JEFFERSON CITY — Missouri's 2014 minimum wage increase still might not be enough for some Columbia families to make ends meet, according to a study by the Economic Policy Institute.
Beginning in 2006, Missouri's minimum wage has been adjusted each year to account for inflation. Since then, the state's minimum wage rate has increased six times, including the increase that will take effect this January.
The purpose of the 2006 bill was to raise the minimum wage along with inflation in hopes of keeping basic necessities in reach for Missouri's lower-income residents. According to a statement from Missouri Jobs with Justice, the raise is good but still falls short of what is necessary to help families get ahead.
Missouri Jobs and Justice cited a report by the Economic Policy Institute, a nonprofit think tank. The report contains a Family Budget Calculator, which computes what a family's "secure yet modest living standard" would be based on local community costs.
The average Columbia household has 2.29 people, according to the 2010 Census— to be realistic, households of two and three. This includes three "family types" in the Family Budget Calculator: one parent with one child, one parent with two children or two parents with one child.
According to the EPI's calculator, a Columbia family with one parent and one child requires $42,857, while a family with one parent and two children requires $55,129 per year. A family with two parents and one child needs $51,508.
Compare that with an average worker's income under the new minimum wage. According to the Organization for Economic Co-operation and Development, U.S. workers in 2012 actually worked 1,790 hours per year, on average.
Assuming that in each family type all parents are working, with the new minimum wage, a single-parent family would earn $13,425 per year and a two-parent family would earn $26,850. This places all three families below the EPI's "secure yet modest living standard" but places the two-parent family above the $19,530 federal poverty level for a three-person household.
No matter how high the minimum wage should be, raising it is a trade-off. When wage rates rise, so does unemployment because higher wages mean less demand for labor; when labor is more expensive, employers don't — or can't — hire as much.
Missouri's higher rate will make the state uncompetitive and hurt employment, said Dan Mehan, president of the Missouri Chamber of Commerce and Industry, in a statement. Mehan said wages should be determined by market demand rather than bureaucrats.
The wage increase on Jan. 1 means Missouri will have one of the highest wage rates among its neighboring states, second only to Illinois, whose minimum wage is $8.25 per hour.
Matt McCormick, president of the Columbia Chamber of Commerce, said the chamber doesn't have an official position on the upcoming increase but said businesses will have to take higher costs into account.
"Sometimes, they might have difficulties hiring more people or giving them increases they need across the board," McCormick said.
The increase will affect students as well. Susan Dayton, computing and recruiting manager for MU Campus Dining Services, said the increase won't have a huge impact on MU auxiliary departments, such as campus stores and dining services, because these departments are funded based on the products and services they sell.
Still, Dayton said Campus Dining Services will have to re-evaluate its base pay rate.
"Part of our goal has always been to stay ahead of minimum wage simply because we have a harder time recruiting," Dayton said.
Other departments that are funded by the state may have a harder time, Dayton said. These departments have a limited amount of money to allocate to students they employ. A higher wage rate means the number of students or the number of hours they are employed may go down.