South Dakota voters may get to decide whether to raise the state’s minimum wage next year.
If several labor unions and the South Dakota Democratic Party succeed in gathering more than 15,000 signatures by November, then the 2014 ballot will include a proposal to increase the state’s minimum wage from $7.25 per hour to $8.50.
The proposed initiated measure would also index the minimum wage to inflation, giving automatic cost-of-living increases to the minimum wage every year.
"South Dakota’s one of the lowest-wage states in the country," said Mark Anderson, president of the South Dakota AFL-CIO. "We’ve made every attempt we could possibly do to make it friendly for businesses. Now I think it’s time we make it friendly for workers. And this is a good start."
People who work for tips would also benefit from the proposed change, which would fix the tip wage at 50 percent of regular minimum wage. At $4.25 to start, that would be double the current $2.13 minimum wage for tipped workers.
Statistics compiled by the federal Bureau of Labor Statistics estimate that around 6,000 South Dakotans earn exactly minimum wage, out of 253,000 workers who are paid hourly. Another 6,000 earn less than minimum wage.
It’s unclear how many people earn more than the current minimum wage but less than the $8.50 proposal. In some fields, such as food preparation, more than one-third of employees earn below $8.50 per hour on a national basis, according to the BLS.
Business groups are traditionally skeptical of minimum wage increases, and the leader of the South Dakota Chamber of Commerce and Industry predicted his group would oppose the SDDP proposal.
"Very few people stay at minimum wage for very long. And most of the people who are at minimum wage are non-breadwinners, although there are people who are," said David Owen, president and CEO of the South Dakota Chamber. "But the vast majority are students, people early on in their working career. Given the labor shortages in South Dakota, I think the marketplace has done a good job of keeping wages in fast food restaurants and similar places slightly above the minimum wage."
Gov. Dennis Daugaard, a Republican, also responded negatively to the proposal.
"This issue should be based on economics, not politics," Daugaard said in a statement. "There needs to be an analysis of how many jobs would be lost."
But Zach Crago, the interim executive director of the South Dakota Democratic Party, predicted a minimum wage increase would help the economy.
"It’s common knowledge that people with more money in their pockets will spend that at businesses across South Dakota," Crago said. "That’s money that will ripple through our economy and create opportunities for all people."
The proposed initiated measure is now in the hands of Attorney General Marty Jackley, who has two months to write an official explanation of the proposal. Advocates will then have until Nov. 4, 2013, to gather 15,855 valid signatures. If they succeed, the initiated measure will be placed on the November 2014 ballot.