Policy Documents

The Leaflet: Minimum Wage Laws Are Still An Issue For States

August 8, 2014

Minimum Wage Laws Are Still An Issue For States 

On August 1, Minnesota became the 13th state this year to see an increased minimum wage take effect. Following a series of increases in coming years, employees at large companies in the state must be paid $8 an hour under the new law, up from the previous minimum of $6.15. Small employers (under $500,000 in sales) must now pay employees $6.50 an hour, up from $5.25.

In 2014 policymakers in dozens of other states considered increasing the minimum wage, and 13 states and D.C. passed legislation to increase it. As of August 1, 23 states and D.C. have minimum wages above the federal minimum of $7.25.

Earlier this year, a Congressional Budget Office report concluded a minimum wage of $10.10 an hour could result in a loss of 500,000 jobs nationwide. By contrast, , the U.S. Labor Department, in a report released July 18, claims states that raised their minimum wages earlier this year were seeing faster job growth than those that did not. Many economists have challenged this report, pointing out that six months of data is not nearly enough time to draw such conclusions. They also have pointed out that correlation does not equal causation.

In North Dakota, a state that did not increase its minimum wage, wages for entry-level jobs have increased dramatically. The number of jobs in North Dakota has increased nearly 3 percent since the start of this year, more than any other state.

Employees who see increased earnings as a result of a higher minimum wage may not feel the full benefit of higher pay: as consumers, they will likely pay more for goods and services as companies raise prices to pay for the increase in labor costs. The adverse effects on employment from raising the minimum wage are likely to be profound in the long run.

To learn more about budget and tax issues, register for our upcoming Emerging Issues Forum, where you will hear from some of the nation’s leading experts – not only on budget and tax policy, but also education, health care, and more. The Emerging Issues Forum will take place in Minneapolis on Friday, August 22 and Saturday, August 23. Admission to the event is free for elected officials and staff. Reserve your place at this event by going to our website, eif.heartland.org, or by contacting Alex Monahan, Heartland’s government relations coordinator, at 312/377-4000 or amonahan@heartland.org.   

 

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