South Dakota's Minimum Wage Hike: Will A 30-Cent Raise Make A Real Difference For Workers?

Starting Jan. 1, 2025, workers earning minimum wage in South Dakota will see a bump in their paychecks. According to The Associated Press (AP), the minimum wage for nontipped workers is set to rise by 30 cents to $11.50 an hour. Tipped workers will see their wages increase to $5.75 an hour. 

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This increase is part of a 2016 law linking the state's minimum wage to the Consumer Price Index (CPI), helping it keep up with inflation. 

The big question: will a 30-cent raise make a big difference for workers in South Dakota? 

The Impact of South Dakota's Minimum Wage

For many people, 30 cents might not feel like a game-changer. Despite the wage bump, South Dakotans could find that their purchasing power remains the same or even shrinks, regardless of whether the minimum wage is connected to the CPI. 

If we breakdown the wage increase, a full-time minimum wage worker will take home $624 more a year, for an estimated total income of $23,920. EPI's family budget calculator estimates that in the lowest-earning county in South Dakota–Todd County – a single adult with no children needs roughly $41,643 to attain a modest yet adequate standard of living. That number more than doubles to $93,548 for two adults with two children. 

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MIT's living wage calculator shows that a living wage for a single adult with no children is $19.58 per hour. It also reports that the poverty level wage for a single adult with no children in South Dakota is $7.24 per hour, showing the minimum wage is closer to the poverty wage than a living wage. 

The extra $624 doesn't quite meet the mark on helping South Dakotans achieve the income they need for a modest standard of living. 

According to Cornell Law School, the minimum wage was designed to stabilize the post-depression economy and protect workers in the labor force in 1938. It was also designed to create a minimum standard of living to protect the health and well-being of employees.

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A Bigger Picture

The minimum wage is part of a broader national conversation and affects nationwide wage levels and living standards. The current federal minimum wage is $7.25 per hour, a rate that hasn't changed in the past 15 years. Thirty states, including South Dakota, have opted for higher minimum wages. 

Those who support raising the minimum wage argue that higher pay is essential for helping workers and managing living costs while also reducing reliance on government aid. On the other side, critics say raising wages could spark inflation, job loss and higher consumer prices. 

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Studies show that workers generally report better financial stability and lower rates of food insecurity in states with higher minimum wages, like Washington, where the rate is $16.28 per hour. 

According to a report from the Congressional Budget Office, increasing the federal minimum wage to $15 would reduce poverty and inequality and shift money from corporate profits to the wages of low-wage workers. However, the report also stated that a large increase in the federal minimum wage could lead to job losses as businesses adjust to increased labor costs. 

The 30-cent minimum wage increase in South Dakota may provide some relief to workers, but it is unlikely to substantially improve the financial situation for many. This experience contributes to the long-standing debate on minimum wage increases and what the best solution is to support workers adequately nationwide. 

For those facing financial challenges, seeking financial advice and additional income opportunities may prove beneficial beyond relying solely on wage increases. 

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