Thursday, March 5, 2009
On Feb. 20, the Kansas Senate approved a bill that would raise the state’s minimum wage from its current level of $2.65 to the federal rate of $7.25 per hour. The legislation is pending approval in the House, where it will likely be passed, as it should be. This is a positive development for the state of Kansas, but the effect of this law will be more symbolic than anything else. We believe that the state government needs to go further and put in place a minimum wage that is connected to the annual increases in cost of living, a policy that is more economically efficient and provides more benefits to workers than the current trend of large and intermittent jumps in the minimum wage.
At a paltry $2.65 per hour, the state’s current minimum wage is the lowest in the nation, although five states have no minimum wage. The new legislation would raise it to federal levels in January of 2010. According to the U.S. Department of Labor, in 2007, the last year on record, there were 20,000 Kansans working below the federal minimum wage. Exempted workers include tipped employees, employees of small farms, seasonal workers, teenagers, who can be paid $4.25 per hour for the first 90 days of work, and full-time students, who can be paid 85 percent of the minimum wage. The only employees covered by the state but not the federal law are those who work for firms with less than $500,000 in annual revenue that don’t engage in interstate commerce. Ultimately, this is a very small number of people.
“Everyone who is covered by the state minimum wage is under the federal law anyway,” said Sen. Dick Kelsey (R-Goddard). “The practical thing to do is adjust the state law so that we don’t get criticized for something that doesn’t matter.”
The law passed the Kansas Senate with the support of many Republicans, like Kelsey, who are willing to support the increase to avoid future criticism. The law will likely pass the House for the same reason.
But that belies the symbolic value of this bill. “It sends a message to the people of the state of Kansas that we have as much respect for their work as the federal government,” said Sen. Laura Kelly (D-Topeka).
This largely symbolic increase, however, does not go far enough. We argue that Kansas should adopt a policy that would index the minimum wage to the cost of living, something that many other states, including Florida, Missouri and Montana, have already done. Such a change would benefit workers because it prevents de facto cuts in income that occur when the flat minimum wage rate is eaten up by inflation. Furthermore, the large jumps in the minimum wage mandated by the federal government every decade or so are more costly to employers than a steady, predictable increase.
“This incremental increase is less costly than large jumps in the minimum wage,” said Ron Caldwell, a professor of labor economics at the University.
The increase in the state minimum wage will have a largely symbolic impact, but it is nevertheless an important step in the right direction for the state of Kansas.
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Comments
Editorial: Minimum wage should rise with cost of living
Tip earners: If it is legitimate to extrapolate national data from the BLS to Kansas on the composition of low wage earners, tipped employees make up more than half of this number. To count them in this statistic is misleading since they generally make more than the federal minimum wage when their tips are counted in.
Small farm workers: will simply no longer get jobs. If a task is only worth $2.65 an hour to a small farm owner, do you think the farmer would be more likely to: A) pay someone $7.25, B) do the job himself (or herself), causing an increase in unemployment, or C) still have the employee do the work, but do it off the books so that the state gets no tax revenue?
If you answered B or C, you are probably correct.
Students: Since college students are boosting their potential income massively by going to school, I don't see how this should be a major concern. We don't remain poor for long.
Also, consider this: The term "struggling" is often used to describe people who earn at or below the minimum wage. According to the US Census Bureau, the average household income of families with income earners at or below the minimum wage in the United States is $46,889. This is pretty comfortable and includes single and dual income earners as well as families (my point here being that the single and dual income earners will lower the overall average though they do not require nearly as much money.
Why? Breakdown: Out of every 100 < or = to minimum age earners, 40 are living with a parent or relative, 20 are dual earners in a married couple with or without kids, 26 are single or married with no kids, and 14 are single earners with kids.
While this statistic may not be exactly right for Kansas, if it's even remotely true we should revise our thoughts about minimum wage, which ends up causing unemployment and shutting down small businesses when it gets raised (see the case of farmers, for example.)
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