Missouri minimum wage increases

Raise will benefit 104,000 low-wage workers and boost consumer spending by $11 million

On Jan. 1, Missouri’s minimum wage increased by 15 cents to $7.50 per hour, benefiting an estimated 104,000 low-wage workers in the state.

The minimum wage for tipped workers in Missouri also rose by 12 cents to $3.75 per hour.

Missouri’s minimum wage increase means an extra $312 per year in wages for minimum-wage workers in the state, and the increased consumer spending generated by the minimum wage hike will boost economic growth by $11 million, according to an analysis of Census data by the nonpartisan Economic Policy Institute.

Missouri is joined by 12 states – Arizona, Connecticut, Florida, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont, and Washington – that also raised the minimum wage on New Year’s Day, boosting wages for a total of nearly 2.5 million workers.

“This is good news for Missouri’s economy,” said Lara Granich, director of Missouri Jobs with Justice, which advocates for a higher minimum wage. “It means that our hard-working neighbors can buy as much bread and milk at the neighborhood store next year as they were able to buy this year. The cost of living adjustment in Missouri’s minimum wage keeps the lowest paid people in our economy from falling further behind. And it’s still far, far short of what family needs to get by.”

The increase is far less than what it takes to support a family in Missouri.

WHAT IT TAKES

The Economic Policy Institute recently updated its family supporting budget numbers for Missouri and showed that a two parent, two child family in St. Louis needs $64,332 to secure a decent, yet modest living. In Kansas City, that number is $66,419. A full-time worker in Missouri at minimum wage will still only be earning $15,600, even after the Cost of Living Adjustment that took effect New Years Day.

Missouri’s minimum wage increase is the result of a state ballot initiative approved by a 3 to 1 margin by voters in 2006 that provides for annual rate adjustments to keep pace with the rising cost of living.

NEW ECONOMIC ACTIVITY

In total, the minimum wage increases taking effect in all 13 states will generate over $619 million in new economic activity and support the creation of 4,600 new full-time jobs as businesses expand to meet increased consumer demand.

Because the federal minimum wage is not indexed to rise with inflation, its real value erodes every year unless Congress approves an increase.

Eleven states have adopted annual inflation indexing for their minimum wages – in addition to Missouri, these states include Arizona, Colorado, Florida, Montana, Nevada, Ohio, Oregon, Vermont, Washington, and New Jersey, where voters approved a measure in November to raise the state’s minimum wage to $8.25 per hour and index it to rise with inflation thereafter. Nevada has not scheduled a cost of living adjustment to take effect this year.

A FAIR MINIMUM WAGE

The Fair Minimum Wage Act of 2013, supported by President Obama and introduced in the U.S. Senate and House of Representatives last year, would raise the federal minimum wage to $10.10 per hour and adjust it annually to keep pace with the rising cost of living.

The Act would also gradually raise the minimum wage for tipped workers from its current low rate of $2.13 per hour, where it has been frozen since 1991, to 70 percent of the full minimum wage.

As of Jan. 1, a total of 21 states, including the District of Columbia, have minimum wage rates above the federal level of $7.25 per hour, which translates to just over $15,000 per year for a full-time minimum wage earner.

As the unemployment rate in many states continues to slowly decline, new job growth across the country remains disproportionately concentrated in low-wage industries such as retail and food services, making an increase in the minimum wage an urgent priority for growing numbers of working families finding themselves relying on low-wage work to make ends meet.

MOST NEW JOBS ARE LOW WAGE

Fully 58 percent of new jobs created in the post-recession recovery have been low-wage occupations, according to a 2012 report by the National Employment Law Project.

The most rigorous economic research over the past 20 years shows that raising the minimum wage boosts worker pay without causing job losses – even in regions where the economy is weak or unemployment is high.

A recent study by the Center for Economic and Policy Research reviewed the past two decades of research on the impact of minimum wage increases on employment and concluded that “the weight of the evidence points to little or no effect of minimum wage increases on job growth.”

An April 2013 poll found that 67 percent of small business owners support raising and indexing the minimum wage, indicating that the majority believe an increase will help boost economic growth.