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One Year of Higher Minimum Wage Produces No Noticeable Negative Economic Impacts

John Tsitrian reads an RCJ updated version of Bob Mercer’s report on South Dakota’s growing economy and notices what didn’t happen: South Dakota’s 17% increase in the minimum wage on January 1, 2015, hasn’t produced any of the economic drag Governor Dennis Daugaard and other opponents predicted.

My guess is that Daugaard was swayed by the siren song of the South Dakota Retailers Association (of which I’m a member in good standing) which forecast ominous results stemming from a minimum wage increase.  SDRA fought the issue with everything it had, even sending a spokesman from Pierre to Rapid City to weigh in against the measure at a public forum. SDRA blanketed the state with an ad campaign that predicted a higher minimum wage would “trigger higher prices, layoffs, cuts in hours for workers, and delays in making needed improvements.”  No doubt there were some spot instances where some or all of those eventualities occurred, but its clear from year end summaries that South Dakota’s economy moved forward nicely in the aggregate.  The opposition to the wage hike had it all wrong [John Tsitrian, “SD Minimum Wage Goes Up, Economy Responds Favorably, Naysayers Repudiated,” The Constant Commoner, 2016.01.05]

David Novstrup
As I predicted, the data clearly show… um… that disaster is just around the corner, just like Obama’s hyperinflation.

South Dakota’s minimum wage—now $8.55 with this year’s cost-of-living adjustment—has shown no sign of interfering with job growth. Tsitrian contends it’s more likely that paying more to workers at the bottom of the heap has actually helped the economy by giving more workers more money to spend.

During last year’s debate over the youth minimum wage (you know, David Novstrup‘s kid-hating, worker-hating, democracy-hating bill that we get to kill at the polls come November), I recall some observers suggesting we would see similar legislation this year attacking the minimum wage on another front, such as a revival of a toothier version of Rep. Jim Bolin’s assault on the cost-of-living adjustment). Perhaps those legislators should pause, look at the data, and realize they don’t have an economic leg to stand on if they try attacking South Dakota’s minimum wage.


  1. jake 2016-01-05 14:39

    It does seem to prove one fact, eh, that majority of SD Republicans in gov’t power positions and local influence, watch their own $$$$ like hawks but when it comes to gov’t $$$ graft, corrupted programs and Federal money they are very loosely the guardians of–as long as the po’ folk don’t get any of it.

  2. moses 2016-01-05 15:08

    Surely we can’t give no one a raise.

  3. Richard Schriever 2016-01-05 15:13

    Opponents of higher wages have never had an actual economic leg to stand on. What they’ve had is an ideological leg – that they have mistaken for an economic one; which is a reflection of a sort of prosthetic version of economics. But, as with physical prosthetics, their body politic has come to rely on that “looks like a leg” crutch to hold themselves up. Now THERE is a true culture of dependency.

  4. BOHICA 2016-01-05 15:21

    Hmmmmm…Wonder how PP and other nay sayers will spin this one Cory

  5. O 2016-01-05 15:45

    Richard, I agree but would split one linguistic hair: it is not ideology; it is dogma. It is not only economics, it also is science, history, anywhere where observable fact comes into conflict with dogma, too often dogma is winning out. Pointing back to places where dogma proved false never seems to weaken that dogma. Dogma is growing more and more political/partisan and less rooted in an understandable ideology basis.

    We ask schools to teach “critical thinking” to our students as the world around shuns that very concept.

  6. W R Old Guy 2016-01-05 15:49

    I was in Pierre in October and noticed that McDonalds was hiring starting at $10.25 per hr. I wonder how DD and company explained how McDonalds could afford to pay well above the minimum wage?

  7. Jerry K. Sweeney 2016-01-05 16:40

    Excuse me, but asking SD Republican legislators to choose reality over ideology is the classic example of a fool’s errand.

  8. Jason Sebern 2016-01-05 16:52

    The naysayers (Repubs) are not interested in evidence. They are concerned with an ideology that promotes income inequality and they will not stop until the people vote them out of office.

  9. Rorschach 2016-01-05 18:32

    It’s a shame that the leadership of the SD Retailers doesn’t understand that people making $8.55/hr aren’t stashing money in 401Ks. They’re spending it. And the retail stores where they are spending it are turning around and spending it again.

  10. Flipper 2016-01-05 21:50

    Just like there are no “death panels”, Catholic hospitals haven’t closed, there were no WMD and we weren’t greeted with flowers in the streets of Iraq as liberators. Just a few more examples of how the GOP has no shame when it comes to their predictions and fear-mongering.

  11. Les 2016-01-05 22:04

    You’ll be voting Sanders, right, Flipper..?

  12. caheidelberger Post author | 2016-01-05 22:06

    O, your comment makes me think of Senator Monroe’s anti-science bill, which then gets me thinking of how strange it is that the GOP dogma seems to depend on a facetious relativism, a willingness to respond to obvious facts by declaring their dogma equal in value to demonstrable truths, deeming empirical data subjective and scientific fact “just a theory,” and demanding equal time in the news and schools to dispute the indisputable.

  13. moses 2016-01-05 22:25

    The sky is falling , the sky is falling.Where is porter when you need him and Lanny, and Winston.

  14. mike from iowa 2016-01-06 07:07

    iowa Dems want to raise my states minimum wage because we are losing workers to Nebby and your state. Wingnuts are mired in “losing jobs” if we raise the limit.

  15. John 2016-01-06 08:16

    Meanwhile the Pennington County Commissioners gave themselves a 20% raise. Then some pretend it was $50 . . . . unable to tell whether it’s being math or age -challenged, perhaps both. This occurred about the same day the petitioned Pennington County voters rejected by 60% the commission’s $60 wheel tax. The wheel tax is a dumb idea in light of recent gas tax and highway bill increases – – yet the tax-and-spend-and-transfer repubs march on.

  16. O 2016-01-06 09:41

    Cory, Neil deGrasse Tyson said, “The good thing about science is that it’s true whether or not you believe in it.” That seems to be the distinction with dogma, dogma is true ONLY if you believe in it.

  17. Les 2016-01-06 10:19

    Yes, O. If the scientists are not corrupt working for the oil industry or the nuke industry from two distinct vantage points.

  18. Roger Elgersma 2016-01-06 22:34

    When someone gives me the typical, if wages go up the prices the stores charge goes up to so there is no gain. I tell them that the workers spend more and the stores do more business. So you have to balance this thing both ways and just balancing the situation one way is not a complete look at the situation.

  19. Roger Elgersma 2016-01-06 22:36

    We need to point out like you have here that there were no negatives. You could probably attribute all job loses in restaurants to lower corn prices and less money spent by farmers.

  20. grudznick 2016-01-06 22:48

    Gentlemen. Has it occured to any of you that if this $8.55 per hour nonsense wouldn’t have happened that the economic recovery would have been FAR FAR bigger? Probably not, since you fellows have lots of money to buy your breakfasts and fancy $5.00 hamburgers and such. But when the price of breakfast goes up it hurts.

  21. Richard Schriever 2016-01-07 01:33

    Gosh grudz, when Costco opened up in Soo Foo, my grocery bill went down – despite the workers there being paid @ $5.00/hr. HIGHER to the HyVee folks. See if you can ‘splain that to me??

  22. caheidelberger Post author | 2016-01-07 06:29

    Grudz, your argument carries no weight with no analysis. The point is this: SDRA told us that raising the minimum wage would cause economic trouble. We raised the minimum wage. Economic trouble did not ensue. SDRA was wrong.

    If we want hypotheticals, we can argue just as easily that the economy recovery could have been FAR FAR SMALLER as it was dragged down by low farm prices and as those thousands of low-wage workers would have had 17% less money to spend.

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