• (573) 427-7326

Missouri to Increase Minimum Wage on New Year's Day

Raise Will Benefit 79,000 Low-Wage Workers and Boost Consumer Spending by $8 million

St. Louis, MO – On January 1st, Missouri’s minimum wage will increase by 10 cents to $7.35 per hour, benefiting an estimated 79,000 low-wage workers in the state. Missouri’s minimum wage increase means an extra $190 per year in wages for the average directly affected worker, and the increased consumer spending generated by the minimum wage hike will boost GDP by more than $8 million, according to an analysis by the nonpartisan Economic Policy Institute. Missouri is joined by nine states – Arizona, Colorado, Florida, Montana, Ohio, Oregon, Rhode Island, Vermont, and Washington – that will also raise state minimum wage rates on New Year’s Day, boosting wages for nearly one million workers nationwide.

Missouri’s January 1st minimum wage increase is the result of a ballot proposal approved by voters in 2006 that provides for annual rate adjustments to keep pace with the rising cost of living. An estimated 72,000 workers in Missouri will be directly impacted as the new minimum wage rate will exceed their current hourly pay, and 7,000 more will see a raise as pay scales are adjusted upward to reflect the new minimum wage, according to an analysis of government data by the Economic Policy Institute. Sixty-three percent of these low-wage workers are adults over 20 years old; 70 percent work 20 hours per week or more; 44 percent have at least some college education. [See chart for complete demographic breakdown.]

A proposal to raise Missouri’s minimum wage to $8.50 per hour nearly reached the November ballot this year, yet was narrowly blocked by corporate-backed opponents who used the legal process to exhaust the timeline for appearing on the ballot. Missouri’s minimum wage has remained at $7.25 for the past three years.

“Missouri’s lowest-paid workers have been waiting three years for a pay raise,” said Lara Granich, director of Missouri Jobs with Justice. “While Missouri’s minimum wage remains decades out of date, this modest increase will deliver a valuable stimulus to the state’s economy and ensure that low-wage workers do not fall further behind as the cost of living continues to rise.”

While weak consumer demand is holding back business expansion, raising the minimum wage puts more money in the pockets of low-wage workers who have little choice but to spend that money immediately on goods and services. In total, the minimum wage increases taking effect in all ten states on January 1st will generate over $183 million in new economic activity and create the equivalent of 1,500 new full-time jobs.

Missouri joins eighteen states plus the District of Columbia that have established minimum wage rates above the federal level of $7.25 per hour, which is just over $15,000 per year for a full-time minimum wage earner. Missouri also numbers among ten states that increase their minimum wage rates annually to ensure that real wages for the lowest-paid workers do not fall even further behind: Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont, and Washington. Nevada has not scheduled a cost of living adjustment to take effect this year.

Because the federal minimum wage is not indexed to rise with inflation, its real value erodes every year unless Congress approves an increase. Without further action from Congress, the current federal minimum wage of $7.25 per hour will lose nearly 20 percent of its real value by 2022 and have the purchasing power of only $5.99 in today’s dollars, according to a new data brief by the National Employment Law Project.

The Fair Minimum Wage Act of 2012, introduced in the U.S. Senate and House of Representatives in July, would help recover much of this lost value by raising the federal minimum wage to $9.80 by 2014 and adjusting it annually with rising living costs thereafter. The Fair Minimum Wage Act would also raise the minimum wage for tipped workers from its current low rate of $2.13 per hour, where it has been frozen since 1991, to $6.85 over five years. Thereafter, it would be fixed at 70 percent of the full minimum wage.

A large body of research shows that raising the minimum wage is an effective way to boost the incomes of low-paid workers without reducing employment.  A groundbreaking 1994 study by David Card and Alan Krueger, current chair of the White House Council of Economic Advisers, found that an increase in New Jersey’s minimum wage did not reduce employment among fast-food restaurants.  These findings have been confirmed by 15 years of economic research, including a 2010 study published in the Review of Economics and Statistics that analyzed data from more than 500 counties and found that minimum wage increases did not cost jobs.  Another recent study published in April 2011 in the journal Industrial Relations found that even during times of high unemployment, minimum wage increases did not lead to job loss.

Strengthening the buying power of low-wage workers is especially critical in this economic climate. A recent study by the National Employment Law Project reveals that, while 60 percent of jobs lost during the recession have been middle- and high-wage occupations, low-wage occupations have accounted for 58 percent of jobs created in the post-recession recovery.

The following table lists the states with increases; amount of increase; the new wage on January 1, 2013; the total workers directly and indirectly affected, the increase in annual earnings for the average affected workers, and the GDP impact of each minimum wage increase:

States with Minimum Wage Increase

Amount of Wage Increase

New Wage on Jan. 1, 2013

Total Affected Workers

Increased Annual Pay for Average Affected Worker

GDP Impact

Arizona

$0.15

$7.80

72,000

$320

$13,188,000

Colorado

$0.14

$7.78

66,000

$300

$11,170,000

Florida

$0.12

$7.79

210,000

$370

$46,428,000

Missouri

$0.10

$7.35

79,000

$190

$8,618,000

Montana

$0.15

$7.80

22,000

$310

$3,960,000

Ohio

$0.15

$7.85

215,000

$340

$43,443,000

Oregon

$0.15

$8.95

127000

$410

$22,681,000

Rhode Island

$0.35

$7.75

29,000

$510

$3,938,000

Vermont

$0.14

$8.60

11,000

$240

$1,461,000

Washington

$0.15

$9.19

164,000

$310

$29,009,000

Total

   

995,000

 

$183,896,000

NOTE: This Missouri Jobs with Justice news advisory was published December 19, 2012. Missouri JWJ is a coalition of community, labor, student and religious groups committed to fighting together for economic justice in Missouri.

@ProgressMO

The High Five: Stories We're Following

  1. President Obama: “In too many communities around the country, a gulf of mistrust exists...
  2. Missouri Republican Party Executive Director Matt Wills characterized the voter registration...
  3. . A USDA study last year said only Arkansas had more people facing daily food uncertainty. A new...
  4. “The Missouri Department of Elementary and Secondary Education ignored several conflicts of...
  5. “The new U.S. jobs reports for July released on Monday reveal that Gov. Sam Brownback’s...

Join the Conversation on Facebook