Minimum wage could go to $15 per hour

Wednesday, July 29, 2015

Petitions filed proposing gradual increase

The current minimum wage in effect for 2015 in the state of Missouri is $7.65 per hour, but hree initiative petitions to increase the state's minimum wage have been approved for circulation by the Secretary of State.

If enough signatures are collected, the petitions may go on the 2016 general election ballot. The petitions must be signed by at least 5 percent of legal voters in six of the state's eight congressional districts to make it on the ballot.

The three petitions, filed by Lara Granich, executive director of Missouri Jobs with Justice, propose increasing the minimum wage, which is adjusted to changes in cost of living.

"By law in Missouri, it adjusts each year by the consumer price index," said State Rep. Scott Fitzpatrick, R-Shell Knob. "The petitions propose raising the minimum wage to $9 per hour. One would increase that $1 per year until 2023, when it reaches $15 an hour. The other two would increase it $1 a year until it reaches $11 or $12.

"There is a mechanism that adjusts the minimum wage every year based on the consumer price index. I would expect that it would increase pretty modestly, maybe at 15 cents to 20 cents per hour, but not up to $15 per hour, unless a group is successful at getting it on the ballot. If the people vote for it, that's a possibility, but I can tell you that in my business, there are people who make more than $15 an hour, but there are some that don't make $15 an hour."

Fitzpatrick said his main competition is outside the state of Missouri.

"So, if we're required to pay our people the same as they are required to pay theirs, that will hurt us," he said. That's a real life example. It could put us out of business. If a company's labor cost goes up by 50 percent, and usually labor is a large cost to produce a product, imagine that. Would that business survive? I would argue that it's best for the market to determine what the wages should be.

"And depending on the job, there are certain types of jobs that command higher wages than others. There are some jobs out there that are trying to be careers. If you're a 16-year-old high school kid working at a summer job, those aren't the types of jobs that are designed to be careers. They're supposed to be temporary jobs that people have during that stage of their life. So by jacking up what a cashier makes at McDonald's, the free market would not support $15 an hour. All you're doing is raising the basic costs of goods to the consumer."

Fitzpatrick said the effect of raising the minimum wage as high as $15 per hour could mean less jobs.

"There would be fewer jobs because there's only so much you can charge people for a certain product or service," he said. "If you have a higher minimum wage, those making $20 an hour now would be much closer to the minimum wage, so those people are going to want to make more money, too. It has a ripple effect where people will want to raise their prices to support the minimum wage increase.

"If the cost of something goes up enough, people just aren't going to buy it anymore. What would happen is places would go out of business most likely. For instance, there are people making $10 an hour and the government tells the business owner they have to pay them $15 an hour, the business closes, so then the person doesn't have a job anymore. That's the real-world impact of a policy like that."

Fitzpatrick said the possibility of businesses closing could be extremely damaging.

"What's better: To have a job that won't pay all the bills, or not have a job? That's where you get into a situation of having to work two jobs. It's not a fun situation, but many have to. The government has tried to create an incentive where two families can work. If there aren't multiple sources of income there are programs available [to help meet needs].

"When government intervenes in a market and sets what's right and wrong, and fair and what's not, when we try to be the final arbitrator of what's there instead of what the businesses can afford and cannot, that's messed up. When government tries to determine what's fair, it's not supported by the reality of what consumers can and are willing to pay for a product or service."

Fitzpatrick said he thinks it goes back to, if wages are artificially inflated to a level the market would not support, fewer jobs will be available.

"So, the question becomes, if you're making $9 or $10 an hour and having a hard time making it, let's say it does get increased. If the employer had to start paying more in wages, wouldn't they have to go to customers and ask them to pay more for their product? So, how long will it be before people stop buying it?"

Fitzpatrick said a bill was passed this year that prevents cities from creating a minimum wage that's higher than the state minimum wage.

"We passed another bill affirming that this year," he said. "That issue is different from some of the others. Kansas City had a push to raise the minimum wage to $15 an hour. Because of the actions of the city trying to be socially progressive, it potentially puts businesses out of business because they won't be able to compete with businesses outside the city. If two businesses are side by side and one is treated more favorably under law than the other, then the one is going to have a better chance of succeeding, it's that simple."

Many large companies are already raising wages for workers, including McDonald's, Walmart, T.J. Maxx, Marshall's and Home Goods, after lower wage workers have staged protests across the country demanding higher pay.

In February, Walmart said after implementing a series of raises, workers would receive at least $9 an hour and $10 an hour next year. And, minimum wage hikes went into effect this year in 20 states, including South Dakota, Nebraska, Alaska and Alabama.

"It's actually not the case that the minimum wage has an influx on the consumer price index," said Lara Granich, executive director for Missouri Jobs With Justice. "Labor costs are a very small portion of consumer goods. Economic modeling shows Walmart could raise their minimum wage to $12.50 tomorrow and be fine. Research shows it would cost the average household only 15 cents more per shopping trip or $17.73 per year. Those [labor costs] are much more driven by market demand, transportation costs, etc. We see little to no relationship between that and minimum wage."

Granich has been working with Missouri Jobs With Justice and Progress Missouri to raise the minimum wage and living wage in Kansas City and St. Louis.

"We're working right now to raise minimum wage in those cities, and hopefully by the end of summer, workers will be on a path to make ends meet for the hard work they do," she said.

According to economic research, Granich said if the minimum wage is bumped up, wages in close proximity generally get bumped up with it.

"The kind of curve in the wages is maintained," she said. "When you say who's going to be impacted, for example, in 2007 when the wage went from $5.15 to $6.50, the people at $6.50 also got raises. The employers are not required to, but tend to move everyone up, because they want to maintain that incentive to stay there. There's very clear research that shows increased productivity and decreased turnover."

Granich said the increases would be gradual and give everyone time to adjust. Other reasons employers benefit is from consumer demand.

The three petitions propose raising the minimum wage to $9 per hour first. One would increase that $1 per year until 2023, when it reaches $15 per hour. The other two would increase it $1 a year until it reaches $11 or $12 per hour.

"They are all gradual increases that allow businesses to make adjustments and so the rising tide can lift everyone's boats," Granich said.

If enough signatures are collected by May 2016, the petition will go on the ballot and citizens will be able to vote. Granich said plans are to circulate petitions through a variety of common venues.

"This is a really popular issue, so we get a lot done with volunteers who take petitions to their church, neighborhood meetings and walk around the blocks," Granich said. "[A minimum wage increase] gives everyone an opportunity to move up. When the floor is raised, it gives everyone an opportunity to move up with it.

For more information on raising the minimum wage or to volunteer, people may visit Missouri Jobs With Justice at go to http://mojwj.org.

Respond to this story

Posting a comment requires free registration: