Alaska, Arkansas, Nebraska, and South Dakota will all have new, higher minimum wages starting in 2015 — thanks to ballot measures their voters passed last night.
Alaska voters raised the minimum to $9.75 an hour by 2016. Arkansas raised it to $8.50 an hour by 2017. Nebraska hiked it to $9 per hour by 2016. And South Dakota will raise to $8.50 per hour by 2015.
But in Arkansas and Nebraska, there’s a catch: The value of those minimum wages will actually decline in subsequent years, because the new wages are not indexed to inflation. Inflation isn’t always a bad thing, but it does erode the value of a fixed hourly wage over time.
Minimum-wage advocates often point out that the federal minimum wage suffers from the same problem. Although the value of the minimum wage has gradually been raised to $7.25 per hour, it is actually now worth less than it was in 1968, when adjusted for inflation.
Source: Department of Labor
Tuesday’s votes mean that 15 states plus the District of Columbia now either currently index or have plans to link their minimum wages to some type of price index or cost of living formula, according to the National Conference of State Legislatures.
Indexing the minimum wage doesn’t mean that it increases in value every year — rather, it just means the minimum wage maintains the same value as overall prices rise. Without indexing, the roughly $15,100 that a full-time minimum-wage worker earns right now buys less and less each year.
On the whole, voters tend to get more excited about higher minimum wages — and indexed ones, likewise — than do legislators, says Tsedeye Gebreselassie, a senior staff attorney at the National Employment Law Project, an organization that advocates for a higher wage. She says that the states that have passed indexed minimum wages have by and large done it by ballot measure, not via the state legislature.
Indeed, voters have passed 10 out of 10 state minimum wage ballot measures since 2002, the Wall Street Journal reports, and all of tonight’s minimum wage measures passed easily, as well. But legislators are tougher to persuade.
“It’s a difficult thing to pass in terms of politics,” Gebreselassie says. “It is oftentimes a thing that gets negotiated out in the deal at the end of the process. And so that’s why it’s hard to get it passed in state legislatures. That’s why it’s hard to pass at the federal level.”
And that’s because ballot measures are up-or-down propositions, she says, whereas legislating is a messier business. In state legislatures, indexing (when it is proposed) often is cut in all of the horse-trading and compromising over wage levels. For example, when Maryland’s state legislature recently passed its own minimum wage hike, indexing was one of the things more liberal Democrats lost in the process of compromising with more conservative Democrats and Republicans. So don’t expect the federal wage to start rising — er, holding steady — anytime soon.
