Minimum wage hike would aid 34,000 in S.D.

About 34,000 workers in South Dakota would be in line for pay raises if voters approve an increase in the minimum wage, according to a study released this week by the South Dakota Budget and Policy Institute.

Those workers now make from $7.25 an hour — the federal minimum wage — to $8.50, which is the amount voters could raise the minimum wage to in November if they approve Initiated Measure 18.

Another 28,000 South Dakota workers who make $8.50 to $9.75 could be in line for pay increases as employers adjust their wage scales, the report also concludes.

The South Dakota Budget and Policy Institute relied on data from the Economic Policy Institute, a Washington, D.C., think tank that advocates for raising the federal minimum wage.

"What it can help you do is sort out some of the talking points that maybe exaggerated from one perspective or another," said Joy Smolnisky, executive director of the Budget and Policy Institute. "We thought it was all kids, but in truth it's not all kids."

The report finds that people earning less than $8.50 per hour are a diverse group. The biggest group of these low-wage earners — 30 percent — lack high school diplomas. But a quarter of them attended college and almost 20 percent have a degree.

More than half work in either retail or the hospitality industries.

Many of the low-wage earners are desperately poor — a quarter live in households earning less than $15,000 per year, which is below the poverty line for a family of two. But a large number of low-wage earners live in better-off households. Slightly less than 50 percent live in homes taking in at least $40,000 per year, and almost 12 percent are in households earning at least six figures.

One area the report did not include was a detailed age breakdown. It found that 30 percent of workers earning less than $8.50 are teens but gives no further insight.

"I ... suspect that there are significant numbers of seniors in that category, particularly as you get up to the $8.50 level," Smolnisky said.

Initiated Measure 18, in addition to immediately raising the state's minimum wage to $8.50 starting in January, also would require inflationary increases each year based on the Consumer Price Index.

Opponents of the measure argue that IM 18 is a "forever increase" that uses a national inflationary gauge that doesn't necessarily reflect economic conditions in the Midwest.

Shawn Lyons, executive director of the South Dakota Retailers Association, which opposes IM 18, said an increase in the minimum wage will force businesses to either increase their prices, lay off employees or reduce employee benefits.

If it passes, Lyons predicted that it would hit businesses differently, depending on where they are in the state. The economy in Sioux Falls, he noted, is different than the economy in small towns, and he said it would have "serious consequences" for Main Street business in small towns.

Lyons said the minimum wage typically is only a starting wage and that employees get raises. And he said that with the state's low unemployment rate, a competition for labor translates to higher wages.

"The competition for labor has never been greater than it is now," he said.