Four US states vote to raise minimum wages -- what will the effect be?

It seems we have a sort of natural economic experiment in progress due to the election results in four US states that voted to raise the minimum wage (not taking immediate effect though). It will, however take at least a year, and probably more to really see if there is any effect on unemployment and jobs. I hope to revisit this thread in the future and see if we can learn anything useful.



Four States and Two Cities Hike Their Minimum Wage Rates

Quote:

Alaska: More than two-thirds of voters in Alaska agreed to raise the minimum wage to $9.75 by 2016. The measure increases the state’s current minimum wage from $7.75 per hour to $8.75 beginning January 1, 2015. This is followed by a second increase to $9.75 on January 1, 2016. From that point on, the minimum wage will be adjusted based on inflation or remain $1 higher than the federal minimum wage, whichever amount is greater. Arkansas: Arkansas voters overwhelmingly approved a measure to increase the state’s minimum wage incrementally to $8.50 per hour by January 1, 2017. On January 1, 2015, the hourly wage will increase from $6.25 to $7.50, then to $8.00 on January 1, 2016. Of note, Arkansas is one of three states whose minimum wage is currently lower than the federal minimum wage of $7.25 (though when a state’s minimum wage is less than the federal minimum wage, the federal rate applies). Nebraska: Nebraska voted to increase its minimum wage in two increments: from $7.25 to $8.00 on January 1, 2015; and from $8.00 to $9.00 on January 1, 2016. When the first increase takes effect it will be the first time the state’s minimum wage has been higher than the federal minimum wage. South Dakota: South Dakota passed Initiated Measure 18, increasing the minimum wage from $7.25 per hour to $8.50 per hour beginning January 1, 2015. The new law also guarantees an increase in the minimum wage each year thereafter to account for inflation. Additionally, the measure set the tipped employee minimum wage at half that of the minimum wage, raising the tipped employee minimum wage from $2.13 to $4.25 an hour. Illinois: Voters approved a nonbinding advisory question that calls on the state Legislature to approve a $10 minimum wage effective January 1, 2015. The state’s minimum wage is currently $8.25 per hour. In addition, a number of cities also had wage-hike referendums. Oakland, California: Voters approved a measure to increase the citywide minimum wage to $12.25 beginning on March 2, 2015. The minimum wage rate will thereafter increase yearly on January 1st based on cost of living adjustments. San Francisco: The City, which currently has a minimum wage of $10.74, passed an incremental minimum wage increase that will reach $15 an hour on July 1, 2018. Under the new law, the minimum wage will rise to $11.05 on January 1, 2015. On July 1, 2016, the minimum wage will increase to $13 per hour; then $14 on July 1, 2017. Beginning on July 1, 2019, the minimum wage will increase annually based on the Consumer Price Index.

Just for a baseline, the latest reported national unemployment rate at this time is 5.8%. For the states in question:

SOUTH DAKOTA 3.4

NEBRASKA 3.6

ARKANSAS 6.2

ILLINOIS 6.6

ALASKA 6.8



The unemployment rates in South Dakota and Nebraska are already quite low. Hard to get much better than that. The question is, will they get worse? The Illinois thing was non-binding, but if the legislature and governor follow through on it, it could also be a data point, so I'll include them for the time being.



There's also data for Oakland and San Fransisco, although they are taken as one area in the statistics:

San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area 5.0