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Pay Lifted for 1 Million Workers

Missouri and Arkansas voters have raised their state's minimum wages giving raises to over 1 million people

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by Guest Post on
Nov 14, 2018

This post was written by the Economic Policy Institute.

In yesterday’s election, voters in Missouri and Arkansas gave overwhelming approval to ballot measures that will raise their state’s minimum wage over the next several years, lifting pay for a combined 1 million workers. In Missouri, 62 percent of voters elected to raise the state minimum wage from its current $7.85 to $12 an hour in 2023. In Arkansas, 68 percent of voters supported a measure that will raise the state minimum wage to $11 per hour in 2021 from its current value of $8.50.

The increase in Arkansas will raise pay for an estimated 300,000 workers (about a quarter of the state’s wage-earning workforce). The Missouri increase will lift pay for 677,000 workers (also about a quarter of wage-earners in the state.) In both cases, the majority of workers who will get a raise are women, most work full time, and they come from families with modest incomes. Analyses of the measures estimate that the raise in Arkansas will put over $400 million into the pockets of low-wage workers there over the course of the increases. In Missouri, low-wage workers will receive nearly $870 million in additional wages over the course of the measure’s implementation.

In voting to raise their state minimum wages, voters in Arkansas and Missouri are making long-overdue corrections to policy failures that political leaders in those states, and at the federal level, should have fixed a long time ago. Raising the minimum wage in Arkansas to $11 by 2021 and $12 by 2023 in Missouri will bring the minimum wage in those states, in both cases, roughly back to where the federal minimum wage was in 1968, when it equaled roughly $10 an hour in today’s dollars. According to the Congressional Budget Office’s (CBO’s) projections for inflation, $11 in 2021 is $9.98 in 2017 dollars, $12 in 2023 is $10.40 in 2017 dollars.

Updating key labor standards, like the minimum wage, is critical if policymakers want to do something about the enormous stagnation in wages that has plagued the country for decades. The recent modest uptick in wage growth is not nearly enough to undo the damage that has been done over the past 70 years. Since the mid-1970s, as the U.S. economy has grown and productivity has risen, hourly pay has barely budged after adjusting for inflation. Since 1973, average labor productivity has grown 77 percent; yet hourly compensation for the typical U.S. worker—and this includes both wages and benefits, such as payments for healthcare premiums and retirement accounts—has grown only 12.4 percent. For low-wage workers, the trends are even worse.

These outcomes were not inevitable; they are the result of policy decisions that allowed pay to stagnate for the vast majority of American workers, while wages skyrocketed for those at the very top of the pay ladder. From 1979 to 2017, as wages for most Americans remained flat, wages for the top 1 percent of earners grew by 157 percent; wages for the top 0.1 percent grew by 343 percent. If the federal minimum wage had been increased at the same pace as labor productivity over the past 50 years, it would be well over $19 an hour today. This means that our economy has the capacity for significantly higher minimum wages that what exist in most of the country.

There are currently 29 states, plus the District of Columbia, that have minimum wages above the federal minimum wage. Since January of 2014, state minimum wages have been raised in 23 states and D.C., yet Congress has failed to update the federal minimum wage in over a decade. Since the federal minimum wage was last raised to $7.25 an hour, inflation has reduced its spending power by more than 12 percent. In fact, the federal minimum wage is now worth 27 percent less than it was worth 50 years ago.

Last year, a bill was introduced to raise the federal minimum wage to $15 by 2024. That proposal would have lifted pay for 41 million workers across the country, yet the majority in Congress never brought the bill forward for a vote. Last night’s results in Missouri and Arkansas will hopefully send a clear message to the incoming Congress: voters—even those in historically conservative places—want higher minimum wages. It’s long past time for Congress to raise the federal minimum wage.

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