Home
/
RELIGION & LIBERTY ONLINE
/
How Four States Voted to Hurt Low-Skilled Workers
How Four States Voted to Hurt Low-Skilled Workers
May 15, 2025 4:48 PM

Last night the election results revealed wins for Republicans in almost every state. But in four states where the GOP gained ground — Alaska, Arkansas, Nebraska, and South Dakota — the poor and unskilled suffered a loss.

In each of those states, voters passed ballot measures that will increase the government-mandated minimum wage. Beginning in 2015, the wage in South Dakota will increase to $8.50 an hour. In 2016, Alaska’s wage will be $9.75 an hour and $9 an hour in Nebraska. Arkansas will also raise the wage-floor to $8.50 an hour by 2017.

While the measures passionate — who doesn’t want hard-working people to receive more money? — the effect will be that each of those state will likely see unintended consequences of the action.

Here are four ways the increased minimum wages will hurt low-skilled workers:

1. Minimum wage laws will reduce the number of low-skilled jobs —even in states that didn’t raise the wage — In 1950, there were over 81,000 gas stations and only about200 self-service stations(almost all in California). Self-service stations weren’t popular until the two gas shortages in the 1970s (1973 and 1979) caused higher fuel prices that ledconsumers to look for pricing relief. Almost overnight, full-service stations became all but extinct—taking an entire sector of low-skilled jobs with it.

Rapidly increasing the minimum wage will have the same effect. A small group of employees will see their pay increase while many more would find their jobs pletely, never e back. Because most of the increases won’t occur for 2-3 years, employers have time to find alternatives to the increased cost. One of the most likely changes will be automation in the fast-food industry.

In Europe, McDonalds has ordered7,000 TIOSs (Touch Interface Ordering Systems)to take food orders and payment. In America, Panera Bread willreplace all of their cashierswith wage-free robots in all of their 1,800 nationwide locations by 2016. There is even a burger-making robot that can churn out360 gourmet hamburgers per hour. Increasing wages will encourage corporations to speed up the implementation of automated services. By the time the wages go into effect in Arkansas, there will likely be fewer fast-food jobs available.

But the corporations won’t just use the automation in states with high minimum wages; it’ll be more cost-effective to roll them out nationwide. So the unintended consequences in these four states will affect the labor market for the whole country.

2. Minimum wage laws don’t substantially affect poverty — Most people who support or oppose minimum wage laws and/or increases share mon objective — helping the working poor. Because both sides have noble intentions, the merits of the debate over minimum wage laws and minimum wage increases should be based on empirical evidence that it will actually help, rather than harm, the poor.

Ina piece for the National Center for Policy Analysis, David R. Henderson explains there are two myths about minimum wages and the poor:

Most workers earning at or close to the minimum wage are not the sole earners in a household and most of them are not in poor households. For those two reasons, raising the minimum wage is not a targeted way to help poor people.

Henderson notes that from 2003 to 2007, 28 states raised the minimum wage to a level higher than the federal minimum wage. Using this as a basis for study, San Diego State University economics professor Joseph J. Sabia and Cornell University economics professor Richard V. Burkhauser examined the effects this had on poverty levels in those states. The result shows that there was no difference in poverty levels in those states pared to states with lower minimum wages.

Further, they calculated the effects of a proposed increase in the federal minimum wage to $9.50 on workers then earning $5.70 (or 15 cents less than the minimum in March 2008) to $9.49. They concluded that increasing the minimum wage from $7.25 to $9.50 per hour “will be even more poorly targeted to the working poor than was the last federal increase from $5.15 to $7.25 per hour.”

3.The minimum wage redistributes wealth from the low-skilled poor to the more skilled working poor and middle class— Many supporters of minimum wage increases mistakenly believe that increases in wage rates are transfers of wealth from employers and investors to the workers. But as Anthony Davis explains, the money to pay for the increased wage e from at least one of four places: higher prices for consumers, lower returns to investors, lower prices to suppliers, or a reduced work-force. Empirical research has shown that the primary effect of minimum wage increases is reduced employment, which essentially transfers the wealth (in unearned wages) from the less skilled to the more skilled working poor and middle-class teenagers.

4. Minimum wage increases disproportionality affect African Americans —Employment among African American males between the ages of 16 and 24 isdisproportionately responsive to the minimum wage. A ten percent increase in the minimum wage would reduce employment by 2.5 percent for white males between the ages of 16 and 24, 1.2 percent for Hispanic males between the ages of 16 and 24, and 6.5 percent for African American males between the ages of 16 and 24. Professors Even and Macpherson estimate that in “the 21 states fully affected by the federal minimum wage increases in 2007, 2008, and 2009,” young African Americans lost more jobs as a result of minimum wage hikes than as a result of the macroeconomic consequences of the recession.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
What you should know about frictional unemployment
Note: This is post #100 in a weekly video series on basic economics. Unemployment is generally harmful to both the economy and to the individual. But there is one type of unemployment that is (mostly) benign, and can even be beneficial: frictional unemployment. In this video by Marginal Revolution University, Alex Tabarrok explains why frictional unemployment helps allocate human capital (i.e. workers) to its highest valued use. Even when it’s caused by an event such as a firm going out...
Reframing the free trade argument
Historically, arguments for American free trade have often been criticized or met with skepticism. However, what would happen if these arguments were reframed to suggest the economic and political benefits free trade can offer? In a recent book review for Law and Liberty, Samuel Gregg seeks to answer this question and present others as he engages Pierre Lemieux’s book “What’s Wrong with Protectionism.” In “What’s Wrong with Protectionism” Lemieux presents several arguments for free trade that can be used in...
How missionaries have transformed the world
Despite the negative stereotypes, says Robert Woodberry, missionaries have effectively improved health, education, economic development, and political representation around the world—seemingly more effectively than government aid and secular NGOs: On average, people from countries that had one more Protestant missionary per 10,000 inhabitants 90 years ago currently have 1.5 years more education and 1.3 years more life expectancy. Similarly, for each additional year of Protestant mission activity, countries have $25.72 more GDP per capita on average. Even after rigorous attempts...
Study: The opportunity costs of ‘soft socialism’
Democratic socialism is on the rise in America, inspired by Bernie Sanders’ 2016 presidential run and recent midterm victories by outspoken advocates such as Alexandria Ocasio-Cortez and Rashida Tlaib. But while the movement emphasizes “popular” vs. “state” control, glazing socialist rhetoric with democratic munitarian vocabulary, how different is the movement from socialist manifestations of the past? What might it portend for the future of the American economy and broader society? In a new report, “The Opportunity Costs of Socialism,”the Trump...
An urgent agenda for Bolsonaro in Brazil
Once we get beyond the myths surrounding the long presidency of Franklin Delano Roosevelt, we soon recognize that one of FDR’s successes was to establish a myriad of symbols that captured the imagination of world politics. Among one of the most enduring symbols is the “first 100 days” of an administration as a milestone of its achievements. “100 days” is basically an arbitrary number. For better or worse, however, it has e the rule by which many evaluate whether an...
Oliver O’Donovan reviews Kuyper’s ‘Pro Rege’
Last year, in partnership with the Acton Institute, Lexham Press releasedPro Rege, Vol. 2: Living Under Christ the King, the second in a three-volume series on the lordship of Christ (find Volume 1here) by Abraham Kuyper. At First Things, the esteemed evangelical ethicist Oliver O’Donovan reviews the first two volumes and explains why the Dutch theologian and statesman is still relevant today: Kuyper is at his most persuasive when he lays out his vision of the moral solidarity of the...
6 Quotes: Billy Graham on patriotism and freedom
Today is the hundredth anniversary of the birthday of Billy Graham. Although he travelled the world as “God’s Ambassador,” the humble evangelist from North Carolina had a special affection for his own country. In honor of his birthday, here are six quotes by Graham on freedom and love of country: On the sacrifices of veterans: “The freedoms we enjoy, the freedoms we take so much for granted, the freedoms we so often trifle with were bought not by the gold...
C.S. Lewis on free will and the key to history
“What Satan put into the heads of our remote ancestors,” says C.S. Lewis, “was the idea that they could ‘be like gods’—could set up on their own as if they had created themselves—be their own masters—invent some sort of happiness for themselves outside God, apart from God. And out of that hopeless attempt e nearly all that we call human history—money, poverty, ambition, war, prostitution, classes, empires, slavery—the long terrible story of man trying to find something other than God...
The Acton Institute awards 2018 Novak Award to Lucas G. Freire
Fr. Robert Sirico presented the Acton Institute’s 2018 Novak Award to Brazilian professor Lucas G. Freire on Monday, November 5. Freire’s acceptance speech offered reflections on the “idolatrous distortions” evidenced in modern public discourse by placing too much trust in the state, and too little faith in markets and individuals. He then presented insights from the Reformed tradition as expressed by Abraham Kuyper. Fr. Sirico personally handed Freire – an assistant professor at Mackenzie Presbyterian University in São Paulo, Brazil,...
Access vs. aid: The economic promise of Africa’s new trade agreement
In battling poverty in the developing world, the West is often consumed in debates about foreign aid. Yet many of the core problems stem from more basic lack of access to the pond and opportunities create, participate, and collaborate therein.Last spring, in an effort to address those problems, 44 African leaders and government officials agreed to create theAfrican Continental Free Trade Area(AfCFTA), seeking to improve access to markets and bolster intra-Africa trading relationships across the continent. The participating countries have...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved