South Dakotans earning minimum wage will see a 5.3% pay increase on Jan. 1.
The wage goes up from $9.45 to $9.95 an hour. That increase is larger than the 1.6% increase between 2020 and 2021.
The increase is mandated under a 2016 South Dakota law that says the minimum wage must be adjusted each year if there's an increase in the cost of living. The cost of living is based on the Consumer Price Index published by the U.S. Department of Labor.
The hourly minimum wage for tipped employees will increase from approximately $4.73 an hour to $5 an hour — half the wage for non-tipped employees. However workers must earn at least the $9.95 when combining wages and tips. If they don't, employers must make up the difference.
Although the raise is designed to account for cost-of-living increases, it might not be enough for some workers.
Most South Dakotans earning the current minimum wage would have to work 51 hours a week to afford a modest, one-bedroom rental home, according to the National Low Income Housing Association. Someone working 40 hours a week would need to earn $12.10 an hour to afford such a dwelling, and $15.46 an hour to afford a two-bedroom rental.
There are several exceptions to the minimum wage:
- Babysitters, field-based salespeople, apprentices, interns and independent contractors do not have a minimum wage.
- Some people with developmental disabilities are paid under the minimum wage if their employer has a special permit from the Department of Labor and Regulation.
- People who work at an amusement or recreational establishment, an organized camp, or a religious or nonprofit educational conference center do not have a minimum wage if they operate seven months or less per year. They are also exempt based on workplace revenue.
- Federal law says people under the age of 20 can be paid as low as $4.25 an hour during their first 90 days of work.
