Topeka, KS – The nonpartisan, not-for-profit Ad Astra Institute (AAI) has just released a report suggesting that the economic impact of minimum wage increases in Kansas would likely be positive for workers, businesses, employment and economic development. The report, “Impacts of Minimum Wage Increases in Kansas: A Background Report” estimates the number of Kansas workers likely to be affected by increases in the minimum wage, summarizes theories of economic impact and reviews actual effects of minimum wage increases in other states and cities.
The Kansas minimum wage of $2.65 per hour applies to workers in job categories not protected by the Federal minimum wage ($5.85). The study documents this under-examined category of workers at the lowest end of the wage spectrum.
To help determine how minimum wage increases would affect Kansas businesses and local economies, the study draws on evidence from states and cities that have raised their minimum wages above the Federal level. Such locally driven increases became common over the past decade, due largely to the stagnation of the Federal minimum wage at $5.15 an hour. Eroded by inflation, and having lost nearly 20% of its purchasing power, the Federal minimum was finally increased in July 2007 to $5.85 an hour. Even so, 33 states have already raised their statewide minimum wages above the current $5.85 level.
Selected findings:
o Kansas has the lowest minimum wage in the nation. The Kansas law has no effect on workers covered by the federal law, but covers certain employees exempt from the federal law. These include childcare workers, companions to the elderly or infirm, and employees of private firms grossing less than $500,000/year and not engaged in interstate commerce.
o A total of 17,000 Kansas workers received less than the $5.15 minimum wage in 2006. Researchers note that this figure will have risen as a result of the recent Federal minimum wage increase. There are an unknown number of workers not covered by federal law who received between $5.15 and $5.85 an hour.
o A minimum wage increase would have no substantial long-term effects on output, employment or profits. Short-run adjustments in prices, made by businesses reliant on low-wage workers, are likely to be much too small to have significant impacts on the overall price levels, and will not cause an ongoing inflationary spiral. The long-term benefits of greater consumer purchasing power, higher sales tax revenue, less turnover and absenteeism, a more productive workforce and a higher overall cash flow in the local economy are likely to compensate for a modest wage increase among the lowest paid workers in the Kansas economy.
o Historically, there has been a correlation between minimum wage increases and economic development. The Fiscal Policy Institute found that, in the five years following the Federal minimum wage increase of 1996-97, small businesses actually grew faster in states with higher minimum wages than in states with lower minimum wages (small businesses are defined as having fewer than 50 employees).
o In 2004 Kansas had an estimated 300,000 persons in poverty – about 100,000 of whom were children and 30,000 of whom were over 65. More than 20,000 (of working age) had severe disabilities and did not work.
The Ad Astra study was commissioned by the Kansas Action Network (KAN), a coalition for workers’ rights, social justice and economic fairness. KAN board member, Tawny Stottlemire, noted that, “Kansans have always valued a strong work ethic and believed that if you work hard and play by the rules, you’re going to be able to earn a decent living. Today, our state poverty rate of 12.5% exceeds the national average and our state minimum wage is less than half that of the Federal minimum wage. These realities are way out of sync with the values of our citizenry.”
KAN is currently engaged in a statewide campaign to “Raise the Wage” in Kansas. The project is coordinating campaigns in Wichita, Kansas City and Topeka, and at the state level. Stottlemire added that, “Without an adequate state minimum wage in place, there will be workers who slip through the cracks. Kansas needs to protect and value all of its workers. As long as there is a state law allowing employers to pay $2.65 per hour – some will. None should.”
Download Ad Astra Institute’s full report >>
“Impacts of Minimum Wage Increases in Kansas: A Background Report”
For more information contact Heidi Zeller, the KAN organizer for Raise the Wage, at 785.760.2764 or raisethewagekansas@gmail.com. Additional information about the campaign is available at www.raisethewagekansas.org. For more information on KAN, visit www.ksactionnet.org.
The Lawrence-based Ad Astra Institute is a nonpartisan, not-for-profit think tank dedicated to promoting the health and prosperity of Kansas families and the communities in which they live. Inspired by the Kansas state motto, Ad Astra Per Aspera (’to the stars through difficulties’), AAI believes the challenges facing our state can be met with solutions that are both pragmatic and progressive. adastrainstitute.org.
