Would a 30-cent raise make a real difference to workers?

From January 1, 2025, workers receiving the minimum wage in South Dakota will see an increase in salaries. The minimum wage for non-tipped workers will rise 30 cents to $11.50 an hour, according to the Associated Press (AP). Wages for tipped workers would increase to $5.75 an hour.

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The increase is part of a 2016 law linking the state’s minimum wage to the consumer price index (CPI), helping it keep pace with inflation.

The big question is: Will a 30-cent increase make a big difference for workers in South Dakota?

Impact of the minimum wage in South Dakota

For many people, 30 cents may not seem like a game changer. Despite the wage increase, South Dakotans may find that their purchasing power remains the same or even decreases, regardless of whether the minimum wage is linked to the CPI.

If we break down the salary increase, full time minimum wage the worker would take home $624 more per year, for an estimated total income of $23,920. In South Dakota’s lowest-income Todd County, the EPI Family Budget Calculator estimates that a single adult without children would need approximately $41,643 to achieve a modest but adequate standard of living. That figure more than doubles to $93,548 for two adults and two children.

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MIT’s cost of living calculator shows that the cost of living for a single adult without children is $19.58 per hour. The report also found that the poverty rate for a single adult without children in South Dakota is $7.24 an hour, which shows that the minimum wage is closer to a poverty wage than a cost of living.

The extra $624 doesn’t quite meet the goal of helping South Dakotans achieve the income needed for a modest standard of living.

According to Cornell Law School, the minimum wage was designed to stabilize the economy after the Depression and protect workers in 1938. It was also designed to create a minimum standard of living to protect the health and well-being of employees.

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Big picture

The minimum wage is part of a broader national dialogue and influences national wage levels and living standards. The current federal minimum wage is $7.25 per hour, and this rate has not changed in the last 15 years. Thirty states, including South Dakota, have opted to raise their minimum wage.

Those who support raising the minimum wage argue that higher pay is needed to help workers and manage living costs, as well as reduce dependence on government assistance. On the other hand, critics say salary increase could trigger inflation, job losses and rising consumer prices.

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Research shows that workers generally report better financial stability and lower rates of food insecurity in states with higher minimum wages, such as Washington, where the minimum wage is $16.28 an hour.

Increasing the federal minimum wage to $15 would reduce poverty and inequality and shift money from corporate profits to the wages of low-wage workers, according to a Congressional Budget Office report. However, the report also said large increases in the federal minimum wage could lead to job losses as businesses adjust to rising labor costs.

Raising the minimum wage by 30 cents in South Dakota may provide some relief to workers, but is unlikely to significantly improve the financial situation of many. The experience contributes to a long-standing debate about raising the minimum wage and what the best solution is to adequately support workers across the country.

For those who are facing financial difficulties and are looking for financial advice and additional income opportunities may be beneficial without relying solely on salary increases.

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This article South Dakota’s minimum wage hike: Will a 30-cent increase make a real difference for workers? originally appeared on Benzinga.com

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