How Will Minimum Wage Increase Impact State Economy?

How Will Minimum Wage Increase Impact State Economy?

Arkansas Matters

LITTLE ROCK, AR — Voters Tuesday approved a new law to increase the minimum wage. While the ballot question passed by a two-to-one margin, not everyone agrees on how it will impact the state’s economy.

We caught up with Herbert Denson after work as he sat down for dinner at the Our House shelter for the working homeless.

“I wash dishes, I bus tables, I clean,” Denson said.

Denson works at a restaurant just under 40 hours a week but says the $7.25 an hour he makes isn’t enough to afford rent in a safe neighborhood.

“It’s just so hard to make it on what I make now,” he said.

People like Denson are the motivation for the ballot initiative that passed Tuesday to gradually increase the state’s minimum wage from $6.25 an hour to $8.50 on January 1st, 2017.

“When people are paid better, they work harder, are more productive and business prospers,” said Stephen Copley, chairman of the Give Arkansas A Raise Coalition.

But not everyone agrees.

“Every additional dollar that you’re paying to a minimum wage worker comes from somewhere else,” said Michael Pakko, chief economist at the Institute for Economic Advancement at UALR.

That means from the pockets of consumers when the price of goods go up or from business owners who make less in profit.

“It’s more likely to have a detrimental impact on mom and pop establishments than large corporate interests,” Pakko said.
Copley calls it a moral issue, saying the 50,000 Arkansans making minimum wage earn as little as $13,000 a year and are left with troubling questions.

“How do I pay my utility bills?,” he asks. “How do I put gas in my car?”

They are questions that haunt Herbert Denson and make him glad some help is on the way.

“It would be a lot better for people in my position,” he said.

By the time the new law is fully implemented, assuming no changes in other states, Arkansas will have a higher minimum wage than any of its neighbors.