Augustana economics professor Reynold Nesiba responds to the Democrats' apparently successful petition drive with these numbers on how many South Dakotans will benefit if South Dakotans vote to raise the minimum wage to $8.50 an hour:
Based on EPI’s analysis, South Dakota has 357,700 hourly-wage-workers. There would be 34,163 who would directly benefit from this initiative since they currently earn less than the minimum wage. Another 28,374 earn between $8.50 and $9.75 an hour. They too would also likely receive raises in the wake of this measure’s implementation. That’s a total of 62,538 workers—17.48% of our labor force that will benefit. The total annual wage increase will be over $46 million annually! Those are wages that will be spent in our local communities across the state increasing sales, profits, and sales tax revenue for state and local government.
Who are the workers that will benefit from this measure? Of those earning more, 55.5% are women, 78.3% are 20 years old or older, 86.3% are white, 63.9% are unmarried without kids, 11.6% are married parents, 8.9% are single parents, and 15.7% are married without kids. Fully 45.4% of these workers are employed full-time. Note: the majority are not teenagers [Dr. Reynold Nesiba, comment to Shawn Neisteadt, "Democrats Collect 25,000 Signatures on Minimum Wage Issue," KELOLand.com, 2013.11.04].
Increasing the minimum wage is about paying real South Dakotans for real work. A year from today, vote to pay workers what they and their families are worth.
The $46M figure is misleading. That assumes that every worker currently making less than the proposed new minimum wage would keep his or her job. An economics professor should know that is not going to happen. Some employers will cut their workforce, some will reduce hours, and others may close completely. Much of the increased labor cost will go into higher prices for the products the workers produce, which means the customer has less to spend elsewhere. And even if we assume that the business owner doesn't cut staff or hours and doesn't raise prices, then he or she will have lower profits, and therefore less money to put back into the economy on his or her own. The professor's insinuation that SD will see $46M of new money added to the economy is simply wrong.
The professor should also admit that there could be a net decrease to the SD economy because new employers will go elsewhere once the labor costs here jump up dramatically.
Cory, I have to take issue with your semantics. Classifying a wage of $8.50 an hour as paying "workers what they and their families are worth" undersells their value. $8.50 is still a low wage and really not representative of "worth" - especially if not accompanied by benefits. Productivity and value of most of the workers being affected by this change is far more than represented by their wage; just as the wage of their corporate CEO ($14,000,000.00 for McD's) is not representative of his "worth."
$8.50 is a step in the right direction.
David, maybe the Economics professor is right, and the scare tactics of the right are just that. There is an amount of work that needs to be done - that will not be accomplished with layoffs; business will choose to continue or increase production - that's the profit generator. Prices may go up, but now there are more people able to pay that price with that spanking new wage increase.
As for the owner having less, putting the money into the workers' hands has a far more positive effect on the economy as the worker will spend that money, while the owner will tend to save it.
You also ignore the potential for lowering a tax burden for all by reducing the welfare need for the workers on poverty wages. I would gladly pay more to go to wages to help raise people out of government assistance.
"...labor costs here jump dramatically." Dramatically? SD will remain on the bottom rung with other states who mistreat unskilled and low skilled labor like Alabama, Mississippi, Georgia, the Carolinas, Arkansas, etc.
Porous labor laws, minimal job security, poor worker safety, little or no benefits. It will require more than a small raise to bring SD into competition with more successful and prosperous states. Keeping wages on the bottom rung has not worked in the past and it won't work now. Oh, except to get the rich richer and the poor poorer.
South Dakotans can do better. The citizens of SD certainly deserve the opportunity to improve their lives.
Let me see if I get this right.
There have been recent major cuts to SNAP effective this month. Republicans are cheering because they think this will fix our economy.
Now Republicans are fighting tooth and nail to keep the minimum wage were it is. Their mantra seems to be "if you don't quit complaining about the wage I'm paying you I'll fire you, lay you off, or go out of business".
The Republicans want the working poor off welfare, food stamps and other entitlements yet do not want to pay them a livable wage to do.
Will someone please explain that to me, like I'm a four year old?
David that is a very tired line. It has been repeated every time the minimum wage has been increased and yet the economy and those very businesses grew. So chirp on, because progress will not wait for you to discover reality.
The economy and therefor the state and its residents will be better off for it.
Anyone voting Yes that makes above minimum wage is simply reducing their buying power and giving up their next raise in hopes of social justice. I won't support robbing the middle class to bring up the poor so the middle class goes away even faster.
No DB you will just vote against your own best interests. And by the way thanks for confirming your ignorance and prejudice.
Good one DB!
Let's see: The middle class is shrinking. The poor are getting poorer. The rich are the richest they've ever been and getting richer every day.
Well. I guess that makes it clear. Those dang poor people are sticking it to the middle all right!
What if we raised the minimum to a number that makes it so you don't qualify for welfare. A good decent number, not $8 bucks and two bits or whatever this is looking at.
Then, we make it so we eliminate those welfares for people who aren't working full enough time. No "unemployment" slackards. No welfare mommies who won't accept a job because then they couldn't stay home and smoke cigarettes they bought with welfare money.
Could we save enough by not paying the welfare taxes to afford the more expensive hamburgers?
Grud is on to something.
http://money.cnn.com/2013/10/23/news/companies/mcdonalds-help-line-workers/
And of course there's this.
http://www.ilsr.org/chains-walmart-foods-free-ride-taxpayers-expense-responsible-small-businesses/
The GOP will decry this as government interfering in the marketplace and there should not be legislation on the employee/employer relationship.
Unless of course it's legislating the Right-to-Work laws.
http://my605.com/pierrereview/?p=9613#comment-62212
I researched this Nesiba fellow and apparently he is some whacko who has done initiated measures and stuff in the past. Maybe my economics are as good as his. I would estimated setting the minimum at $15.23 is the right amount. Discuss over your $22 gravy-taters and sausage this weekend.
Gruz,
Dr. Nesiba may be many things, but a whacko he is not. He was my undergrad Economics advisor for awhile when I attended Augie, and he knows his stuff, from A to Z. Your economics are, and will always be, shit, most especially to Dr. Nesiba's. But take heart sir; thei world always needs bartenders and ditch diggers. And with a solid minimum wage I would gladly do both.
Wow, Grudz: talk about a random, unsubstantiated insult. Dr. Reynold Nesiba is a professor of economics at Augustana College. What are your credentials?
This measure will go down in flames not because it raises the wage but employs guaranteed inflationary increases. A really naive move on what would have probably passed.
Same corporate talking points thrown out by the very people this designed to help.
http://m.huffpost.com/us/entry/2750336