“In opposition to the statists who want to impose a $15 minimum wage, the city of St. Louis, Missouri has decided to go in the opposite direction, lowering their minimum wage from $10 per hour to $7.70, which is the minimum for the rest of the state.
In 2015, the city raised the minimum wage to $10. Republican Governor Eric Greitens said the raised minimum wage would “kill jobs, and despite what you hear from liberals, it will take money out of people’s pockets.”
“This increase in the minimum wage might read pretty on paper, but it doesn’t work in practice,” Greitens said. “Government imposes an arbitrary wage, and small businesses either have to cut people’s hours or let them go.”
In May of this year, a judge said the minimum wage hike could go forward after two years of legal battling.
“The city’s minimum wage will rise again in January, to $11 per hour, significantly higher than Missouri’s $7.70 minimum,” The Associated Press reports. “The increase is expected to give an immediate raise to roughly 35,000 workers.”
However, the minimum the state has in place, $7.70 per hour, is still higher than the mandate from the federal government.
Several cities across America have decided to raise the minimum wage well beyond that federal mandate and there is no doubt that they will see devastating consequences. Among those cities are Seattle, Minneapolis, Washington DC and several cities in California.
While a basic understanding of economics demands that when you raise these minimum wages, you are also going to end up raising prices. After all, who is going to pay for that increased money going out from businesses to its employees? But people don’t think about that, nor do they think about how businesses will also take steps to keep costs low, such as cutting employee’s hours.
In June of 2016, we reported on the state of Oregon attempting to cutoff the protests for $15 minimum wage by implementing a $12.50 per hour minimum wage. They soon discovered economists were right. As Michael Ware reported, “Oregon is heading for a fiscal disaster. With wages going up just to $12.50 rural, the farmers of the state have no chance to compete. And some economists are predicting a massive job loss.”
Democrats actually realized what was happening and admitted it was a terrible mistake. They promised to “fix it” the following year, but whether they do or not remains to be seen and it could be that the damage has already been done.
In a report that came out in June 2017, researchers at the University of Washington, who were commissioned by the city of Seattle, found that when wages went up to $13 in 2016, low-wage workers saw their hours drop by 9%.
Instead of it benefitting the employees, it had the opposite effect.
“For every $1 worth of increased wages, we are seeing $3 worth of lost employment opportunities,” said Jacob Vigdor, one of the study’s authors.
Workers ended up making $125 less each month on average, according to the report.
Of course, that’s average and the market will adjust to those wages, meaning prices will eventually go up to be able to support that increase. The minimum wage for Seattle is between $11 and $15 per hour and that depends on the size of the business and benefits it offers.
Liberal groups took a different perspective.
The Washington report has been making waves in large part because it undercuts the sunny headlines drawn from a University of California, Berkeley paper released last week.
The two studies come to different conclusions, but don’t necessarily contradict one another.
The study from Washington looks at low-wage workers in Seattle across all segments of the economy, while the Berkeley report looks only at Seattle’s low-wage restaurant employees.
It found that wages in Seattle’s food services sector have increased and employment hasn’t been affected since the minimum wage ordinance went into effect in 2015.
Another key difference between the studies: The Washington team had access to the number of hours low-wage workers have logged since the policy went live.
That data was only made available to the University of Washington team through an agreement with the state government. The city of Seattle is funding 15% of the study.
“Our study does something they can’t do, and arrives at a very different answer,” Vigdor said.
Well, it is Berkeley, after all. Still, the liberal Economic Policy Institute’s Ben Zipperer said in a statement, “There is a large body of research that shows that modest increases in the minimum wage boost wages for low-income workers without causing job loss, and nothing in the UW study suggests we should revise those conclusions.”
Obviously, some people are fairing better than others with the implementation of the wage hike, but give it time. Economics are what they are and there will be consequences to this action.
While Missouri is making a smart decision to lower the minimum wage, the fact of the matter is that the minimum wage should be removed altogether. It is a manipulation of the economy more than it is a protection of anything else. Government has no business telling employers what the jobs they offer are worth, and we can see since the implementation of the minimum wage how prices of goods and services continue to escalate as the minimum wage increases.