surplus of supply (unemployed workers). Wage controls, either minimum or capping, have never worked. They didn't work for the Roman Emperor Diocletian, they didn't work for FDR, and they didn't work for Richard Nixon.
http://www.marketwatch.com/story/groups-ask-obama-to-boost-contractor-minimum-wage-to-15-2014-11-11
Santa Fe was just named the best small city in the US.
"Santa Fe’s 2003 citywide minimum wage increase was one of the first municipal laws to mandate a raise and was unsuccessfully challenged by the state legislature after passage."
http://nextcity.org/daily/entry/philadelphia-raise-minimum-wage-15-hour
Don Coyote, On the other hand, perhaps paying labor more will create increased demand for whatever products or services are available, so that the "law of supply and demand" works in another way. According to some analysts, this is exactly what Henry Ford successfully did:
"Companies had an interest in ensuring that their employees could afford the products they produced. Put another way, employers had a role to play in boosting consumption. While paying higher wages than you absolutely needed to might lower profits temporarily, it would lead to a more sustainable business and economy over time. If the motorcar was going to be a mass-produced product for typical Americans, not a plaything for the rich, Ford would strive to pay his workers enough so they could afford the products they worked on all day."
http://www.thedailybeast.com/articles/2014/01/06/henry-ford-understood-that-raising-wages-would-bring-him-more-profit.html
Honestly, I really don't blame people for selling illegal drugs to make a living when our political leaders believe in keeping wages stagnant and are against a pennies increase in a slave-like minimum wage. Worker oppression is really what it is, and after living in MN, I believe unions are needed more than ever. Workers need a voice.
@ John Tsitrian: Your demand-side math is seriously lacking in some critical inputs. Here are a few:
1) You seem to be assuming that the 77,000 SD workers are all working 40 hours a week, when it's known that many min wage jobs are only part time.
2) You seem to forget that not only will some jobs be lost due to the increase in wages (the actual numbers are in dispute no doubt) but also that hours will be cut and other pay raises withheld within the companies.
3) One fact that seems to be lost among the min wage increase zealots is that all these "new" dollars being injected into the economy with unrestrained passion will not be spent on new purchases. In fact, much of it will be spent on paying off past loans. Education loans, car loans and payday loans. None of that can be considered new spending as the new spending occurred when the loan was originally spent.
4) The Chicago Federal reserve calculated in 2013 that a $1.75 increase in the national minimum wage only created a near term increase in the national GDP of only .3% and that there would be no long term effect.
5) You forget to factor in the increase in the prices of goods and services due to the passing along of the increase of wages which will cause non-min wage earners to curtail spending, which will depress the increase of GDP. See point 4.
In the end there is no free lunch as is promised by "Democratonomics" as nothing new is being created and wich is so typical of Keynesian thought, since in reality we are only moving money from one pocket to another on the same pair of pants.
coyote: go tell to it emperor daugaard and his army of public service drones.
Divining why anyone lives in Pierre for any amount of money makes finding Nemo child's play.
@bearcreekbat: The problem with the Henry Ford story as recounted by the Daily Beast link is that it trades a lot with the economically fallacious story of paying his workers enough so that they could afford the products they were making. However even a cursory examination of Ford's finances show that this was an impossiblity. In fact if every worker of Ford's bought a Ford car he would only recoup $7M of the $9M he paid in extra wages. And that would be for only 1 year. Ford raised the wages of his workers so as to get the best workers in a crowded market and thereby reduce turnover and training expenses, improving his bottom line. By forcing all companies to raise their wages for the same worker, the employers gain no advantage. Even the Liberal's Liberal, Paul Krugman realized that. From a Forbes article:
"Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage “compared with other companies” — and that is precisely what mandating an increase in the minimum wage for all companies cannot accomplish."
http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/
http://indiancountrytodaymedianetwork.com/2013/10/06/breaking-cycle-poverty-and-crime-indian-country-151430
Don Coyote, I did see the Forbes article and I am aware of the argument that Ford's primary motivation for the large pay raise was to stabilize his work force. That is why I prefaced my earlier comment with the "some analysts" language.
Another factor to consider, however, is not only the ability of Ford employees to buy cars, but how the fact that, under the economic multiplier effect, these workers would also spend their wage increases on other goods and services in their communities and help build a middle class market that could then also afford Ford's cars.
An NPR story describes this as a welcome side effect:
"It's widely believed that Henry Ford also upped wages to expand his market — paying employees enough to buy the cars they made. While that wasn't Ford's main motivation, it was a welcome byproduct, and a game changer, says University of California, Berkeley, labor economist Harley Shaiken.
"What that gave us was an industrial middle class, and an economy that was driven by consumer demand," Shaiken says."
http://www.npr.org/2014/01/27/267145552/the-middle-class-took-off-100-years-ago-thanks-to-henry-ford
Raising the minimum wage today should have the same type of effect. The higher wages will be spent in the communities where the employees live and the businesses and services in that same community will enjoy an increased demand for their products, primarily through the multiplier effect of the repeated spending of the wage increase, which in turn raises the income of all the folks who end up handling the new funds.
Mike fi, you were attacked by a loon?! Wow. That's really loony! Hahahahahahahaha!
Larry, Santa Fe is one of my very favorite places in the USA. (Haven't been to Hawaii or Alaska yet though.)