SIOUX FALLS, South Dakota — The new year comes with a pay raise for thousands of South Dakotans who make minimum wage or wait tables, but Thursday's increase already has prompted some higher fees and budget changes.
Residents voted 55 percent to 45 percent in November for a measure that raises the minimum hourly wage from $7.25 to $8.50 an hour, increases the $2.13 hourly tip wage to half the minimum wage, and ties future increases to the cost of living.
The hourly increase represents about $50 additional per week for a full-time worker. A study released last fall by the nonpartisan nonprofit South Dakota Budget and Policy Institute found about 34,000 South Dakotans would be in line for raises and another 28,000 workers who make slightly more than the federal minimum wage could see a boast as employers adjust wage scales.
The hike means more money for Laurel Lund, who rents a house in Hot Springs, to pay for her prescriptions. Lund will get a 50-cent raise from her $8 hourly wage at a Taco John's in Hot Springs.
"It helps pay bills or I wouldn't be here," said Lund, 56, who was laid off from her job at a concrete company after the snow and cold came.
Proponents argued that a wage increase would boost South Dakota's lagging personal income, but business groups said it could trigger layoffs and higher prices for some goods and services.
That's already happening, said Shawn Lyons, executive director of the South Dakota Retailers Association in Pierre.
The Board of Regents, which oversees the state's six public universities, said it will have to find another $970,000, including from tuition, student fees and room and board. The Aberdeen Salvation Army said it will have to plug a $5,000 hole in its budget. And the Oahe YMCA in Pierre cited the wage increase, as well as utilities and insurance, as reasons for a fee increase in 2015, Lyons said.
"It's not just the business community seeing the impact. It's widespread," he said.
The South Dakota Democratic Party and some labor unions gathered enough signatures to put the proposal in front of voters, arguing that in a state that prides itself on being business-friendly, a worker-friendly wage increase is long overdue.
Mark Anderson, president and financial secretary of the state's AFL-CIO union, said the increase will impact some employers but also help overall wages rise in the state.
"The economy's booming. I think it's a good idea that the workers get their share," he said.
Dawn Dovre, spokeswoman for the state Department of Labor, said the biggest question from businesses is whether they need to put up a new poster advertising the new minimum wage, so the agency created a new one that can be downloaded from its website. The department also consulted retailers in putting together a "frequently asked questions" section, she said.
South Dakota is one of 21 states increasing its minimum wage. An analysis by Washington-based liberal think tank the Economic Policy Institute this month projected an economic impact of $22.5 million in the state from increased consumer spending caused by the wage increase.
Associated Press writer James Nord in Pierre, South Dakota, contributed to this report.
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