By Michael Saltsman
North Dakota's secretary of state recently approved for signature collection a ballot initiative that would raise the state's minimum wage to $15 by 2021. To get a sense of how radical that is, that's a 107 percent increase over the state's current minimum wage--at a phase--in that would happen even faster than scheduled increases in California or New York. Before voters rush to endorse this ballot measure, they should consider the evidence from other locales that have embraced the Fight for $15.
The movement for a $15 minimum wage got its start in the high-wage city of Seattle. The theory put forward by supporters was that techies and tourists would pay the higher costs necessary to fund this dramatic wage hike. It didn't turn out that way: A city-funded research team at the University of Washington found that the City of Seattle $15 experiment reduced employees' hours and had a negative effect on their paychecks, roughly $125 a month less.
Down the coast in California, economists at Harvard Business School and Mathematica Policy Research found that a similar minimum wage experiment in another "high wage" town (San Francisco) was similarly harmful. Each $1 increase in the minimum wage increased the closure rate for certain restaurant by roughly 14 percent. By the time California's $15 minimum wage is phased in statewide, researchers at Trinity and Miami University estimate that roughly 400,000 will be lost--with the greatest losses occurring in the hospitality and service industries.
These data points should be a warning sign for North Dakotans. The current median hourly wage in the San Francisco metro area is nearly $25 an hour; it's $23 in the Seattle metro area. If a $15 per hour minimum wage wasn't supported in a city where there's a $25 an hour median wage, it definitely won't fare well in a city such as Fargo, where the median wage is $17 an hour. Even one of the country's foremost academic proponents of raising the minimum wage suggested a figure closer to $9 minimum wage right for North Dakota.
These aren't just statistics: My organization, the Employment Policies Institute, has profiled the stories of dozens of businesses throughout the country that were forced to cut back on staff, employee hours, or even permanently close from an increased minimum wage. (Over 100 can be viewed at FacesOf15.com). The victims include nonprofits, local bookstores, neighborhood diners, and daycares-these aren't corporate bigwigs, but rather mom-and-pop businesses that pay the cost of $15.
Also lost in the debate over a new wage mandate is that the data show it's unnecessary. North Dakota is a primary example of that: A Walmart store in Williston made news when it offered a starting wage upwards of $17 an hour for positions such as cashiers and truck loaders in order to be competitive in a tight job market. Companies such as Target have recently increased their own starting wages to attract talent. But the voluntary actions of these employers doesn't mean that every small business to pay the cost of $15--which is why increasing the minimum wage so far above any state or historical precedent is such a bad idea.
North Dakota voters can stop this ballot measure in its tracks by declining to sign the petition to put it to voters. Small businesses, and the people they employ, will thank you.
Michael Saltsman is the managing director of the Employment Policies Institute