Arkansas’ minimum wage workers got a 75-cent per hour raise on Jan. 1. The boost in pay comes after voters overwhelmingly supported Issue 5 during the Nov. 6 general election, approving a wage increase from the $8.50 to $9.25 an hour. Under the initiated act, the standard will rise to $10 in 2020 and $11 in 2021.
The state was among 22 others and the District of Columbia to raise minimum wages this year. The District of Columbia has the highest state rate at $13.25 per hour, followed by Massachusetts and Washington each at $12 per hour, according to Minimum-Wage.org.
The minimum wage is the lowest hourly amount that an employee may be paid for their labor. Under the Federal Fair Labor Standards Act, states and localities are permitted to set their own minimum wage rates, which will take precedence over the federal minimum wage rate of $7.25 if they are higher. A number of states have wages at the federal minimum.
Talk Business & Politics featured an article on the Arkansas increase, which included optimistic comments from business owners about rewarding and keeping good employees due to the new standard. One of them was a restaurant owner.
It contrasted with an Associated Press report out of Missouri, where a restaurant owner was discussing higher-priced menu items to offset the cost of paying higher wages. Granny Shaffer’s restaurant in Joplin, Missouri, owner Mike Wiggins said he was reprinting the menus to reflect the 5, 10 or 20 cents added to each item.
Wiggins said the price hikes are necessary to help offset an estimated $10,000 to $12,000 in additional annual pay to his staff as a result the a new minimum wage law that took effect New Year’s Day, the AP reported. In Missouri, the minimum wage rose from $7.85 to $8.60 an hour as the first of five annual increases that will take it to $12 an hour by 2023.
“For us it’s very simple. There’s no big pot of money out there to get the money out of” for the required pay raises, Wiggins said.
Advocates of a higher minimum wage credit the trend of voter support to the “Fight for $15,” a national movement that has used protests and rallies to push for higher wages for workers in fast food, child care, airlines and other sectors.
When I shared the AP article about higher prices to offset the higher wages on social media, a friend observed: “If you go back to 1964 when we had the last of our silver quarters (as we abandoned the last of our metals money standard) and take the minimum wage then ($1.25) and adjust for the current price of silver, you will find that the minimum wage should be around $14.”
While I think the friend makes a good point, the reality is that some workers may find themselves with reduced hours and paying more for day care and other services. For example, the minimum wage rose from $9.30 to $10.20 in Colorado, with the target of $12 by 2020. The Coloradoan.com interviewed Marilyn Barker, a day care owner who has 14 employees. Barker said she would be increasing rates to cover the new payroll expense.
She told the newspaper that only one part-time employee at Barker’s Creative Kids Corner in Wellington earns minimum wage, but Barker gave all 14 workers the same 90-cent increase. It’s only fair, said Barker, one of four co-owners of the center that cares for 65 children, ages 6 weeks to 12 years.
I agree. It is only fair that all employees receive the raise. Otherwise, the wages of those who have worked their way up to a higher salary are devalued. But how many business owners will see it as Barker does? How many can and will take on that expense or be willing to raise prices enough to do so?
It seems a given that business owners, especially small ones, will increase prices to pay employees or reduce hours to cover wage hikes, if needed. People who work minimum wage jobs are also consumers of goods and services, so they will pay more just like everyone else. And some workers have expressed concerns that the increase could make them ineligible for government assistance with child care, which along with the higher cost of daycare, could make them worse off than they were when they made less money.
I like the idea of the increase in minimum wage pay, but I do have concerns about what will be gained by it in actuality. What are your thoughts?
Shea Wilson is the former managing editor of the El Dorado News-Times. Email her at email@example.com. Follow her on Twitter.com @sheawilson7.