I really don’t like to say I told you so, but I did.
Congress is expected to send a bill to the President’s desk which will raise the federal minimum wage to $7.25 by 2009. The repercussions of this could force all of Missouri’s businesses to raise their prices and many may have to close their doors
Last year, Missouri voters raised the state’s minimum wage from $5.15 to $6.50 per hour. What many voters may not have realized though is that they also cast a vote for the minimum wage to go up each and every year according to the Consumer Price Index.
Should President Bush sign HR 2206, 60 days later the federal minimum wage will rise from $5.15 an hour to $5.85. Missouri’s will remain at $6.50.
In January 2008, Missouri’s minimum wage will go up according to the CPI, we estimate that will be approximately 4 percent, meaning our state’s minimum wage will be $6.75.
What happens next? You probably already guessed.
In January 2009, Missouri’s minimum wage will rise to $7 per hour. Later that year, the federal minimum wage will increase to $7.25. In line with that, Missouri’s minimum wage will also increase to $7.25.
While the federal minimum wage will remain stable at $7.25 for years to come, Missouri’s will continue to rise.
Continuing to use the low-ball 4 percent figure, wages for entry level and less skilled minimum wage level workers will rise to $11.20 per hour by 2020. That breaks down to $448 per 40-hour week or $23,296 per year.
What else will be rising? What you and I pay for absolutely everything – groceries, clothing, fast-food – the list is endless.
Employers don’t have limitless sources of revenue. If a manager is required to raise the wages of entry level and less skilled minimum wage workers what they charge for their product must rise accordingly, or jobs must be eliminated.
For those of you who might be worried about illegal immigrants being hired at below minimum wage, rest assured those workers have a watchdog in Washington.
Rep. Zoe Lofgren, D-Calif., the new head of the U.S. House immigration subcommittee, recently said that she believes “minimum wage laws apply to people who are here legally and also apply to people who are here illegally. To the extent that the minimum wage is raised – which I support – it would include everybody who is working here.”
So who won’t get a raise?
Unfortunately, the workers who will be hit the hardest are the more experienced and trained. Those men and women are the ones who will be sending their hard-earned raises down to the mandated increases for entry-level workers.
And yes, they have the opportunity and privilege of enjoying the increased cost of living that always accompanies artificially increasing the cost of goods sold.
How are the businesses of our state supposed to compete with neighboring states? Who will be able to create entry level jobs with a starting salary pushing $24,000 per year before benefits?
How can our institutions of higher learning continue work-study programs? How can Missouri’s senior citizens’ services continue to provide hot lunches?
This action in Washington, D.C. demonstrates clearly that House Speaker Rod Jetton and his leadership team was right this past legislative session when they attempted to address this tragic escalator in addition to correcting language for municipalities.
If everyone had worked together to find a resolution as requested by these lawmakers, rather than pointing fingers and placing blame, we would not be standing on the precipice of having the highest minimum wage standard in the United States.
During the 2006 election, Associated Industries of Missouri led the Save Our States Jobs coalition in an effort to defeat the ballot initiative that would raise Missouri’s minimum wage annually. We warned you what would happen if the measure was approved.
What we cautioned is about to take place.
I hate to say I told you so, but I did.
Gary Marble is president of Associated Industries of Missouri, a business and industry trade association serving as The Voice of Missouri Business for over 1,200 Missouri employers. AIM represents its membership before the Missouri legislature, state regulatory agencies and the courts. Marble represented the 130th District in the House of Representatives from 1994-2002.