Missouri minimum wage goes up a dime in January, despite opposition

What will a dime buy you? Not much, but despite that, business organizations and working men and women are still battling over it.

Missouri’s lowest paid workers will receive a 10-cent per hour raise in January, as Missouri’s minimum age rises to $7.35 an hour. The raise marks the first time in three years that the state minimum wage has increased, and the first increase in years, thanks in part to inflation.

The 10-cent increase means a full-time minimum wage worker will reap just $208 more in annual income. The weekly increase for a 40-hour worker amounts to just $4.

The new rate, however, will now be higher in Missouri than the federal standard of $7.25 per hour because Missouri law states that minimum wage be adjusted annually based upon cost of living. The law approved by Missouri voters in 2006 balances minimum wage with the state’s inflation level.

Workers may be somewhat pleased, but the Missouri Chamber of Commerce and Industry says the new minimum wage will put state-wide retailers at a competitive disadvantage. Currently, Illinois is the only neighboring state with a higher minimum wage than Missouri.

The Chamber wants legislators to repeal the automatic inflationary adjustment but others are fighting the change.

“At a time when Missouri businesses are struggling to provide jobs in today’s difficult economic climate, it is concerning news that labor costs will increase and Missouri businesses will become less competitive compared to other surrounding states,” said Missouri Chamber President and CEO Daniel P. Mehan. “This announcement underlines the need to break Missouri’s minimum wage away from the automatic escalator to which it is currently tied. It causes uncertainty and positions Missouri to eventually raise its minimum wage to uncompetitive levels.”

The Chamber says the increase for Missouri places it in a minority group of states with minimum wage rates higher than the federal minimum wage. Missouri is one of 10 states that have automatic increases based on inflation and among 18 states that have minimum wages higher than the federal minimum standard.

The Chamber says as the minimum wage increases, the ability of employers to continue to employ workers is damaged – hitting entry-level jobs especially hard.

According to the U.S. Department of Labor, employers in retail or service businesses whose annual gross income is less than $500,000 are not required to pay the state minimum wage rate.

Tipped employees, such as restaurant waitstaff, must be paid half of the state minimum wage rate or $3.625 per hour. That means those workers will see an increase of just 5 cents per hour. However, if the tipped employee does not make up the other half of the minimum wage in tips, the employer is required to pay the difference so that the tipped employee is paid $7.25 per hour.

Lara Granich, director of Missouri Jobs with Justice, said the repercussions that businesses imagine are unfounded.

“All the research shows that businesses do not move to states with lower minimum wage rates. That’s just a scare tactic in the public today to try to keep the minimum wage down,” Granich said.