Missouri’s minimum wage to increase Jan. 1 with cost-of-living adjustment

Missouri will increase its minimum wage from $7.25 to $7.35 on Jan. 1, 2013, the state’s Department of Labor and Industrial Relations announced.

Unions and their allies gathered petitions in 2006 to get the raise and it was approved by voters later that year.

The raise comes as part of a state law that provides for annual rate adjustments based on the Consumer Price Index so that the minimum wage keeps pace with the rising cost of living. The raise translates to an additional $200 per year in wages for a full-time minimum wage worker.

“It’s encouraging that the lowest-paid workers in Missouri will finally receive a raise next year, if only a small one,” said Lara Granich, director of Missouri Jobs with Justice. “While extensive corporate-backed opposition has allowed Missouri’s minimum wage to remain decades out of date, these annual indexing adjustments will at least prevent the purchasing power of the minimum wage from falling even further as the cost of living continues to rise.”

Missouri Jobs with Justice said the measure will help boost consumer spending and that such annual adjustments to the minimum wage help combat stagnant wages, particularly in a weak economy.

A proposal to raise Missouri’s minimum wage to $8.50 per hour nearly reached the November ballot this year, yet was narrowly blocked by corporate opponents who used legal maneuvering to exhaust the timeline for appearing on the ballot.

Missouri’s minimum wage has remained at $7.25 for the past 3 years.

ANNUAL INCREASES

Ten states currently increase their minimum wage annually to ensure pay rates for the lowest-paid workers keep up with rising living costs, including Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont, and Washington.

Missouri joins eighteen states plus the District of Columbia in having minimum wage rates above the federal level of $7.25 per hour, which is just over $15,000 per year for a full-time minimum wage earner.

Strengthening the buying power of low-wage workers is especially critical in this economic climate. A recent study by the National Employment Law Project confirms that low-wage occupations have accounted for a majority of jobs created in the post-recession recovery.

The unbalanced recovery has contributed to the long-term rise in inequality in the United States: Since the first quarter of 2001, employment has grown by 8.7 percent in lower-wage occupations and by 6.6 percent in higher-wage occupations; by contrast, employment in mid-wage occupations has fallen by 7.3.

INCREASES DON’T COST JOBS

Research shows that raising the minimum wage is an effective way to boost the incomes of low-paid workers without reducing employment.

A groundbreaking 1994 study by David Card and Alan Krueger, current chair of the White House Council of Economic Advisers, found that an increase in New Jersey’s minimum wage did not reduce employment among fast-food restaurants.  These findings have been confirmed by 15 years of economic research, including a 2010 study published in the Review of Economics and Statistics that analyzed data from more than 500 counties and found that minimum wage increases did not cost jobs.  Another recent study published in April 2011 in the journal Industrial Relations found that even during times of high unemployment, minimum wage increases did not lead to job loss.