October 26, 2006
Missouri Voters Being Asked To Raise State’s Minimum Wage
Proposition B on the November 7th ballot in Missouri will ask voters to consider raising the state’s minimum wage from $5.15 to $6.50.
The ballot language states that a “yes” vote will amend Missouri statutes to increase the state minimum wage rate to $6.50 per hour, or to the level of the federal minimum wage, whichever is higher. Every year thereafter, the state minimum wage rate will be adjusted based on changes in the Consumer Price Index.
“This is great news for the hard-working people of this state,” said John Bowman, Treasurer of the Give Missourians a Raise Coalition. “We don’t have to wait for the politicians to address this issue anymore. Now, the people of Missouri can take matters into their own hands and vote yes on Proposition B to raise the minimum wage.”
In May, the Coalition submitted signatures from over 210,000 Missouri voters – more than twice the number required – in order to place the initiative on the ballot.
However not everyone is in favor of the proposal.
S.O.S. Jobs (Save Our State’s Jobs) Coalition is opposing Proposition B. Its members, consisting of Associated Industries of Missouri, the Missouri Restaurant Association, the Missouri Retailers Association, NFIB Missouri, the Missouri Grocers Association and the Missouri Merchants and Manufacturers Association, believe any effort to adjust the minimum wage should be initiated at the federal level. The SOS coalition says through federal action, Missouri businesses would be on a level playing field with surrounding states, and not be at a disadvantage in competing for new business opportunities.
“By dealing with this on a state basis instead of at the federal level,” stated Pat Bergauer, Treasurer of the S.O.S. Jobs coalition, “businesses in Missouri will be fighting to maintain jobs and employees against surrounding states with one hand tied behind their back. Raising the minimum wage will leave many employees without a job and no financial means to support their families.”
Proponents of the proposition point to a report from the non-partisan Economic Policy Institute, that shows that approximately 256,000 Missourians will receive a raise if Proposition B passes, including 120,000 Missourians who currently make less than $6.50, as well as an additional 136,000 who make slightly more than that, but who will see a bump in their wages due to a “spill-over” effect.
Supporters also believe that a raise in the minimum wage will generate between $3.3 million and $4.3 million more each year in state revenue, and would pump over $21 million in new spending into the economy.
Opponents are attacking this report, stating that while The Economic Policy Institute managed to find 650 economists who supported raising the minimum wage, the Employment Policies Institute differs in opinion. It points to a survey conducted by the University of New Hampshire revealing that 77 percent (13,860) of labor economists with the American Economics Association believe minimum wage hikes have a negative effect on employment.
“Minimum wage opponents could release a thousand studies predicting job loss if Missouri raises the minimum wage. It doesn’t change the facts – states that have raised the minimum wage have seen no job loss, even in the low-wage industries directly impacted by a raise in the minimum wage,” said Sara Howard, Communications Director for the Give Missourians a Raise coalition.
“No one can survive on $5.15 an hour,” Howard continued. “Raising the minimum wage is a long-overdue step that is going to help thousands of Missouri families who are struggling to get by.”
Still, opponents of the bill fire back that job loss experienced by low-skilled adults, in particular, is substantial following a minimum wage hike. They site research from Cornell and the University of Connecticut that found a 10-percent increase in the minimum wage results in an 8.5-percent increase in unemployment among adults lacking a high school diploma. Research from economists at Duke, Boston University, and Michigan State University all confirm that low-skilled adults suffer considerable job loss following minimum wage hikes.
“Proponents of minimum wage hikes contend that the attendant job loss is minimal and worth it, but they’re ignoring the fact that it is almost exclusively low-skilled adults who lose their job,” said Mike Flynn, director of Legislative Affairs at the Employment Policies Institute. “Minimum wage hikes end up hurting the very people they are intended to help by jeopardizing the jobs of those most in need of assistance.”
Opponents also are questioning the ballot language, specifically how the minimum wage calculations in years following the proposed raise to $6.50
The SOS Coalition asks voters if they understand what the Consumer Price Index (CPI) is, and more importantly what the CPI-W, which is the index identified in Proposition B, is?
They explain that the Bureau of Labor Statistics publishes CPI’s for two population groups, CPI-W and CPI-U:
The CPI-W (Urban Wage Earners and Clerical Workers) comprises approximately 32 percent of the total population. Not included in this population are technical workers, self-employed persons and all agricultural jobs. This is the annual increase being identified for Missouri to use in Proposition B.
The CPI-U (All Urban Consumers) covers approximately 87 percent of the total population and includes all lines of work and populations including agriculture, the self-employed, etc. The SOS Coalition states that, while it’s not being used in our state’s calculation, this percentage increase better reflects the national increase in the cost of living and runs considerably less than the CPI-W. The group also notes that the Bureau of Labor Statistics publishes a break down of the CPI-W, looking specifically at four regions of the nation, the northeast, south, west and midwest. With the Midwest being 25 percent lower for the past year than the other three.
“Simply stated, Missouri will be forced to use the cost of living adjustments for large urban areas such as New York City and Los Angeles to calculate our minimum wage increases every year,” said Gary Marble, president of Associated Industries of Missouri (AIM), which is part of the Save Our State’s Jobs Coalition. “Not included in those calculations are 68 percent of the population, including agriculture and the self-employed. That certainly isn’t clearly stated on the ballot.”
Marble questions whether Missouri should have a minimum wage for low skill, entry level, jobs of $8 per hour, which is what proponents are predicting the amount to be in only five years. He adds that it will continue to increase at a rate of over $.25 to $.30 per hour every year thereafter.
He and fellow SOS Coalition members say Proposition B will force Missouri’s minimum wage to increase annually as the cost of living increases which they feel means that year after year, Missouri companies will find it harder and harder to compete – and Missouri will lose jobs.
They point out that Missouri consumers and employees likely will pay the additional costs of a higher minimum wage. Businesses will be forced to increase prices to consumers and employees could have to pay more for health insurance and other benefits to offset the additional costs.
“For small businesses, raising prices is not always an option.” stated Brad Jones, state director of NFIB Missouri. “Having to compete with bigger companies often means operating on razor thin margins just to survive.”
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