Out-of-State Interests Pushing Minimum Wage Hikes

Labor groups have spent hundreds of thousands on state initiatives

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October 31, 2018

Out-of-state interests from the labor community are the main drivers behind several state ballot initiatives to pass steep minimum wage hikes, according to a new analysis.

Voters in Arkansas and Missouri are considering ballot initiatives that would raise their hourly minimum wages. Proposition B in Missouri would guarantee a $12 wage by 2022, a 53 percent increase from the current $7.85 rate, while Issue 5 in Arkansas would cement an $11 wage by 2021, a 29 percent jump from the current $8.50 rate.

Those two initiatives have benefitted from substantial spending from Raise Up Missouri and Arkansas for a Fair Wage. Both of those groups receive nearly all of their donations from labor groups outside of the state. Raise Up receives 88 percent of its funds from out-of-state resources, while the Arkansas group collects 99 percent of its contributions outside of the state, according to an analysis from the labor watchdog Employment Policies Institute.

"Voters heading to the polls next Tuesday should be skeptical about the self-interested labor unions and special interest groups funding 'Raise up Missouri' and 'Arkansas for a Fair Wage,'" EPI spokesman Samantha Summers said in an email. "These out-of-state groups care more about pushing their own agenda than actually helping working families."

Raise Up Missouri did not respond to request for comment. A spokeswoman for Arkansas for a Fair Wage declined to answer questions about the out-of-state funding.

Three organizations are responsible for the massive injections of out-of-state cash. The Sixteen Thirty Fund, a union-backed 501c(4) that has funded 45 statewide ballot initiatives since its 2009 founding, is the single largest donor in both states. It has campaigned for securing taxpayer-funded abortions, allowing felons to vote, and a number of other minimum wage hikes. It has given $4.7 million to Raise Up Missouri and $450,000 to the Arkansas campaign. The fund did not respond to request for comment.

The second largest donor has been The Fairness Project, which has spent $285,000 in Missouri and $100,000 in Arkansas. Like the Sixteen Thirty Fund, it is based in Washington, D.C., and receives financial backing from labor unions. The Fairness Project was created by the politically powerful Service Employees International Union in 2015 and has since passed a number of successful minimum wage hikes. An investigation by City Journal found that the organization had taken in more than $12 million from organized labor since 2016. A spokesman declined comment.

The National Employment Law Project is the oldest of the three major backers of the campaigns. The New York City-based organization is one of the largest labor legal groups in the country and has pumped about $200,000 into the races. The group did not respond to request for comment.

Minimum-wage hike advocates have found more success through direct democracy than they have through legislating. Voters have approved every state measure to boost the minimum wage even in places that have elected Republican candidates. They have found less success courting politicians. In June, D.C. voters overwhelmingly approved a measure to raise tipped workers' base salaries to $15 an hour, mirroring a similarly successful initiative in Maine. Lawmakers in both cases overrode the will of voters after public outcry from workers.

Other labor watchdogs faulted unions for backing measures that fall outside of the scope of their advocacy. Raise Up Missouri shares an address with labor giant Service Employees International Union Local 1, while Arkansas' campaign receives support from the American Federation of State, County, and Municipal Employees Local 965.

Patrick Semmens, spokesman for the National Right to Work Foundation, said these expenditures are drawn from the dues money that workers forfeit to labor bosses in exchange for representation. Many of these members can understand supporting candidates for office who support the workers' agenda, but they do not realize the money is spent on outside causes that do little to help them, according to Semmens.

"Union bosses love playing politics with other people's money, including spending on controversial issues that either don't impact their members at all or are opposed by many of the workers they claim to represent," Semmens said. "Each year Big Labor spends hundreds of millions of dollars on politics and lobbying funded overwhelmingly from union general treasuries, which are largely funded by dues paid for by workers who would be fired if they stopped financially supporting the union."

Summers said the movements are benefiting from "dark-money" that will be invested in the state during campaign season but will not be around when those measures are enacted. Arkansas and Missouri employers will bear the brunt of such activism.

"There's nothing 'fair' about East Coast dark-money groups air-dropping millions of dollars into states where they're not located, to support ballot measures that harm small business owners," she said.

The midterm elections will take place on Nov. 6.