A fairer wage or fewer jobs?

A lot of us would recognize Flora Abernathy as the woman who works most days in the Dollar General checkout line, standing at the cash register behind a stainless-steel counter and ringing up the purchases of customers who’ve just run a gantlet of last-second temptations: pens, magazines, gum and the kinds of candy packaged so perfectly that children can’t resist begging parents for it.

Shopping can be stressful, but Abernathy does her best to make it a pleasant experience for her customers. Her hellos, thank-yous and goodbyes are sincere. Still, there’s a tired tone in her voice, reinforced by the shadows circling her eyes, that belies her enthusiasm.

That’s because Abernathy works hard — and not just at Dollar General. There’s a good chance you’ll also see her ringing up the register at Break Time convenience store just a couple of blocks down Vandiver Drive. She splits most of her days between the two jobs, trying to make ends meet.

Since May, Dollar General has paid Abernathy $6 an hour, but it cut her from 40 hours a week to 25 or less.

“I took a second job because I can’t pay the bills at $6 an hour,” she said.

Break Time pays Abernathy $7 an hour for 25 hours or more per week. While it boosts her average wage to about $6.50, it also has her working 50-plus hours. It’s easily enough labor to keep her exhausted but brings barely enough money to cover rent, utilities and groceries for her family.

One might find Abernathy to be the perfect poster person for Give Missourians a Raise, the committee responsible for putting Proposition B on the Nov. 7 ballot. The measure would create a statewide minimum wage of $6.50 per hour — trumping the federal minimum of $5.15 that has stood since 1997 — and ensure inflationary adjustments every year. Though Abernathy already makes an average of $6.50, there’s a good chance she’d get a raise if Proposition B passes.

In reality, however, thousands of Missourians are making even less than Abernathy.

A study by the not-for-profit Economic Policy Institute in Washington, D.C., estimated that approval of Proposition B would directly affect 120,000 minimum-wage workers in Missouri and perhaps result in raises for 136,000 more as employers adjust their pay scales.

But the overall effects of a higher minimum wage are difficult to pinpoint. Supporters say the increase would lift thousands of Missourians out of poverty, create a more dedicated work force and stimulate the economy by boosting the buying power of lower-wage workers. Opponents, however, argue the increased wage would hurt small businesses and the economy by making labor more expensive, increasing the cost of goods and services and forcing some larger companies out of the state.

The potential effects on Boone County are especially difficult to gauge because so few workers here earn the federal minimum wage. Of more than 50 businesses contacted by the Missourian, only four reported paying wages as low as $5.15, and only about a third reported paying less than the $6.50 minimum that Proposition B would require.

Complicating matters is the inflationary adjustment Proposition B would require. That, opponents say, could be the death knell for many of Missouri’s small businesses.

Proposition B is similar to a measure filed in the legislature earlier this year that never got out of committee. The bill would have raised the state minimum wage to $6.50 per hour with a yearly increase for inflation. Its sponsor, state Rep. John Bowman, D-Normandy, said debate on the bill was heavily partisan.

“It was the same old rhetoric about how it will lead to job loss in Missouri, but we all know they’re not shipping dishwashing and food-serving jobs to India,” he said.

After Bowman’s bill died, he helped form Give Missourians a Raise. Coalition members include the AFL-CIO, Missouri Progressive Vote, the Association for Community Organizations for Reform Now and the Missouri Chapter of the Service Employees International Union. Give Missourians a Raise garnered more than 135,000 signatures to put the measure on the November ballot.

“I’m happy that the voters will make this decision on Nov. 7,” Bowman said. “The people of the state no longer have to rely on politicians to make a decision like this.”

A growing trend

Missouri is far from the first state to consider setting its own minimum wage as the federal rate has remained stagnant over the past nine years. Twenty-two states and the District of Columbia already have decided a higher wage is necessary, according to the Economic Policy Institute. Two of those — North Carolina and Pennsylvania — continue to require the federal minimum for now but will increase that wage next year.

One motivation for increasing wages is to get more people out of poverty. According to the 2005 American Community Fact Sheet, 13.3 percent of Missourians fall below the federal poverty line, which ranges from $9,645 for one person to $19,307 for a family of four. By comparison, a person earning the minimum wage for 35 hours of work per week would net $9,192.75. Adding $1.35 to that wage would boost the salary by $2,409.75 before taxes.

For two years, Illinois has been the only state in the region paying above the minimum wage, at $6.50 per hour. Todd Maisch, vice president of government affairs at the Illinois Chamber of Commerce, said this increase has resulted in subpar job growth because businesses have had to cut back on employees’ hours. “This is job-killing legislation that impacts people who have the least amount of job skills out there,” he said.

Gov. Rod Blagojevich and Chicago Mayor Richard Daley have both been supporting another raise for Illinois. Although inflationary adjustments have been considered, Maisch said the Illinois Legislature has recognized “the danger of setting wages on autopilot.”

Wisconsin has raised its minimum wage twice, once in June 2005 and again in June 2006. It currently stands at $6.50, and no inflationary adjustments are planned.

Rose Lynch, spokeswoman for the Wisconsin Department of Workforce Development, said it’s still too early to know about the impact on businesses in her state. So far, however, there has been no discernible harm.

“We’ve had steady job growth,” she said.

While nearby states are raising their minimum wages, Jim Gregory, a spokesman for the Kansas Chamber of Commerce, said Kansas businesses are not feeling any pressure to follow suit. In Kansas, the state minimum wage for jobs not covered by the federal Fair Labor Standards Act is $2.65, but Gregory said competition in the market really determines what workers are paid. Market-driven wages instead of arbitrary minimum thresholds, he said, allow more students and part-time employees to be integrated into the work force. Beth Martino, communications director with the Kansas Department of Labor, noted that most Kansas jobs are covered by the federal minimum wage requirement.

Arkansas and Michigan are the most recent states to pass higher minimum wages; both took effect Oct. 1. The Arkansas Legislature first considered a ballot measure, which was being pushed by an outside group, that would have tacked $1 an hour onto the federal minimum and also required inflationary adjustments. Kenny Hall, executive vice president of the Arkansas Chamber of Commerce and the Associated Industries of Arkansas, said the business community felt that was too much.

“We were very fearful that (the escalation) would have a negative impact on businesses in the future,” he said.

In the end, legislators compromised and passed a state minimum wage of $6.25. Only three lawmakers opposed it, and the higher minimum took effect at the beginning of this month.

The Michigan Legislature passed a series of increases. Its minimum wage as of Oct. 1 is $6.95. That will rise to $7.15 in July 2007 and to $7.40 in July 2008.

Wendy Block, director of health policy and human resources for the Michigan Chamber of Commerce, said that, like Arkansas, the Michigan Legislature pre-empted the ballot initiative that was set to go before voters in November because that proposal sought annual increases tied to inflation.

“The business community sees what was done in Michigan as the lesser of two evils,” she said.

In Arkansas, the business community also preferred a simple raise over regular inflationary adjustments.

“If you went out today in Arkansas and talked to the right small businesses, you’d probably see a lot of pain, and it hurt us to see that cost,” Hall said. But the inflationary adjustment, he said, eventually would have made it very difficult for Arkansas to compete for new business nationally.

The same arguments are playing out here in Missouri.

The primary opponents to Proposition B have organized under the name Save Our State’s Jobs. The group includes six Missouri business organizations: the Associated Industries of Missouri, the Missouri Restaurants Association, the Missouri Retailers Association, the Missouri Chapter of the National Federation for Independent Businesses, the Missouri Grocers Association and the Missouri Merchants and Manufacturers Association.

“In my mind, this isn’t about minimum wage,” said Jim Kistler, executive vice president for Associated Industries. “This is about the ripple effect. This is not about the minimum-wage worker. The cost of this will be passed on through consumers or workers, which will result in lost jobs or lost bonuses.”

Kistler said his group wouldn’t oppose an increase in the federal minimum wage. But if Proposition B passes, he predicted, “companies are going to be looking to relocate to other states. All the states need to be on a level playing field.”

“I can tell you that my group probably wouldn’t be in existence if this was happening at the federal level,” he said.

The potential ripple effect that scares members of Save Our State’s Jobs is exactly what the AFL-CIO likes about Proposition B, its Missouri president, Hugh McVey, said. If the minimum wage rises, he said, wages are more likely to increase across the board.

“We don’t represent anyone who makes minimum wage,” he said, “but the floor needs to come up higher.”

MU sociology professor Victoria Johnson noted that while the minimum wage has remained stagnant for nine years, its actual buying power has fallen. Data from the U.S. Department of Labor show the peak in actual buying power occurred in 1968, when the federal minimum of $1.30 had a present-day value of about $9.33. Johnson said the declining value of the minimum wage reflects society’s declining respect for the value of labor.

“The society values more the accumulation of wealth than the connection of paying well for the work people do,” Johnson said, pointing to the trend toward deregulation and the focus on entrepreneurship during the past 20 years.

Johnson said businesses owe their employees a chance to get ahead. “Society consents to (an economic system that allows) businesses’ profits, so (businesses) owe it to society to pay a living wage.”

Johnson couldn’t help but quote a comment President Franklin D. Roosevelt made as he signed the National Industrial Recovery Act in 1933: “It seems to me to be equally plain,” Roosevelt said, “that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

Johnson said a business climate that focuses on profit causes workers to fall behind and become dependent on state services, which costs society as a whole.

While the higher minimum wage is not a complete solution to poverty, she said, bringing more people up to a livable wage would save everyone money in the long run.

“It is a Band-Aid, but that’s better than bleeding all over the floor,” she said.

Sharon Ryan, a professor of economics at MU, disagrees. She said a higher minimum wage may actually hurt the workers it is intended to help because employers required to pay more would be reluctant to take a chance on inexperienced applicants.

“Minimum wage is designated to protect the workers with the least skills,” Ryan said. “The problem is, those people are hurt the worst. An employer takes a chance to hire someone with no experience.”

Ryan also argued that a significant increase in the minimum wage would cause lost jobs and higher prices. Many economists oppose minimum wages altogether because they prevent the market from regulating itself. Wages, she said, should correlate with productivity.

So who’s right and who’s wrong? The report from the Economic Policy Institute sides with Proposition B’s supporters, noting that comparing the economies of states with and without minimum wages higher than the federal standard provide empirical evidence.

“These studies typically find that the job losses predicted by opponents have never materialized, and job growth has not been dampened in the 22 states with minimum wages higher than the federal level,” according to an article published by the Economic Policy Institute. It cited a 2003 study by the Fiscal Policy Institute that found “between 1998 and 2004, the job growth for small businesses in states with a minimum wage higher than the federal level was 6.2 percent compared to a 4.1 percent growth rate in states where the federal level prevailed.”

Low-wage workers in Columbia

It’s tough to find anyone making minimum wage in Columbia. A Missourian survey of fast-food restaurants, grocery stores, theaters, retailers and others found almost no one being paid as little as $5.15 per hour.

Ryan, the MU economics professor, said Proposition B would probably have little impact in Columbia. Most employers, she said, voluntarily pay close to $6.50 already, so increasing the legal minimum would force few to pay more than they already do. While workers making $6.50 now might seek raises, those increases probably would be small.

“Is there really any point in raising it?” she asked.

Janice Johnston feels the same way. “Does anyone even make minimum wage anymore?” asked the owner of Kaffeeklatsch in Columbia Mall.

Johnston sees the federal minimum as a starting wage for the youngest of workers. She doesn’t believe the average head of household makes that kind of money any more. She starts her employees, who are typically college age, at $5.50 an hour.

“Older people are not typically applying,” Johnston said, citing the need to stand all day and the lack of health insurance as factors. Her student employees typically remain covered by their parents’ insurance.

Noah Hollenkamp is one of Johnston’s baristas. He spends 20 to 25 hours a week pulling espresso shots and steaming milk behind the Kaffeeklatsch counter. He said he’s completely satisfied earning $5.75 an hour.

“For what I’m doing there, I couldn’t ask for any more,” he said.

The 20-year-old MU junior started at Kaffeeklatsch about a year ago at $5.50 an hour. He got a raise and became a shift manager after six months. For Hollenkamp, the job offers more than extra cash.

“It’s fun because it’s in the mall and you can see all sorts of people,” he said. “When they come in, they’re taking a break and always have a story. I’ve gotten to know a lot of people over the last year.

“I don’t look at it as an obligation,” he said. “I’m making money for something I enjoy doing.”

When Hollenkamp isn’t working at Kaffeeklatsch, he does odd jobs around his apartment complex in exchange for reduced rent. Would he cut back on that work if Proposition B passes?

“I don’t think anything would change,” he said, “except that I’d be excited for the extra 75 cents an hour.”

At 20 hours a week, Hollenkamp would make an extra $780 over the course of a year, and even more as inflationary adjustments kick in. Johnston worries about the added expense; not only would all longer-term employees such as Hollenkamp get raises, but the starting wage would rise by $1 as well.

“I do think it affects the smaller businesses more because then your payroll becomes a larger expense out of the budget,” she said.

Johnston’s crew of about five during slow times of the year doubles to about 10 during the holiday season. She noted that higher wages wouldn’t be the only expense; the cost of workers’ compensation, Social Security and other employment taxes she pays to the government would also increase. Though she doesn’t yet know how she would cope, she knows the cost would have to be absorbed somehow.

“My opinion is that costs in general will go up; somehow you have to make a little bit more,” she said.

The minimum wage increase won’t affect Dave Maxwell — not yet anyway. The owner of Bread Basket Cafe at Eighth and Elm streets and at Crossroads West already pays $6.50 an hour.

“I’m paying that much because that’s what the industry demands,” he said. “In order to attract quality workers, you have to stay with the market. A lot of chains are starting people at $7.”

While Maxwell isn’t concerned about the immediate impact if voters pass Proposition B, he worries about the future.

“The cost-of-living increase is my biggest concern,” he said, adding that many small-business owners share that concern. “Adjustments for the cost of living are based on the state. You could have a big increase in places like Kansas City or St. Louis, but a zero percent increase in Columbia.”

There’s also the problem of payroll compression: When entry-level employees make more money, older employees feel it’s only fair to get a corresponding raise.

“If there is a 15-cent raise one year for minimum wage, everyone is also going to want a raise, but you may not be able to afford that,” Maxwell said.

Maxwell also cited other potential cost increases. Labor unions, for example, calculate wages and contract costs using formulas based on the minimum wage. Consequently, he might have to pay his suppliers more.

“The suppliers may have to pass that expense along,” he said.

Several workers who spoke with the Missourian said they’d be happy to have some extra cash if Proposition B is approved, but they also understood the arguments against it. Stephanie Callaway, an 18-year-old who’s been working at Patricia’s Foods for the past two years, is among them. She started as a sacker, bagging groceries at $5.50 an hour. She has since been promoted to cashier and makes $6.20 an hour.

“I got this job when I was 16 because I wanted the spending money,” Callaway said. “Now I need the job so I can afford to go to a good school.”

Callaway attends cosmetology school at Merrell University of Beauty Arts and Science in Moberly and hopes to become a hairstylist. If Proposition B passes, she’d make an extra $360 per year working 25 hours a week. Although she’s paying her own tuition and buying gas for a 60-mile commute each day, she’s uncertain whether a higher minimum wage is a good thing.

“I’ve heard that other costs would go up,” she said. “I feel like it won’t matter if everything else goes up.”

Hollenkamp also sees a negative side. “I’ve heard that money would not be worth as much, so prices would go up as well,” he said. “It would probably equal out, I think.”

At Abercrombie & Fitch, a clothing store for teens and the college crowd in Columbia Mall, sales clerk Keith Bell said he wouldn’t mind making more than the $6 an hour he makes now, but he’ll probably stick with the job either way because he likes it.

“When I go to work, we have fun,” the 20-year-old MU sophomore said. “You meet a lot of cool guys and girls working there.”

That “cool” factor resonates in other shops around town. At the mall, Hot Topic and Spencer’s pay wages comparable to Abercrombie & Fitch. The same is true at Slackers, a CD, DVD and video game store downtown. Working in these businesses is simply cooler than working at Taco Bell, which means more people are applying, even at lower wages.

Ted Sharp, a shift manager at Slackers, said employees start at $5.50 an hour, then get a review and, perhaps, a raise after three months on the job. Raises are recommended by the manager and approved by the chain’s owner, Kurt Jellinek.

Though the Columbia location is its flagship, Slackers also has stores in Illinois and in other Missouri cities, including Jefferson City, where Sharp started. Before taking his job there, Sharp had been making $7 an hour, but he had no problem accepting less pay.

“The job seemed so awesome, and I knew I’d be getting a raise soon anyway,” he said. As a shift manager, he’s now back up to what he’d been making before, earning between $7 and $8 an hour.

Slackers employee Alex Hilderbrand said Jellinek is smart: “I think he knows that a lot of people want to work here, so he doesn’t have to pay more.”

Jellinek said the high interest in jobs at Slackers is a factor in his starting wage: “Places like McDonald’s have to start people at $7.50, $8 an hour, because otherwise nobody would want to work there.”

“Other businesses like my own, who do attract a large candidate pool, don’t have to offer that same starting pay, but we have to remain competitive nonetheless,” Jellinek said. “Otherwise people are going to want to leave, and a good business manager knows that.”

In Columbia, many McDonald’s restaurants start employees at $6.25 an hour, but they occasionally pay more depending on an applicant’s availability and experience. Taco Bell, on the other hand, tends to start employees at $6.50 an hour.

Jellinek said lower wages also allow him to give untested workers an opportunity.

“We can take more of a chance on people who don’t have a ton of experience. We want to make sure that we’re investing in the right people,” Jellinek said, adding that employees in good standing typically will make $6.50 within a year.

Jellinek knows exactly what he’ll do if Proposition B passes because he’s already been through a similar change in Illinois, where a two-stage increase brought the minimum wage to $6.50 in 2005.

“If the wage raise goes through, at your first review, you’re probably not going to get a raise because we look at it like the government already gave you that raise,” Jellinek said. “They’ll have to put in more time and more quality work in order to get that increase.”

In Jellinek’s opinion, it’s capitalism’s job — not the government’s — to regulate wages.

“In general, I’m opposed to having minimum wage because the market is going to bear what you’re going to pay people.”