Wage raise ballot issue stirs debate

JEFFERSON CITY — Jefferson City business owner Jim Baumgartner and one of his employees, Travis Lee, personify the debate over raising Missouri’s minimum wage.

In 1959, Baumgartner started working at McDonald’s on Missouri Boulevard in Jefferson City. Back then, he made 80 cents an hour.

Baumgartner has come a long way since working at McDonald’s. He now owns six McDonald’s restaurants, all on U.S. 54. That’s why he named his small business 54 Foods.

54 Foods employs more than 300 workers, and Baumgartner says he doesn’t see that number changing immediately if Proposition B passes in November.

The proposition would raise Missouri’s minimum wage to $6.50 from $5.15 per hour. The wage would then be increased every year for inflation based on the Consumer Price Index.

Lee has worked as a cook at one of Baumgartner’s McDonald’s for five months. He works more than 30 hours a week and makes more than the minimum wage. Baumgartner hired him at $6 per hour, and he now makes $6.15 per hour.

Lee doesn’t fit the mold of most hourly wage ­workers in the U.S. While such workers tend to be under 25, female and childless, Travis is 34, male and a father of three. The profile of a hourly wage worker in 2005 was published in a May 2006 report issued by the Bureau of Labor Statistics, a branch of the U.S. Department of Labor.

Lee said that a 35-cent pay increase, while small, could make a big difference.

“I’d use (the money) to provide for my children — take them out on more family outings, buy them more clothes,” he said.

Baumgartner said that although his employees’ starting salary is just cents below the level in the November ballot proposal, it’s the automatic, annual inflation adjustment in the proposal that has prompted his opposition.

“I feel that it could get out of hand after a while,” he said.

He also voiced concerns that an increase in the starting wage would mean that his longtime employees would also demand higher wages.

But while Baumgartner doesn’t support Proposition B, he said he understands why people do.

“(Workers) are looking for the best deal they can get, and I don’t blame them,” he said. “I would be the same way if I was in the job market.”

Proposition B has become a rallying point for this year’s election for low-wage workers and small-business owners such as Baumgartner.

Small-business advocacy organizations say a raise in the minimum wage could hurt the interests of small-business owners.

The National Federation of Independent Business is one such organization. Brad Jones, director of Missouri’s NFIB chapter, said that if Proposition B passes, it could be a bad deal for businesses.

“When you ask small-business people what’s going on with their economy, they’re going to talk to you about two things: health care premiums and minimum wage,” Jones said. “It’s a perfect storm between the two, and (if Proposition B passes), it’s going to result in consequences.”

Jones said that, contrary to Baumgartner’s situation, most small-business owners will have to lay off employees.

Jones also said he was concerned by the yearly increase for inflation. He said that because the Missouri minimum wage could eventually be the highest in the Midwest, businesses may leave the state in search of cheaper labor.

If passed, Proposition B would make Missouri the sixth state in the Midwest to pass an increase beyond the federally mandated minimum wage. Minnesota, Wisconsin and Illinois currently have minimum wages over $5.15 per hour. Michigan and Arkansas will put increases into effect on Sunday. None of the five states in the Midwest has a minimum wage tied to the index, although Michigan’s will rise from $6.95 to $7.15 in July 2007 and again to $7.40 in July 2008.

Since the federal minimum wage was raised to $5.15 in 1997, 22 states have passed laws to increase it.

According to the Missouri Economic Research and Information Center, 42,000 Missourians earned the minimum wage in 2005.

Small-business coalitions like NFIB predict that if Proposition B passes, 1,500 of those jobs will be lost. The numbers come from a report by economist David McPherson of Florida State University.

But the “fiscal note” attached to the proposition reads much differently. It predicts the proposal would generate an extra $3.3 million to $4.3 million annually in extra revenue for the state government.

However, Michael Podgursky, an MU economics professor, warned that the fiscal note can be more complicated than it looks. “The presumption there is that people will make more money and spend more on taxes, but that’s not always the case,” he said.

“(Proposition B) is radical,” he added. If it passes, “it will be a big increase in minimum wage, but could also set off a complicated economic dynamic regarding standards of living,” he said.