Minimum wage boosts: Did low-income workers win?

Four more states will join the growing cohort of states and cities that have approved minimum wage hikes. Will they be enough to combat widespread income inequality?

Workers in several more states will receive a pay raise thanks to a handful of successful ballot measures seeking to raise the minimum wage.

Voters in four states chose to raise the minimum wage to $12 an hour or higher by 2020, joining a growing number of states and cities that have announced wage hikes in the past few years as a tactic to boost the economy and close the growing income gap. As the slogan “Fight for $15” has gained ground and shed light on the millions of people making minimum wage rates that are frequently not enough to support a family, more advocates are stepping forward to lead their own movements.

On Tuesday, Maine, Arizona, and Colorado all voted to increase their wages to $12 an hour, while Washington state approved a $13.50 hour rate. Colorado, Arizona, and Maine also included provisions that tie the rate to cost of living increases, while Washington’s also mandated paid sick leave.

But some worry those increases may not be significant enough for low-income workers to feel their benefits.

“It’s a start. It’s probably not enough to help people who really need their wages to go up,” Oren Levin-Waldman, a professor in the School for Public Affairs and Administration at the Metropolitan College of New York, tells The Christian Science Monitor in a phone interview. “The issue is, it does have to be somewhat incremental so you don’t have a shock on businesses.”

While opponents of the measures have argued that a forced hike in wages would saddle businesses with undue burdens that force layoffs and price increases, many economists argue that smaller boosts hovering around or below $15 an hour likely won’t cause a major upset in the markets or for small business owners.

That became clear earlier this year in Seattle, which raised its minimum wage to $15 an hour in 2015. Just over a year later, researchers found that businesses did not suffer some of the crises feared but also that little change was seen in the lives of workers who received the pay boost, as slight layoffs or cut back hours curtailed some of the city-wide benefits.

Business owners still fret about costs when they face mandated raises, but many have managed to incorporate the additional expenses into their payroll. 

“I think [$10.10] is fine. It puts more cash in everyone’s pockets, which they spend,” John Conzelman, a restaurant owner in Portland, Maine, told The Christian Science Monitor in May. Despite raising his prices to meet rising costs, Mr. Conzelman hasn't felt an impact on his profits, he said. “What goes around comes around.”

Raising wage rates by margins small enough to avoid market shock is a good start, economists say, but to make real progress, those increases can’t be a one-time measure. Many experts recommend initiatives that tie the wages to inflation and changes in the state’s cost of living.

Support for wage hikes strikes many as a “blue” state issue, with liberal states and cities like Portland, Chicago, and Seattle, adopting plans in the past few years to make their minimum wage a living wage, at least in some industries. But several red states, have considered such measures, including Arkansas, which approved ballot measures two years ago that raised their minimum wages after years of stagnant pay rates that lagged behind the national averages.

It’s likely that the wage increase movement will see success more in left-leaning areas, Dr. Levin-Waldman says, but conservative states looking to play catch up could also place similar measures on their ballots in 2018.

And that may be the most effective way to bring change. State legislatures have been slower to introduce wage reform than advocates have been to put it on the ballot, and Congress has given little indication that they’d take up the cause nationally, leaving the federal minimum wage untouched since 2009, when it increased from an hourly rate of $6.55 to $7.25. Now that the GOP has retained its control over Congress and taken the White House, it’s unlikely that any legislation promoting the idea of wage raises, which has been deemed a progressive measure, will arise.  

But as experimental measures have taken off without any substantial rippling effects through local economies, more states may move to take the question directly to the people in the next round of midterm elections, seeing the route as the best possible way to move the issue from an idea to a law.

“It’s the only recourse that people have to get something through,” Levin-Waldman says. “I would expect to see more of it at the state level because the national government hasn’t been doing it. It’s a message to the legislatures that they need to get their act together on certain issues.”