$1.25 rise in state's base pay set today

Thousands of Arkansas workers will see a bump in their paychecks starting today.

Voters overwhelmingly approved a constitutional amendment in November that will raise the state's minimum wage in three increments from $6.25 an hour to $8.50 an hour on Jan. 1, 2017. Today's $1.25-per-hour jump raises the state's minimum wage above the federal minimum wage of $7.25 per hour.

Arkansas is one of 19 states that, along with the District of Columbia, will increase their minimum wages starting today. Three others are scheduled to increase their minimum wages later in the year, and New York increased its minimum wage Wednesday.

The Arkansas Department of Labor, along with different industry groups, has been working to spread the news.

Most employers who have four or more employees are required to pay at least the state minimum wage, with the exception of some agricultural industries, some public teaching positions and a few other jobs.

On Nov. 4, almost 66 percent of voters approved the amendment. Until now, businesses that made more than $500,000 in revenue or accepted credit cards as payment were required to pay the federal wage. Under the new law, those businesses will be subject to the higher state minimum wage.

Lindsay Moore, manager of the Labor Standards Division of the Department of Labor, said the agency has been passing out new posters that are required to be hung in break rooms at companies with more than four employees.

"Our investigators have been out informing business owners, providing our new posters with the new rates. We've also offered to go out and talk to various groups and inform them about the new law and what is being required," Moore said. "This is going to affect any employer in the state with four or more employees. The Arkansas minimum wage is going to be 25 cents more than the federal minimum wage, so it will be all of those businesses."

Moore said the bump in pay will not change pay for waiters, which is $2.63 per hour plus tips. If those tips do not take the server's pay up to $7.50 an hour, the employer is required to make up the difference.

"We've had an increase in calls, particularly in the food service industry, when it comes to tip credit," he said. "But the wage for servers did not change."

Montine McNulty, executive director of the Arkansas Hospitality Association, said her group has sent reminders and information about the increase to its member businesses repeatedly after voters approved the constitutional amendment. She said the group has gotten questions from members, noting that the association and the Labor Department have information and fact sheets on their websites for businesses.

The change will happen in the middle of a pay period for most employers, but Moore said they cannot wait until after the pay period ends to adjust wages.

He said after this year, the next two increases -- to $8 an hour on Jan. 1, 2016 and to $8.50 an hour on Jan. 1, 2017 -- will likely be easier because employers will have experience with the increases.

"We're stepping things up through the first quarter of the year, making more visits, delivering posters and talking to groups. But after that, we're hoping to go back to the regular investigator schedule," Moore said.

National economic-policy nonprofits and state agencies and economic groups disagreed about how many workers would be affected by the change or how much more revenue or spending the pay bump would lead to.

The Economic Policy Institute, a nonprofit, nonpartisan think tank started in the 1980s with the goal of including low and middle-wage workers in the national discussion of economic policy, released a study earlier this month looking at scheduled minimum wage increases. Nineteen states and Washington, D.C., are scheduled to increase their minimum wages on Jan. 1.

Of those increases, 10 states and Washington, D.C., increased their minimum wages because of legislation or voter approved measures. The remaining nine states have laws in effect that periodically adjust the minimum wage based on cost of living.

Three other states, Alaska, Delaware and Minnesota, are scheduled to increase their minimum wages later in the calendar year. And New York's 75-cent per hour increase went into effect Wednesday.

The increases in Alaska, Nebraska and South Dakota -- like Arkansas -- were passed by voters.

According to the nonprofit, about 40,000 Arkansas workers will see a direct increase in their wages after today. The study suggests another 17,000 workers who earn just above the minimum wage will also likely see an increase in their salaries as well.

The group estimates that increase will mean about $17.5 million in additional earnings for Arkansas workers and about $11 million in new consumer spending.

Administrators at the Arkansas Department of Finance and Administration said the agency's economic analysts have not broken down the effect the minimum wage increase is expected to have on the state's monthly revenue.

Michael Pakko, the state economic forecaster and chief economist for the Institute for Economic Advancement at the University of Arkansas at Little Rock, said he has not done a specific study of the minimum wage increase because he does not expect the first increment to have a large effect on the state's revenue or financial outlook.

"It doesn't give a discernible change in the numbers," Pakko said. "It's going to have an increasing impact over time, but as far as the impact at any given time, it's unlikely to make a real difference in the forecast. It's probably just not going to be a lot of difference in the tax coffers."

Pakko said the larger effects of the change may become apparent if Arkansas outpaces neighboring states with a higher minimum wage. He said that may affect whether businesses that depend on minimum wage labor as part of their production decide to locate in Arkansas.

"As an economist, I have frequently pointed out some of the negative impacts raising the minimum wage can have on employment and on businesses that might choose to open in a state," Pakko said. "But the impact is likely to be small, dependent on those outside factors."

A section on 01/01/2015