Arkansas a high wage state? After a fashion, yes | Arkansas Blog

Friday, November 9, 2018

Arkansas a high wage state? After a fashion, yes

Posted By on Fri, Nov 9, 2018 at 9:24 AM

The Washington Post reports today on passage of a minimum wage increase in Arkansas. The article says the state will have the "highest effective minimum wage" soon and thus perhaps provide a test for the economic impact of a higher guaranteed wage.

The key word is "effective." The current minimum is $8.50 an hour and it will rise in stages to $11 by 2021.

The Post goes to a conservative economist at UCA, part of a unit financed by Koch money, to get the pitch that Arkansas workers are soon to be in the lap of luxury.

By 2021, a minimum wage worker in Arkansas will earn nearly 70 percent as much as the median worker in the state, according to analysis by Jeremy Horpedahl, assistant professor of economics at the University of Central Arkansas. For that to be true in the District of Columbia, the minimum wage would have to be $23 an hour.
Well. 1) Arkansas's median household income was about $42,000 in 2016 according to Census figures. We are typically near the bottom with Mississippi. 2) work 40 hours a week for 52 weeks at $11 an hour and you gross less than $24,000. For a family of four, it goes pretty quickly. And that pay level is more than two years off. 3) Some places have already lifted the minimum to $15, but they are higher income places like California, New York and Washington. 4) But improvements are happening all over. The rest of the U.S. isn't standing still. 5) Many big employers, including the state's biggest (Walmart), already start people higher. The minimum is already $11 at Walmart and likely to be higher by 2021.

Nonetheless, we'll have a laboratory here for study.

There is widespread agreement among economists that raising the minimum wage too high would cause job losses, but no one really knows what amount “too high” is. Evidence so far suggests there have been few, if any, job cuts in places where entry-level wages have risen.

Now, Arkansas has set up a large-scale test case: Will the pay hike lift people out of poverty in the sixth poorest state? Or will it be a “job killer” as popular Republican Gov. Asa Hutchinson warned? About 300,000 workers are expected to get raises because of the changes.

Business owners in Arkansas are deeply divided about it, but voters sent a clear message: 68 percent voted in favor of the ballot initiative to increase the minimum wage. On a night when Republicans swept all the key races in Arkansas, this was the only issue that didn’t go their way, a result that didn’t go unnoticed by progressive activists in surrounding states, which almost all have $7.25 an hour minimum wages.
The article talks to people on both sides of the issue, including in the restaurant industry where many low-wage workers are found. Capi Peck, a city director and owner of Trio's, says she got blowback from others in her business for her advocacy for the increasae.

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