Business leaders say minimum wage hikes will boost consumer spending, strengthen economy

More than 20 states, including Missouri and Illinois, raised their minimum wage to ring in the new year. Another three states and the District of Columbia have increases scheduled later in 2024.

Illinois’ minimum wage increased to $14 on Jan. 1, and will increase to $15 in 2025.

In Missouri, where annual minimum wage hikes are indexed based on the Consumer Price Index, the minimum wage increased from $12 an hour to $12.30 on Jan. 1.

The federal minimum wage has been stuck for more than 14 years at $7.25 an hour since July 24, 2009 — the longest period in history without a raise.

Business owners across the country are welcoming the increases, saying they will boost consumer spending and improve employee hiring, retention, productivity and customer service.

STRENGTHENS THE ECONOMY
Mike Draper, owner of Raygun clothing and design, with locations in Kansas City, Mo., Chicago, Des Moines, Cedar Rapids, Iowa City, and Omaha, says raising the minimum wage is a way of strengthening the economy.

“I think in general the biggest threat to the  American economy is the reduction in spending power,” Draper said. “I’ve always thought the minimum wage was an easy way to get things moving faster than relying on government programs. Obviously my support hasn’t moved the needle on the federal minimum wage, unfortunately.

Raygun’s minimum wage is $15.25.

“Most of the cities we operate in have been raising their minimum wage, so they’re slowly catching up with us,” Draper said. “Whenever we do a minimum wage floor up, we raise the wages for everyone else along with that.

CREATES MORE CONSUMERS
“You’re really just creating more consumers,” he said. “When so much of the economy is consumer driven, the thing you need is more consumers. The American consumers drive the economy. You don’t just want to look at consumers, you want to look at production. The fewer people we have with disposal income buying goods, the lower the demand is and it just ripples out. This isn’t altruism, it’s good for the economy. The entire economy is driven by consumers.

“You want your company to be profitable, but the fewer people there are with spending power, keeping wages low keeps consumer spending low, which affects the economy, which affects your business.

“Raising the minimum wage is a way out for companies; it’s a way out for consumers, and it’s good for everybody.”

OTHER INCREASES
Other states making significant increases this year include New York, where lawmakers approved gradually raising the minimum wage in New York City, Westchester County, and Long Island to $17, and to $16 for the rest of New York state, by 2026.

In Maryland, Governor Wes Moore signed a bill accelerating the minimum wage increase in that state to $15.

The highest state minimum wages to take effect this year are Washington State at $16.28 and California at $16.

The District of Columbia minimum wage, which increases annually on July 1, is currently at $17.