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Minimum Wage Increase
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This Discussion Guide is part of Community Conversations at FOCUS St. Louis.  It is meant to initiate civil discourse around the policies that affect the St. Louis region; to hear each other’s perspective. As is the case with all public policies, this issue is complex and multi-faceted, with many stakeholders. Please keep this in mind as you discuss the minimum wage in your community. 

Minimum Wage Increase

Currently, Missouri minimum wage is the same as the federal minimum wage rate ($7.25). Give Missourians A Raise and Missourians for Responsible Lending have worked to put a minimum wage initiative on the November ballot, raising the state's minimum wage to $8.25 an hour. The initiative, which would take effect in 2013 if passed, includes annual cost - of - living adjustments and requires tipped employees receive 60 percent of the state minimum wage, instead of the 50 percent they receive now. It would also penalize employers who violate minimum wage law. Ballot language reads:

"Shall Missouri law be amended to increase the state minimum wage to $8.25 per hour, or to the federal minimum wage if that is higher, and adjust the state wage annually based on changes in the Consumer Price Index; increase the minimum wage for employees who receive tips to 60% of the state minimum wage; and modify certain other provisions of the minimum wage law including the retail or service businesses exemption and penalties for paying employees less than the minimum wage?”

This initiative was challenged in court for insufficient signatures. The sponsors of the ballot proposal were unable to meet court deadlines to affirm that all the submitted signatures were in fact legal, and so the proposal was withdrawn from the November ballot.

In 2006, Missouri voters passed a similar initiative, with more than 76 percent support, increasing minimum wage from $5.15 to $6.50 an hour and tying it to Consumer Price Index. Earlier this year, however, the Missouri Chamber of Commerce tried to abolish the inflation adjustment, which would have frozen the state minimum wage at the federal level ($7.25). Yet by the end of the legislative session there had not been a full Senate vote on the matter. In response Give Missourians A Raise and Missourians for Responsible Lending proposed an initiative to raise Missouri minimum wage and collected the signatures required to put the initiative on the ballot.

Although most states establish their own minimum wages legislatively, which are sometimes below the federal rate, federal minimum wage law supersedes state law. This means that if a state’s minimum wage higher than the federal rate, the state’s rate applies; and if the state’s rate is lower than the federal rate, the federal rate applies. According to the Knowledge Center, 18 states and the District of Columbia have a minimum wage rate above the federal minimum. In 10 states, including Missouri, minimum wages are linked to the consumer price index. The highest state minimum wage in the US is Washington State ($9.04), while the city of San Francisco's has a minimum wage of its own over $10. Of Missouri's neighbor states, only Illinois has a rate higher than the Federal minimum.

Several other states (Maine, Illinois, New York, California, Maryland, and Massachusetts) are also considering raising their minimum wage, though the federal minimum wage rate has remained the same since 2009 despite the fact that the cost-of-living keeps rising. In the last 30 years, Congress has passed 3 pieces of legislation to increase the minimum wage. If Federal minimum had kept up with inflation over the past 40 years, today it would be $10.55, instead $7.25.

Proponents of raising the minimum wage note that a full-time job (40 hours/week X 52 weeks per year) that pays minimum wage will pay $15,080 per year – hardly a living wage. Even at a minimum wage of $8.25, people earning minimum wage will only make $17,160.

Opponents of raising the minimum wage note that there are plenty of people willing to take minimum wage jobs, and that, by artificially raising the wage above the market-clearing rate, employers might end up having to let go people who otherwise would be employed at the lower minimum wage. The perverse effect of raising the minimum wage might be that, in an effort to help low-wage workers, the policy might well result in layoffs of low-wage workers.
Who else is involved with this issue?

Give Missourians A Raise and Missourians for Responsible Lending (the groups leading the coalition for the initiative) as well as Missouri Jobs with Justice and the National Employment Law Project support the initiative. The Show-Me Institute, Associated Industries of Missouri, the Missouri Chamber of Commerce and Industry, and a number of state business groups oppose the wage increase.

Three Possible Perspectives:

Person A favors the increase, believing the rate needs to keep up with the rising costs of living. The annual income of a full-time employee earning federal minimum wage ($15,080 a year) is not livable. Minimum wage is a valuable anti-poverty program and raising the rate could positively affect local economics with minimum workers.

Person B does not support the increase, especially with the job market and the economy being so delicate. A wage increase would hurt corporations and businesses, possibly causing them to move out of state. Unskilled, low-wage labor might also be less in demand as its price rises therefore hurting employment rates, which could especially impact teens and young workers.

Person C believes minimum wage should be kept at the current Missouri rate ($7.25) but should be indexed for inflation. Missouri’s minimum wage is in line with the states around it as well as federal minimum wage.

Discussion Questions:
  1. Which of these 3 people do you most closely agree with- A, B or C? Why?
  2. Is minimum wage the same as a living wage?
  3. How would an increase in minimum wage affect young people coming into or who are already in the job market today?
  4. Does higher minimum wage mean higher unemployment rates?

Links for further reading:

  1. January 29, 2012 CBS St. Louis article: Petition Efforts Focus on Payday Loans, Minimum Wage.
  2. May 8, 2012 Knowledge Center: The Council of State Governments article: State Minimum Wages
  3. May 8, 2012 People’s World article: Missourians file 350,000 signatures for higher minimum wage.
  4. May 9, 2012 Huffington Post article: Missouri Minimum Wage Hike: Backers Say They Have Enough Signatures to Qualify for Ballot.
  5. May 11, 2012 St. Louis Post Dispatch article: Timing is bad for a minimum wage increase.
  6. May 14, 2012 ABC News article: Missouri Petitions to Raise Minimum Wage; States with Highest, Lowest Wages.
  7. June 5, 2012 St. Louis Post Dispatch article: Guest commentary: The minimum is not enough.
  8. Missouri Minimum Wage Initiative.
  9. Missourians for Responsible Lending website.
  10. Missouri Department of Labor: Minimum Wage and Minimum Wage History.
  11. Missouri Department of Labor: Division of Labor Standards.
  12. Missouri Secretary of State: 2012 Initiative Petitions Approved for Circulation in Missouri: Statutory Amendment Relating to Minimum Wage.
  13. Raise the Minimum Wage: Campaigns, Facts.
  14. United States Department of Labor, Bureau of Labor Statistics: Unemployment Rates for Metropolitan Areas.
  15. United States Department of Labor, Wage and Hour Division: Minimum Wage Laws in the States
  16. University of California, Berkeley: Living Wage Policies and Big-Box Retail: How a Higher Wage Standard would impact Wal-Mart Workers and Shoppers.
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