Raising the minimum wage

It just might be one of the most studied and least understood economic issues of the day. Studies can be found that trumpet definitive statistics that authoritatively support entirely opposite views. No question about it. When it comes to increasing the minimum wage, you can be sure that contradictory studies and opinions abound.

North Dakota’s minimum wage is $7.25, the same as 17 other states and the federal minimum wage. As for neighboring states, Montana’s minimum wage is $8.30, South Dakota’s $8.85 and Minnesota’s $9.65. New York, California and Washington, D.C., Minneapolis too, are on their way to stairstepping the minimum wage to $15 per hour.

Changes might be coming to North Dakota’s minimum wage too. A sponsoring committee has already received approval from the Secretary of State for language to be used on petitions seeking to place a new minimum wage scale on the November election day ballot.

The committee needs to acquire 13,452 signatures placed on the desk of the secretary of state by midnight July 9 in order to have the statutory measure placed on the ballot. Thus far the business of collecting signatures has been hampered by a cold and late spring. Scott Nodland, Bismarck, is the chairman of the sponsoring committee.

“We’re waiting for nicer weather,” said Nodland. “What we are doing is building teams in different areas around the state. We’re working out how we are going to circulate petitions.”

The proposed change would increase the state’s minimum wage from $7.25 per hour to $9.83 per hour beginning July 24, 2019, $12.41 per hour July 24, 2020 and $15 per hour starting Jan. 1, 2021. After that the minimum wage would be adjusted for the cost of living based on the Consumer Price Index.

“There’s some argument how fast the ramp-up should be,” said Marvin Nelson, a Rolla resident and member of the North Dakota House of Representatives since 2011. “If it is absolutely too fast the Legislature has the ability to slow it down if that’s the basic problem. The basic thing on minimum wage is that it hasn’t kept up at all where it needs to be. It’s really been a fundamental problem, especially in rural areas.”

Two positions are commonly expressed when it comes to minimum wage:

1 – Raising the minimum wage puts more purchasing power in people’s paychecks.

2 – Raising the minimum wage leads to a corresponding increase in the cost of items purchased.

There are numerous other views too, but mostly they expand on one of the two positions described above.

“Chambers of Commerce or business interests will say there will be less hiring, employees cut and that sort of thing,” said Nodland. “You’ll hear increasing the minimum wage will mean cutting jobs, but when self-checkouts are introduced we praise them as a good thing, as progress. We don’t condemn it as taking away jobs.”

“It’s really silly if we don’t raise the minimum wage,” added Nelson. “The state continues to spend money to create more jobs. We don’t have the workers because we don’t pay enough to keep them in the state and then we run programs to try and convince them to come back to North Dakota.”

Proponents of an increased minimum wage say if low income workers earn more money they will no longer have to rely on government subsistence programs such as food stamps or heating assistance. Therefore, they contend, an increase in the minimum wage will lessen the monetary burden on certain government agencies.

“My solution is, we’ve got to take care of that underlying class and I think it will solve a lot of our social problems,” said Nodland.

The restaurant industry employs thousands of people in North Dakota. Many “up front” workers, waiters and waitresses, are paid at base rate of $4.26 per hour. However, with tips, their actual salary is often much more than minimum wage.

“The state has to consider the serving industry,” said one Minot business owner who asked not to be identified due to the sensitivity of the issue. “Many are already making well, well above minimum wage. An increase in the minimum wage doesn’t do any favors. To cover higher wage costs we have to pass that on to customers, or less people and less hours.”

Restaurant workers behind the scenes, such as cooks and dishwashers, receive an hourly salary, many in the range of $10-$14 per hour. Some make more, depending on the restaurant, their experience and responsibilities. If the minimum wage initiative were to become law, it’s possible that the increasing minimum wage rate would eventually catch up with what many workers are being paid.

“If $15 is minimum wage it would be higher than what we pay, for the most part,” said a Minot fast food business owner. “Prices to the consumer would change. We wouldn’t survive if we didn’t raise prices. We’d kind of end up in the same place as before. There’s risk involved.”

Interestingly, as hot a topic as minimum wage can be, it may not affect many people at all. There’s no agency that tracks the number of minimum wage earners in the state but, it appears, the number may well be very small.

“We haven’t paid minimum wage for years, for years,” said one Minot business owner.

“I have not seen minimum wage for a long time in our area,” added Susan Ogurek, customer service, Minot office of Job Service North Dakota. “My experience is that I haven’t seen minimum wage on our website even.”

Many low income jobs are considered “stepping stone” positions for employees that intend to work until they accept another job higher up the income ladder.

Proponents of a minimum wage increase say North Dakota small towns may have the most to gain should the increase become law. The contention is that raising the minimum wage would give people the incentive they need to remain in small communities rather than look elsewhere for work.

“The reason small businesses close is because there are no people left,” said Nodland. “They’ve gone somewhere else to earn a living wage.”

Nelson agrees.

“Low wages have contributed to the de-population of rural North Dakota,” said Nelson. “That is one of the fundamentally important things. All across the state retailers are hurting, the economy is hurting.”

Statistics show a different message. For example, according to JSND, the average income in Williams County is $35.70 per hour or $74,256 per year. The same study lists the average per hour wage in Ward County at $22.83, or $47,476 per year and the state hourly average at $22.83 which equates to $49,556 yearly. However, maintains Nelson, those numbers are very misleading.

“The oil patch kind of masks the whole thing,” concludes Nelson. “The oil patch has raised our average. There’s a trap of destroying our own economy with low wages and sending our kids to other states to prosper.”

“There’s an economy at the bottom that hasn’t risen with the rest of North Dakota,” explained Nodland. “What these workers really want is an opportunity to have a fulfilling life, not work 12 hours a day and come home to bills they can’t pay.”

For North Dakotans the debate on whether or not raising the minimum wage is helpful or harmful will likely reach a crescendo in November, if the petition drive is successful and the issue appears on the general election ballot.

Minimum wage initiative petition

This initiated measure would amend section 34-06-22 of the North Dakota Century Code by increasing the state minimum wage from $7.25 per hour to $9.83 per hour, effective July 24, 2019; to $12.41 per hour, effective July 24, 2020; to $15 per hour, effective Jan. 1, 2021; and, starting July 24, 2021, and annually thereafter, to a wage adjusted by the increase in the cost of living based on the Consumer Price Index.

Job Service North Dakota position on minimum wage petition

— Our agency remains neutral as to a change to minimum wage.

— Our role at JSND is to assist businesses in recruiting and retaining qualified workers.