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Minimum wage bill could affect future wage increases

Wednesday, February 23, 2011 | 2:03 p.m. CST

JEFFERSON CITY — A proposed change to minimum wage legislation could affect thousands of Missouri workers.

A Senate bill calls for 2012 state elections to decide whether to bind the state minimum wage to the federally mandated wage. The Senate Small Business, Insurance and Industry Committee heard the bill Tuesday.

Committee Chairman Sen. Scott Rupp, R-St. Charles County, said he sees the change as benefiting Missouri's business community.

"If we start to exceed the national minimum wage, then all of a sudden we become even more uncompetitive compared to neighboring states," Rupp said. The bill "is something to look at, especially in an era of low employment."

Although the federal and state wage are both currently set at $7.25, critics worry that inflation could eat up the amount that workers will receive in the future. Lou Prince, owner of Vintage Vinyl record store in University City, explained to the committee the implications for those who work for small businesses such as his.

"The least we can do for hard-working Missourians is to protect the buying power of the poorest and economically weakest of our neighbors. That's all that minimum wage indexing does," Prince said. "It keeps people who are barely staying above water economically from drowning."

The current law was enacted in 2006, after voters supported an increase in the state's minimum wage levels. Lara Granich, director of the Missouri Jobs with Justice Coalition, helped push for passage of the 2006 increase. She said the amount of support the proposal received around the state proves that lawmakers should keep their hands off.

Granich said: "76.4 percent of Missourians voted for the increase in minimum wage. Actually, even more powerfully, it passed in every single county by 16 points or more."

However, Rupp said the current economic downturn makes it imperative to try to attract employers to the state.

"We can kick it back to the people and say is this something that you wanted to do to try to spur economic growth in our small businesses, which hire most of the employees here in the state," Rupp said.

Sen. Jason Crowell, R-Cape Girardeau, who sponsored the bill, was unable to be reached for comment.


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Comments

Louis Schneebaum February 23, 2011 | 3:00 p.m.

A Repug from Taint Charles doesn't want inflation-adjusted minimum wage because it doesn't keep us competitive with our neighbors in Haiti and Honduras? I can't believe it!

(Report Comment)
Sam Tyler February 24, 2011 | 6:43 a.m.

"The least we can do for hard-working Missourians is to protect the buying power of the poorest and economically weakest of our neighbors. That's all that minimum wage indexing does," Prince said.

What a specious argument.

Raising the labor costs always increases prices by that raise times the Markup percentage the businesses use.

An increase in minimum wage is immediately followed by an increase in prices, while the poorest must wait until the government calculates the increase in the Cost of Living and then finds the money to increase the Dole payments.

Raising the minimum wage also raises the floor of experience and ability an employee must offer the employer, which means fewer young and low level job seekers can qualify for a job.

Never forget that TANSTAAFL.

(Report Comment)
Laura Froese February 24, 2011 | 7:26 a.m.

Sam,
The price of the goods depend less on the cost of labor then what the supply and demand curve looks for that service/good. It's what the market (the consumer) is will to pay that is important.

If the minimum wage is dropped- and the market has already supported the cost of the goods/services- the price won't go down- and the business profits will go up.

If the demand for an item is low- then cheap labor would make a difference. Or other ways to reduce cost is: use cheaper materials, or changes in manufacutering or process to reduce overhead.

(Report Comment)
Jack Hamm February 24, 2011 | 7:43 a.m.

@ Sam

First, you may want to check out a little thing called the elasticity of demand which maes this statement "An increase in minimum wage is immediately followed by an increase in prices" a joke. A freshman in econ 101 knows better than to generalize like that.

Second, "Raising the minimum wage also raises the floor of experience and ability an employee must offer the employer, which means fewer young and low level job seekers can qualify for a job." This is half of the idea; welcome to the conversation. After the minimum wage law was first enacted in 1938 education levels among younger segments of the population skyrocketed. Each additional increase in the minimum wage law correlated to higher education rates and longer duration periods for schooling. Something that benefits everyone in society.

(Report Comment)
Mark Foecking February 24, 2011 | 7:59 a.m.

Laura Froese wrote:

"The price of the goods depend less on the cost of labor then what the supply and demand curve looks for that service/good."

That depends to a large part on the business. Labor cost is only a small part of some businesses and a very large part of others. Also, some businesses, because of their nature, employ very few or no minimum wage employees.

Every type of business will be different, and the impact of raising the minimum wage will be individual to each type. However, I think we can say with certainty that the impact of raising the minimum wage a few percent per year is likely to be minimal, considering only a few percent of the labor force earns minimum.
DK

(Report Comment)
Jean Blackwood February 24, 2011 | 4:39 p.m.

If a potential employer doesn't want to pay Missouri workers a fair living wage, why would we want to attract them to the state?

(Report Comment)
Allan Sharrock February 24, 2011 | 4:51 p.m.

Would you rather make $5.00 a hour or nothing? Wait I think I know the answer for some.

(Report Comment)
Corey Parks February 24, 2011 | 11:41 p.m.

How many commenting own a business? Or ever had to deal with pay roll and securing enough work to keep them employed?

(Report Comment)

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