Study shows minimum wage hike will cost jobs, opportunity

Ray Carter | January 2, 2024

A ballot measure to raise Oklahoma’s minimum wage to $15 an hour by 2029 took a blow recently when a Congressional Budget Office (CBO) study showed a similar federal proposal would eliminate many entry-level jobs for workers.

In Oklahoma, supporters of an initiative-petition measure have collected signatures to place State Question 832 on the ballot before voters. The proposal would raise the state’s minimum wage to $9 an hour in 2025, then to $10.50 in 2026, $12 in 2027, $13.50 in 2028, and $15 in 2029. After that point, the minimum wage would automatically escalate based on changes in the U.S. Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers.

A website touting the effort, Raise the Wage Oklahoma, declares that raising the minimum wage “helps hard-working Oklahomans feed their families and pay for housing.”

But a recent CBO study of the federal Raise the Wage Act of 2023, filed by U.S. Sen. Bernie Sanders, a self-described socialist from Vermont, indicates that the wage increase could leave many workers with less opportunity and less income.

The federal legislation would raise the federal minimum wage, in annual increments, to $17 per hour by July 2029. After 2029, the bill would tie additional increases to the rate of median hourly wage growth.

Among the CBO’s findings is that the proposed wage increase would reduce job opportunities for entry level workers.

“Employment would be reduced because employers would respond by reducing their workforces,” the CBO report stated.

The report estimated that 700,000 jobs would be eliminated nationwide as a result of the minimum-wage increase. The number of lost jobs exceeds the number of people the CBO estimated would have their income rise above the poverty level because of the change, predicting just 400,000 people nationwide would rise out of poverty due to the law.

In 2024, the CBO estimated that “most workers who would not have a job because of the higher minimum wage would still be looking for work and hence be categorized as unemployed,” and that by 2029 nearly half of the 700,000 people who lose jobs because of minimum-wage changes “would have dropped out of the labor force.”

“Younger, less educated people would account for a disproportionate share of those reductions in employment,” the CBO report stated.

The impact of State Question 832 could be more severe, however, because it could ramp up the mandatory minimum wage in Oklahoma at an even faster rate than what is envisioned through Sander’s Raise the Wage Act.

Because SQ 832 ties future, mandatory increases in Oklahoma’s minimum wage to the U.S. Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers, the rate could skyrocket in future years, based on data recently released by The State Chamber and the Oklahoma Farm Bureau.

The two groups recently noted that within 15 years SQ 832 could increase Oklahoma’s minimum wage to $22.16 per hour if the Consumer Price Index for Urban Wage Earners and Clerical Workers grows at the 10-year average. But if the index grows at the more recent five-year average, the wage mandate could hit $27.56 per hour in 15 years, and if the index grows at the same rate as the last three years, the mandatory minimum wage in Oklahoma could reach $35.61 per hour within 15 years.

“Let’s be clear, most of our members already pay well above the current minimum wage hourly rate to their non- salaried employees,” said Chad Warmington, president and CEO of The State Chamber. “What is a major concern to us is the automatic, open-ended increase being linked to a federal government produced index that is based upon cost-of-living rates in cities like New York or San Francisco. Those areas are not reflective of the actual cost of living in Oklahoma. This ill-conceived plan would give Oklahomans no opportunity to adjust or halt these automatic increases.”

“Oklahoma Farm Bureau members understand the importance of fair compensation for honest work as farmers and ranchers rely on dependable, hardworking individuals to ensure their agricultural operations run smoothly and efficiently,” said Steve Thompson, OKFB vice president of public policy. “State Question 832 seeks to raise minimum compensation through national economic projections that are unrepresentative of Oklahoma’s economy, and these burdensome government mandates will only intensify the inflationary pressures Oklahomans are already facing.”

Oklahoma Attorney General Gentner Drummond has challenged SQ 832, filing a brief in the Oklahoma Supreme Court that declares the proposal “manifests plain constitutional infirmities” that include “an unconstitutional delegation of legislative authority.”

Drummond’s brief argues that SQ 832’s provision mandating future increases in the minimum wage based on the processes of the U.S. Department of Labor runs counter to prior court decisions and is a delegation of state legislative authority to the federal government.

Drummond’s brief also says that provision makes it “impossible for the legislature (or the public) to know or evaluate subsequent changes” in the minimum wage, noting that the U.S. Department of Labor’s standards for determining the Consumer Price Index have been altered over time and remain subject to change in the future.

Drummond also noted the Consumer Price Index for Urban Wage Earners and Clerical Workers is designed to represent urban households and not rural communities and is “not necessarily representative of Oklahoma.”

While Oklahoma’s current minimum wage of $7.25 per hour has been in place since July 2009, wages have continued to increase without any government mandate.

For example, Indeed, a job-search website, shows that the hourly salaries of cashiers in Oklahoma Walmarts currently average $12.85 per hour but go as high as $22.10 per hour. A similar website, ZipRecruiter, reports that “the majority of Walmart salaries currently range between $8.84 (25th percentile) to $25.88 (75th percentile) in Oklahoma.”

Ray Carter Director, Center for Independent Journalism

Ray Carter

Director, Center for Independent Journalism

Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.

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