Idaho Minimum Wage Initiative (2014)

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The Idaho Minimum Wage Initiative will not appear on the November 4, 2014 ballot in Idaho as an initiated state statute. The measure would have increased the minimum wage in the state from $7.25 an hour to $9.50 an hour by 2017.[1]

Background

In 2014, Idaho had the largest percentage of minimum wage workers relative to total hourly workers in the country. In 2012, 31,000 Idahoans were earning minimum wage or 7.7% of all hourly workers. This is a 63.2% increase in minimum wage workers from 2011. The U.S. Labor Department reported that three in four jobs created in Idaho last year were in the service sector, a labor sector known to be saturated with minimum wage jobs. Oregon and Alaska have the lowest number of minimum wage workers relative to total hourly workers with 1.1% and 1.0%, respectively.[2]

Support

The measure was sponsored by the group Raise Idaho.[3]

Arguments

Michael Reich, director of the Institute for Research on Labor and Employment and professor of economic at UC-Berkeley, and Ken Jacobs, chairperson of the Center for Labor Research and Education at Berkeley, said, "With the national debate stuck in the same old rut, states and cities have again become laboratories of democracy. Are they on the right path? For the last 15 years we have been doing research on just this question." The two wrote an op-ed supporting actions to raise the minimum wage at the state and local levels:[4]

  • They highlighted their research on San Francisco, a city with a municipal-wide minimum wage higher than the state's, saying, “After adding the effects of other local laws mandating employers to pay for sick leave and health spending, the minimum compensation standard at larger firms in San Francisco reaches $13. Our studies show that the impact of these laws on workers’ wages (and access to health care) is strong and positive and that none of the dire predictions of employment loss have come to pass. Research at the University of New Mexico on Santa Fe’s floor (now $10.66) found similar results.”
  • “But how can minimum wage increases not have negative effects on employment? After all, according to basic economic theory, an increase in the price of labor should reduce employer demand for labor… Our research and that of other scholars illuminates how businesses actually absorb minimum wages at low-wage industries. Higher standards have an immediate effect in reducing employee turnover, leading to significant cost savings. Minimum wage increases do lead to small price increases, mainly in restaurants, which are intensive users of low-paid workers. How much? A 10 percent minimum wage increase adds 0.7 cents on the dollar to restaurant prices. Price increases in most other sectors, like retail, are too small to be visible, partly because retail pays more than restaurants.”

Opposition

Opponents

Arguments

  • Alex LaBeau, president of the Idaho Association of Commerce and Industry, said, “It’s an arbitrary government interference in the private marketplace and we think unnecessary given the nature of the wages in Idaho.”[5]

Reports and analyses

Economic Policy Institute

Economic Policy Institute (EPI), an economics think tank that supports an increased minimum wage, analyzed the relationship between higher state minimum wages and changes in economic conditions to hypothesize about the effects that would be generated by the Fair Minimum Wage Act of 2013, which would increase the minimum hourly wage to $10.10. Multiple initiative campaigns have cited the research as a supporting argument. EPI developed the two following key points:[6]

  • Such an hourly amount would restore the minimum wage to an inflation-adjusted value equivalent to the minimum wage in 1968. “It is important to also recognize that today’s minimum wage has not fallen to exceptional lows out of economic necessity. Over the past 45 years, the U.S. economy has vastly expanded, and productivity (our ability to produce goods and services for the same amount of work) has more than doubled. Yet the minimum wage—our agreed-upon standard for the minimum amount a worker in our society should be paid—has been left to stagnate and decline.”
  • An increased minimum wage would create more consumer demand and thus create more jobs and spur economic growth. “Research over the past two decades has shown that, despite skeptics’ claims, modest increases in the minimum wage have little to no negative impact on jobs. In fact, under current labor market conditions, where tepid consumer demand is a major factor holding businesses back from expanding their payrolls, raising the minimum wage can provide a catalyst for new hiring.” Such an increase would indirectly raise the wages of an additional 27.8 million workers, who would receive about $35 billion in additional wages over the phase-in period.

To read the full report, see here.

Congressional Budget Office

The Congressional Budget Office (CBO) issued a report on the “principle effects” of increasing the minimum hourly wage to $9.00 or $10.10. An increase to $10.10, they concluded, would have a more substantial effect on wages and employment than $9.00. The CBO made the following conclusions about raising the minimum wage:

  • An increase to $9.00 would reduce total employment by about 100,000 and an increase to $10.10 by approximately 500,000. The CBO postulated that this would happen because employers would raise commodity prices to offset wage increases.
  • An increase may be accompanied by reductions in real-income due to inflation and higher consumer prices.
  • The aggregate income, after increases and losses, would still be net positive for low-income families. The aggregate would be an increase of $2 billion.
  • A minimum wage hike to $10.10 would boost an average family's income by about three percent.
  • The hike would also move about 900,000 people above the poverty line. Currently, 45 million people live below the poverty line.
  • Raising the minimum wage would cause a small decrease in federal budget deficits for several years following.

To read the full report, see here.

Path to the ballot

See also: Laws governing the initiative process in Idaho

Initiative supporters needed to collect at least 53,751 valid signatures from registered voters by May 1, 2014 in order to place the initiated state statute on the ballot. This would have been equivalent to 6% of the qualified electors of the state at the time of the last general election.

Supporters only submitted 8,157 signatures, and therefore, the measure did not make the ballot.[7]

Similar measures

The following measures related to minimum wage increases were proposed for the general election ballot in November:

See also

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References