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Minimum Wage Increase Will Help Workers Feed Families

That Sioux Falls paper gets on the stick and discusses the AFL-CIO, Teamsters, and Democrats' plan to place on the 2014 ballot an initiative to raise South Dakota's minimum wage. Reporter Kelly Thurman presents some useful numbers for framing the debate:

Less than 5 percent of hourly workers in South Dakota earn minimum wage or lower, according to the Bureau of Labor Statistics. Food-service positions are among the lowest-paying jobs. In South Dakota, for instance, the average wage for a dishwasher is $8.56 an hour. It’s lower in rural areas, below the $8.50 threshold in central ($8.34) and western ($8.30) South Dakota, excluding the Rapid City metro area [Kelly Thurman, "Flip-Side of State Business-Friendly Climate: Low Wages," that Sioux Falls paper, 2013.07.21].

A minimum-wage hike won't boost a majority of South Dakotans' wages. But it will target some help toward the working poor who are busting their chops but still going hungry in South Dakota. An extra $50 a week will buy a couple more bags of groceries for the kids. With South Dakota's growing wealth, we can afford that.

The South Dakota Retailers Association is already lining up to cordon off every scrap of its profits. Their exec Shawn Lyons peddles the usual free-market magic:

It’s better to let supply and demand regulate the economy, he said. Already in South Dakota, Lyons said, most employers are paying more than the minimum because of the competitive marketplace for workers.

“All sectors are recognizing the fact that they have to be competitive in what they pay. That’s letting the market take care of itself, and that’s what we’ve said all along,” Lyons said. “We want to try to create jobs and we would view this as just the opposite” [Thurman, 2013.07.21].

Come on, Shawn: you know that if we let the market take care of itself, Northern Beef Packers, Bel Brands, and Eagle Creek Software wouldn't be doing business in South Dakota, right? Big business is fine with the government interfering in the free market to benefit capital; why not support government action in the marketplace on behalf of labor? Shouldn't we couple policies to create jobs with policies to ensure jobs pay enough to feed families?

Augustana econ prof Reynold Nesiba says the retailers' job-creation line doesn't apply to debating South Dakota's minimum wage:

...The focus in the discussion should be broader than job creation, he said.

“The real problem in South Dakota is never employment. The real problem is finding a wage that you can live on,” Nesiba said [Thurman, 2013.07.21].

Darn good point, Dr. Nesiba. South Dakota typically has power unemployment than the rest of the country. We struggle to find workers for our jobs. We don't need to create more jobs as much as we need to create more workers. Offer better wages, and you'll see more workers bringing their talent to South Dakota to compete for jobs.


  1. interested party 2013.07.21

    Customer service in SD is atrocious: the most devastating contraindication of full employment. Curious that most employers complain that they can't find help or maybe they just don't care.

  2. David Newquist 2013.07.21

    State officials and the press love to circulate those alleged studies that show what a great place South Dakota is for business, but the most suppressed, hard-fact statistic shows that South Dakota leads the nation in the number of people who hold multiple jobs []. The number is 10.3 percent.

    Exploiting that "work ethic" for low pay and no benefits is an implied, sometimes openly stated, factor in that business climate. I have watched many young people work multiple jobs so that they could save enough money to move.

  3. charlie5150 2013.07.21

    Having been in various food service positions including management, I cannot recall any negatives of wage adjustment , other than the annoying complaints of persons who have never had to work for minimum wage. Having experienced a couple of increases during my management time, it was a good excuse to raise prices, providing a scapegoat customers who liked to whine about a 10 cent increase in their iced tea. You know darn well other "costs" were also factored into the raising of prices. I cannot recall a single business in my area going out of business or cutting employees due to a minimum wage increase, it's really just a fact of life that expenses go up, not down (why this is so controversial when it applies to human labor is odd).

    If electic rates, gas prices, cable prices, groceries, etc all undergo constant upward price adjustments, how can we justify a stagnent minimum wage? The "trickle-up" factor with a minumim wage hike is vital towards economic growth. Why some would rather their taxes go to "evil entitlement programs) rather than pay an extra nickel for their burger has always eluded me.

  4. Reynold Nesiba 2013.07.21

    The retired economist and others can chant supply and demand all they want. However, when one looks at the actual empirical evidence, there is remarkably little support for the idea that a higher minimum wage causes any statistically significant job loss. John Schmitt, linked below, does an excellent job of reviewing the literature on the minimum wage and communicating in a straight-forward way the main result. The title communicates the main point, "Why Does the Minimum Wage have no Discernible Effect on Employment? Dennis Johnson, cited in the Thurman article, misses the point. Worker productivity has continually risen. Shouldn't the workers be receiving the fruits of these productivity gains? Perhaps in the labor market firms hold the upper hand and use their market power to hold down wages to increase their profits? If so, supply and demand--which requires an absence of market power to "regulate the economy" in a way that is socially beneficial--will be insufficient to raise wages consistent with the increase in worker productivity. We need some other mechanism to counter the market power of the hiring firms. An increase in the minimum wage does just that.

    Since this is a summer morning and many South Dakotans are at church, let me close by referring to one of my favorite hymns, For the Fruit of All Creation. We can leave out all of the econ-speak and get to the main point. Paying people less than $8.50 is simply unjust.

    In the just reward of labor,
    God's will is done.
    In the help we give our neighbor,
    God's will is done.
    In our worldwide task of caring
    for the hungry and despairing,
    in the harvests we are sharing,
    God's will is done.

  5. Michael Black 2013.07.21

    If you raise the minimum wage up two or three dollars, does not mean that everyone's hourly salary will go up. Many that are making around $10 right now will find themselves making the same as someone with no experience and that is going to cause grief.

  6. MJL 2013.07.21

    Michael, that has been proven wrong over and over. There are a lot of examples of increasing wages in places like Oregon and Vermont and there simply was no proof. There is some evidence that those that get the higher wages due to the increase actually work harder. I think most businesses would want that.

  7. Michael Black 2013.07.21

    If you are going to cite proven examples, then post links.

  8. caheidelberger Post author | 2013.07.21

    Michael, how many times has the United States raised the minimum wage? How many of those times did American workplaces erupt into the grief you allege will happen and drag the economy down?

  9. Robin Page 2013.07.21

    Unfortunately, for the thousands of women who are the sole provider for themselves and their children, $8.50 an hour will still be insufficient to rent an apartment, pay utilities and buy food and insurance. I am disappointed in the Dems for even proposing this low wage! We should get on board with the national Democratic party and leadership and support the $10 an hr. wage. If we raise wages, we will see a decrease in the need for food stamps and other subsidy programs. We would also give every worker the dignity that their days work is respected and appreciated just like those at the top of the company.

  10. Owen Reitzel 2013.07.21

    Your right Robin but I'm afraid in this state $10 will not fly. Hell $8.50 might not fly.
    Unfortunately a lot of people in this state think that people on food stamps and welfare are lazy bums and on drugs and who don't want to work.

  11. MJL 2013.07.21

    You can look at all of the examples I posted on the blog:

    You can also look to

    In the majority of cases, we found no evidence that an increase in the minimum wage has an effect on employment – negative or positive. As such, policymakers can feel free to increase the minimum wage (potentially as a form of economic stimulus), while remaining reasonably sure that its overall negative employment effects are likely to be negligible and concentrated on young workers. Perhaps such an increase in the minimum wage should be coupled with policy directed against youth unemployment, or in favor of greater opportunities in higher education. In that case, policymakers may also wish to take note of the differences between the effects on youth employment in Illinois and Vermont in our study.

    On Jan. 1, 2012, minimum-wage workers in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont, and Washington will all see an increase in their paychecks.

    Across these eight states, an estimated 1,045,000 workers will be “directly affected.” These are workers whose current wages are between the existing state minimum wage and the new Jan. 1 minimum wage. In addition, another 394,000 workers will be “indirectly affected” by the increase. These indirectly-affected workers are those whose current wages are just above the new Jan. 1 minimum, and are likely to also see a wage increase as employers adjust their overall pay structures to reflect the new minimum (the “spillover” effect).

    In a recent review of the literature, Professor Richard Freeman of Harvard, a widely respected labor economist, wrote: "At the level of the minimum wage in the late 1980s, moderate legislated increases did not reduce employment and were, if anything, associated with higher employment in some locales."
    In discussing the minimum wage, Robert M. Solow, a Nobel laureate in economics at the Massachusetts Institute of Technology, recently told the New York Times, "The main thing about (minimum wage) research is that the evidence of job loss is weak. And the fact that the evidence is weak suggests that the impact on jobs is small."

  12. Douglas Wiken 2013.07.21

    I can remember riding an old dump hayrake for a long afternoon on a rough hay field in the hot sun. The rake was converted from horse use to tractor use. The steel wheels weren't made for comfort of the rider.

    My dear old dad decided that $1.50 for the afternoon would be about the right pay from our neighbor.

    Minimum wage did not apply to family farm members.

    I have since then never had much affection for the idea that low wages are a good thing.

  13. Roger Elgersma 2013.07.21

    If all were without sin and the world was a perfectly fair place we would need no rules. But reality is that not all workers have a good work ethic and not all employers pay fair. It is easier to fire someone than it is to get another job. In small rural areas there are a lot of job options.
    Those who say that supply and demand have virtually eliminated the use of minimum wage mearly says that it is to low to serve its need of keeping the lowest paying jobs at a fair pay.

  14. MC 2013.07.23

    I don't specifically oppose or support increasing the minimum wage. What I oppose is government intrusion into business affairs. This issue isn't black and white there is plenty of gray areas.

    In response to Robin's comment, she is correct, $8.50 / hour is no where near a living wage. However nowhere is it written that a person is guaranteed a living wage, or even a job. For most businesses the largest single expense is human resources. As other costs continue to go up and profit margins continue to narrow employers try to get the best deal for their dollar.

    As an employer, I want to get the best performance I can out of my hired workers. I want their mind on the job at hand, and not off worrying about their children or sick cat. I may offer them time away to take care what needs to be done. I might even offer pet health insurance. In the end If I pay X amount for a job to be done, I expect X to be done. Not everything I pay goes into the paycheck, If I am offering any benefits, that must be paid for, I expect the employee just as hard for those benefits as well as a paycheck.

    The government comes in and says the health insurance needs to cover A, B and C. This will increase my costs. Can I expect an increase in productivity for this extra cost?

    Employers are asked to pay or provide more and more benefits, without any expectation of any benefit from current or future employees. They are costs the employer must eat, just to an employee on the payroll.

    The social services system is a trap! Once you're dependent on it, it is very hard to get away from it. It almost as bad as some drugs. Social Services was supposed to be short (a couple of years) help for some who has fallen on hard times. They get more benefits for not working than if they worked a minimum wage job for 40 hours a week. If they make above a certain level, they get their benefits cut. Too often, what they made is no where the level of what their benefits were that were cut. There is little incentive for people to start and stay working.

  15. caheidelberger Post author | 2013.07.23

    Sure, MC, I'm not guaranteed a job. You're not under obligation to give me a job. But I'm also not under any obligation to give you eight or ten or twelve of the hours of my day. Where do we meet in the middle? If I give you eight hours a day of honest work, how much do you owe me? Do I deserve at least some minimum living wage?

  16. MC 2013.07.23

    Do you deserve a living wage? I don't know, do you?

    Wages are not based on the need, rather on the value of the services rendered. Does someone waving a sign on a street corner help a business more than someone unloading trucks or answering the phones? It depends on the business, and the usefulness of the sign waver. Someone waving a sign for a fast food burgers would better then waving a sign for an attorney's office, thus should be paid more.

    As far who should be paid for how much for how time is subject to negotiations BEFORE job or work is started.

  17. caheidelberger Post author | 2013.07.23

    I agree that some labor produces more value than other labor. But if a man gives you his full-time effort, forty hours a week, for whatever work you assign to him—sweeping, cooking... heck, just standing next to you with an umbrella—is there some minimum compensation he deserves for sacrificing a third of his day to your desires? How much of his life should a man have to sacrifice to make a living?

  18. Bill Fleming 2013.07.23

    Next to love and life, the greatest thing one person can give to another is his labor. Hence, no one can really afford to hire someone else (if the price were truly and fairly valued from the laborer's perspective).

    MC, any time you spend not fishing (or whatever it is you truly love to do) in order to do something for another (involuntarily) should be extremely well compensated by the beneficiary of your efforts (typically your employer.)

    Otherwise, you, my friend, are basically agreeing to allow yourself to be exploited.

  19. interested party 2013.07.23

    Where the hell have you been, Fleming? Headed your way: want to do lunch Thursday?

  20. Bill Fleming 2013.07.23

    We could. You like Mexican? (Is the Pope Catholic?)

  21. interested party 2013.07.23

    Name the place and time: my treat.

  22. Bill Fleming 2013.07.23

    Call when you get to town. (Sorry Cory. We're off topic now, but hey, wanna join us?)

  23. MC 2013.07.23

    It not about how long they work, it is about how much they got done.
    Let’s go to our sign wavers. We have on guy try to get people in our business from 10:00PM to 2:00AM he waved only nine people in. (the tenth was lost, he was just looking for Burger Time) We have second guy working from 4:00PM to 8:00PM he waves in 150 customers.
    Should they be paid the same? They both only worked four hours, doing the same thing. Should the one who brought in more customers be paid more? Or the one working later hours plus he knows where Burger Time is at?
    There are those who are not paid an hour wage, but piece work. A freight relocation specialist (truck driver) may be paid per mile or ton mile. Or someone makes pallets for a dollar a pallet. Or farmers who work year round only to be paid when he delivers the crop. You might argue they are small business people, and are taking a chance, couldn’t the same argument be made for any worker. After all work is work.

  24. caheidelberger Post author | 2013.07.24

    Bill! Nice to hear from you, even if MC seems impervious to your point about the value of a man's time. I'd love to join you, but I'm back in the Flatlands!

  25. caheidelberger Post author | 2013.07.24

    So should we do away with hourly wages entirely, have everyone work on tips and commission? Take a look at Bill Fleming's 15:05 comment: does my surrender of my time and labor to you really have no value in itself?

  26. MC 2013.07.24

    Cory, we really are not disagreeing on this issue.

    Of course time is priceless, for once lost, it can never be recovered. What an hour of my time is worth is between my employer and myself.

    Do away with hourly wages? in some businesses that might not be such a bad idea, in others it would be disasterous.

    What I am not in favor of is the someone telling me I have to pay someone $8.50 + benefits + taxes for job that should only cost $5.00 per hour flat rate, because they need it, not because they earned it.

  27. interested party 2013.07.24

    Diane Rehm is talking about the Freelancers' Union on WAMU.

  28. caheidelberger Post author | 2013.07.25

    MC, we agree a man's time (and his liberty to use that time), but I think you're dodging our fundamental moral disagreement. Let me try the question this way:

    Suppose $5 an hour at a full-time job is not enough for a man to feed his family. Suppose that work really adds only $5 per hour to the product or service you offer for sale (I'm speaking in abstractions here, and even the dollar figure is arbitrary, but let's see if we can roll with it).

    (1) Is it immoral for you to hire a man to do that work at that wage?

    (2) Is it immoral for a man to take that job at that wage?

    (3) Do you and that man have an obligation to figure out a more efficient way to do that work, so that man can add the same value and earn the same pay in less time?

    (4) Should that work be done only by machines?

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