Creating a State Minimum Wage

S.938 would create a state minimum wage higher than its federal counterpart. The state minimum wage would be set at $8.75 an hour starting January 1 2017 and would be raised to $15 an hour by January 1 2020. After 2020 the state minimum wage would be adjusted annually for inflation.

Like S.144 from the 2015 session, S.938 attempts to mute any unemployment effects caused by raising the minimum wage by allowing persons aggrieved by a violation of this law to bring civil actions against an employer. Employers in turn would be prohibited from any retaliatory action against a person who filed such a civil complaint. The attorney general would also be able to enforce this law through civil action which could either seek injunctive relief, or impose a fine of $1,000 for each violation of the law.

As we have said before no matter the enforcement provisions, the laws of supply and demand cannot be legislated away. Forcing employers to pay a wage above the wage the productive capacity of their workers dictates will inevitably increase unemployment. Even if companies are legally prohibited from firing current employees whose work does not justify their mandated wages, they will compensate by simply hiring less, or hiring from a more restricted pool of applicants in the future. Alternatively, many companies that cannot bear the new legislatively imposed costs of the increased minimum wage will simply go out of business. Either way the result will be more unemployment.

A state imposed minimum wage harms business by driving up costs, and harms low skilled individuals by denying them entry level jobs which they could use to build experience and skills thereby justifying advancement and a higher wage.

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