While Kristi Noem promises to stop taking money out of your pocket at the grocery store if only you’ll let her keep using the state plane, she says nothing to celebrate another great Democratic idea that has been putting more money in workers’ pockets since 2015: South Dakota’s inflation-indexed minimum wage!
Underneath Noem’s noisy campaign promise yesterday, the Department of Labor and Regulation yesterday tersely announced that South Dakota’s minimum wage will rise from $9.95 to $10.80 an hour on January 1. That 8.5% increase is the largest indexed boost to the state minimum wage since voters approved Initiated Measure 18 in 2014. IM 18 (now codified into multiple statutes in SDCL Chapter 60-11] raised the minimum wage from $7.25 to $8.50 at the beginning of 2015, then began applying annual inflation adjustments in 2016 (see SDCL 60-11-3.2). This next increase will bring the average annual increase in the minimum wage since 2015 to 3.0%.
IM 18 also raised the minimum wage for tipped employees to half of the regular minimum wage. Restaurateurs and anyone else taking advantage of the lower tipped wage will have to raise their minimum pay from $4.975 to $5.40 an hour. Employers still have to top off their workers’ wage to the regular minimum wage each pay period if their tips don’t get them to that level (this provision existed before IM 18; see SDCL 60-11-3.1).
As on broader measures of worker well-being, South Dakota’s minimum wage will remain in the middle of the national pack, with at least 22 states offering better minimum wages come January 1. We will beat Minnesota, which is increasing its minimum wage only 2.5%, from $10.33 to $10.59 for large-employers and from $8.42 to $8.63 for most everyone else.
Bust your chops for 40 hours a week, 50 weeks a year, and at South Dakota’s new minimum wage, you’ll make $21,600 a year. Put in 11 hours of overtime each week, and if the boss gives you time and a half, you’ll crack $30K.
Not many South Dakota workers will get a raise directly from this increase. According to 2020 data from the Bureau of Labor Statistics, over 98% of South Dakota’s hourly workers were already making more than minimum wage. But the minimum wage hike exerts upward pressure on wages among the bottom quintile of workers and thus chips away at wage inequality.
Plus, increasing the minimum wage has a nice feminist bent, as over 70% of the workers making minimum wage in South Dakota are women.
Kristi Noem has been generally quiet about the minimum wage throughout her career. Back in 2014, she resisted President Barack Obama’s call to increase the federal minimum wage, saying that letting states decide their own minimum wages is “the right approach.” Voters that year took Noem up on her lazy states’ rights line and set in motion the minimum wage increases that will finally bring every hourly worker to four figures an hour in 2023.