If State Question 832 passes in June and Oklahoma’s minimum wage surges to $15 and more in future years, economists overwhelmingly agree there will be negative consequences for workers and consumers as jobs and hours are cut and prices increase.

State Treasurer Todd Russ, a longtime resident of western Oklahoma, says the impact will be especially harsh for rural communities.

“Rural Oklahoma has the most to lose,” Russ said.

Under State Question 832, the minimum wage in Oklahoma will more than double to $15 an hour by 2029 and then continue rising at a rapid pace every year thereafter based on increases in the cost of living in the nation’s largest urban centers, as measured by the U.S. Department of Labor’s Consumer Price Index for Urban Wage Earners and Clerical Workers. That would effectively tie Oklahoma’s wage mandate to the cost of living in places like New York City or San Francisco.

As a result, while SQ 832 would initially mandate that entry-level jobs pay $15 an hour in 2029, an analysis by The State Chamber of Oklahoma and Oklahoma Farm Bureau found SQ 832 would put Oklahoma’s minimum wage on a fast track to $35.61 per hour and continue rising thereafter.

“Fifteen dollars an hour is the very beginning, and this process is going to set in where it’s just going to continue to grind away at the employer cycle after cycle after cycle,” Russ said.

A broad swath of economists agrees that the formula will generate a significant negative impact in Oklahoma.

When the Employment Policies Institute, a nonprofit research organization, commissioned a survey of 166 American economists in March and April, the survey found that 69 percent of economists say it will be harder for small companies to stay in business if the wage mandate is up to $15 an hour.

If the mandate is increased to $20 per hour, as will happen later under SQ 832, the survey found 94 percent of economists say it will be harder for small employers to stay in business. At more than $20 an hour, 98 percent predict small businesses will struggle.

If SQ 832 causes small businesses to close in rural towns, that severely impacts the ability of residents to get work, Russ noted.

“We just don’t have as many places to turn to for backup if we lose our jobs in this area,” Russ said. “In bigger communities, there are 500 other places to go. In smaller communities, there’s one or two, maybe less than half a dozen.”

On paper, SQ 832 has exemptions for some small businesses, but those exemptions are so tightly written that very few employers will qualify—and the share of exempted businesses will decline every year.

SQ 832 exempts only businesses with fewer than 10 employees and less than $100,000 in gross receipts, not profit. Thus, a business with just three employees that pays $34,000 each would not be exempt, regardless of actual profit. Only about 15 percent of Oklahoma employer firms gross under $100,000 a year, and the $100,000 threshold is not adjusted for inflation, meaning more and more small businesses will be hit by SQ 832’s ever-rising wage mandate in future years.

That will not only have an outsized impact in rural areas, but also hammer much of Oklahoma.

“A large percentage of employers in our state are small businesses,” Russ said. “They’re not large companies and organizations.”

If small businesses are forced to close their doors due to the ever-growing labor costs imposed by SQ 832, the ripple effects will be severe for local funding of many towns.

In many rural communities, Russ noted, there may be only one motel and/or one to three restaurants. But that handful of businesses generates an overwhelming share of local sales tax collections that support the city government.

“I’m used to communities that if they lost one grocery store, they’d have almost zero sales tax coming in, because that’s the biggest part of their base in these little bitty towns,” Russ said.

Currently, Oklahoma has a very low cost of living compared to most states in the country, and especially compared to states like California that have imposed SQ 832-style wage mandates.

“The cost of living in Oklahoma is phenomenal,” Russ said.

But SQ 832 will reduce that competitive advantage and make Oklahoma more closely resemble high-cost states on the east and west coasts.

The Employment Policies Institute survey showed that 59 percent of surveyed economists believe a $15 an hour minimum wage will increase consumers’ cost of living. If the minimum wage is boosted above $20 an hour, as SQ 832 would ultimately require, 84 percent of economists believe surging costs are likely, with 42 percent predicting an above-$20 wage mandate will increase consumer costs “significantly.”

That will also translate into greater poverty for workers as employment opportunities decline and prices rise.

If the minimum wage is $15 per hour, 39 percent of surveyed economists think it will increase poverty rates. Once the rate hits $20 an hour, the survey found 57 percent of economists say it will increase poverty rates. At more than $20 per hour, 66 percent of economists think poverty rates will increase.

Those wishing to get a glimpse of Oklahoma’s future under SQ 832 can do so by visiting California, Russ noted.

“Anybody been to California lately, paid for anything?” Russ said. “Was it cheap? No! Costs you out the nose. You can hardly wait to get out of there. You hope your credit card lasts until you can get out of town.”