Effective today, Arkansans earning the state’s minimum wage will receive a $ 1 per hour wage increase under a law passed in 2018.
Arkansas companies are now required to pay employees no less than $ 11 an hour, marking the final step in a three-year phased implementation that began in 2019. Prior to that, the minimum wage in the State was $ 8.50 an hour.
The wage increase is $ 40 per week, before taxes or other deductions, for employees who work 40 hours per week at minimum wage. Minimum wage earners in Arkansas will earn up to $ 440 per week.
The change comes amid economic uncertainty caused by the worst pandemic in 100 years. Supporters say the $ 1 increase comes at the perfect time, as many families struggle to make ends meet.
“The chances of all of this actually being used to save are slim. Not only are people going to make more money, they are going to have more money to spend,” said David Couch, who led the campaign for the act initiated in 2018..
Those who oppose it say it places a burden on businesses in an already difficult time.
“It will be more difficult for some people to find work because business owners will be forced to pay their employees for fewer hours or to hire fewer people to compensate for the increase. It’s tough, ”said Randy Zook, president of the Arkansas State Chamber of Commerce.
The Natural State is one of 20 states that raised its minimum wage on Thursday or today. Another state, Michigan, previously planned to increase its minimum wage, but a state law prohibits scheduled minimum wage increases when the state’s annual unemployment rate is above 8.5%.
In 2018, Arkansas was one of six states to raise wages through voting initiatives. Missouri is the only neighboring state to raise its minimum wage right now, from $ 9.45 to $ 10.30 an hour. It will continue to increase by 85 cents an hour each year until 2023, when it hits $ 12 an hour.
The other states surrounding Arkansas follow the federal minimum wage, which was set at $ 7.25 an hour in 2009.
Governor Asa Hutchinson, along with the state congressional delegation, opposed the 2018 measure.
When asked at a press conference on December 22 if he would call for a moratorium on the minimum wage increase due to the pandemic, Hutchinson replied that he would not.
Noting that this was a question approved by the voters, the governor said: “… (C) it would not be something that I am considering or that I would consider, and it does not feed into concerns that I have heard from small businesses. They’re struggling, but there are a lot of different factors to that, and of course that impacts their pay rates as well, but I’m delighted that Congress has come together in a bipartisan fashion and brought relief to the people. small enterprises. The governor was referring to the paycheck protection program.
Zook said on Tuesday that the state chamber had no plans to address raising the minimum wage during the 2021 regular legislative session. The session begins Jan. 11.
“It’s a difficult question,” he said. “It’s a popular idea, you know, to raise wages, but at the same time there are limits. But it’s a political challenge. When people start voting for their income, bad things usually happen. . “
During the 2019 regular session, lawmakers debated a measure that would have exempted small businesses and nonprofits from minimum wage increases, but the legislation is dead.
Zook, as well as some state lawmakers, have raised concerns about the rising costs of child care. Couch was skeptical.
“I’m sure in some cases that could be the case for people who didn’t get a minimum wage increase and had to pay more for the daycare, but the moral of my story is that the daycare is swelling. the price far more than the price the cost of additional wages, ”Couch said.
Jamie Thornton, co-owner of Natural State Smoothies in Fayetteville, said he believes the wage increase will hurt many businesses like his. The company has 14 part-time employees, all university students, who he says are all looking for extra hours to work that he can’t give them.
“I’m in favor of paying a living wage, but it’s going to be tough for companies like ours,” Thornton said. “If it was a quarter to 50 cents a year every year for the next five or six years, it would have been a much easier thing for small businesses like mine, but a dollar during a global pandemic is a lot of horror. ask companies that are already struggling to do so. ”
Thornton said he would probably try to raise prices in order to make up the payroll.
Bruno Showers, senior policy analyst at Arkansas Advocates for Children and Families, did not rule out workers’ hours being cut due to minimum wage increases, but said it did not result in lower overall wages. .
“If you make $ 7.25, then $ 11 and work 35 hours, you always have more income in your pocket. I think most people would consider that a good thing,” he said.
The nonprofit group supported the 2018 minimum wage increase initiative and released a study the same year that found that about 1 in 4 Arkansas workers – nearly 300,000 people – would benefit from the increase in the minimum wage.
That number includes 213,000 workers whose wages are directly affected by the law and another 88,000 who earn slightly more than the state’s minimum wage and whose wages would likely increase as employers pay more to keep them, according to study.
Some companies that pay more than the minimum wage include Target, which increased its minimum wage over several years to $ 15 an hour in 2020, and Hobby Lobby, which increased its minimum wage to $ 17 an hour in 2020. .
Showers said minimum wage increases have a net zero impact on unemployment rates as higher wages are pumped back into the local economy.
Arkansas minimum wage law applies to employers with four or more employees. Under state law, tip employees must be paid at least $ 2.63 per hour, and the tips they earn must be sufficient to bring them to minimum wage.
In the United States, in 2019, 392,000 workers earned exactly the federal minimum wage of $ 7.25 an hour, and about 1.2 million were paid below the federal minimum, according to the Bureau of Labor Statistics.
These two groups accounted for almost 1.9% of all workers paid by the hour. This is down from 2.1% in 2018.
The states with the highest percentages of hourly workers earning at least minimum wage were in the South, according to the bureau’s report.