ARKANSAS (KNWA) — The United States House of Representatives passed a bill Thursday to raise the federal minimum wage from $7.25 hour to $15 an hour, but Arkansas has its own minimum wage increase plan in place.
Arkansas voters approved Issue 5 on Nov. 6, 2018, enabling the state minimum wage to annually increase over a three-year period. At that time the minimum wage was $8.50 an hour.
Arkansas’ minimum wage went up to $9.25 on Jan. 1. It will rise to $10 in 2020 and up to $11 in 2021.
Mervin Jebaraj, director of the University of Arkansas’ Center for Business and Economic Research, said ideally a state sets its minimum wage at about 50 percent of the median hourly wage and allows its regions to adjust the wage upwards to account for the cost of living adjustments.
“The current minimum wage in Arkansas is roughly near the sweet spot of between 50-60 percent of the median hourly wage in Arkansas,” Jebaraj said. “Compared to other states, where the minimum wage is in Arkansas is just about right.”
If the federal minimum wage increase to $15 an hour becomes law, it would cover almost all Arkansas employees, Jebaraj said.
The federal minimum wage hasn’t been adjusted in a long time and hasn’t kept pace with inflation, Jebaraj said.
Jebaraj said in theory a minimum wage increase does have an effect on hiring and employment.
“But it is entirely dependent on the conditions in each state’s business environment and the size of the minimum wage increases,” Jabaraj said.
Dr. Raja Kali, chairman of the University of Arkansas’ Economics Department, said because of the tight economy, many employers are already paying their employees a rate that is above the minimum wage increase.
“There could be parts of the country where people aren’t getting paid more than the minimum wage, and a minimum wage increase could have impact on employer costs and could affect hiring,” Kali said.
Jebaraj said it is unlikely that the minimum wage increase will pass in both the House and the Senate.