Home People Missouri Blocks Economic Relief for Low-Wage Earners

Missouri Blocks Economic Relief for Low-Wage Earners

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Gov. Eric Greitens
Gov. Eric Greitens

In St. Louis, a pending bill is set to slash the salaries of low-wage earners in the city by almost 25%, a move the Governor of Missouri literally said should help them, “keep money in their pockets.”

One-term Republican Gov. Eric Greitens (who, for the record, was a Democrat before switching parties to run for office) said as much in a statement earlier this week while announcing he did not plan on signing a bill preventing the city from setting its own minimum wage.

In Missouri, the governor not signing a bill is the same as signing it – the only difference is that Gov. Greitens apparently doesn’t want his name on a law that will mean workers in St. Louis earning the city’s minimum wage of $10 will see that rolled back to the state level of $7.70 on Aug. 28. This means for the roughly 35,000 residents will not get that $2,400 pay raise some were desperately hoping for.

St. Louis initially passed an ordinance granting higher base wages back in 2015, but according to the St. Louis Post-Dispatch the city’s law had been tied up in the courts by business interests in the state.

It wasn’t until May when an injunction placed on the law by the St. Louis Circuit Court was lifted by order of the Missouri Supreme Court. The Republican-controlled state legislature then proceeded to fast-track another bill that would outlaw the ordinance immediately.

Despite past attempts by state representatives to get the city’s ordinance nullified, and the fact the wage-cutting bill was passed on the state level, Gov. Greitens said low wage earners in St. Louis looking to hold someone accountable should direct their ire toward their local elected officials.

Why? Because they apparently forgot to take into account the interests of the state which, “needs more private sector paychecks and bigger private sector paychecks.”

Think about that for a minute: the state has to stop municipalities from making the private sector pay more people higher wages, because the private sector needs that money to pay more people higher wages. Gov. Greitens keeps going.  

“It will kill jobs and despite what you hear from liberals, it will take money out of people’s pockets,” Gov. Greitens said. “This increase in the minimum wage might read pretty on paper, but it doesn’t work in practice. Government imposes an arbitrary wage, and small businesses either have to cut people’s hours or let them go.”

Here’s the problem: all of that is flat out untrue.

On Thursday, the Labor Department released its jobs numbers for the month of June and, at the risk of getting too wonky, there are takeaways from the report that run counter to Gov. Greiten’s argument.

Namely, how while about 222,000 jobs were added last month and unemployment is stupid low at 4.4 percent, economists and other experts say wages have not increased as much as they should have. Hourly earnings have increased a mere four cents, or 0.2 percent, in June. In May, workers earned 0.1 percent more.

Experts say the issue is that while there are more jobs, employers are having a difficult time finding qualified employees to fill them. To fix this, some economists suggest paying people higher wages.

“The pace of job growth is expected to slow as the labor market hits full employment,” economics reporter, Lucia Mutikani, reports for Reuters. “As a result, companies are gradually raising wages in an effort to attract and retain their employees.”

Clearly, paying workers a bit more isn’t the cure for an ailing economy in Missouri or in the rest of the country from having a booming economy, but experts say it’ll sure help. And to think: Gov. Greitens could veto the wage-cutting legislation and help the private sector he says the state so desperately needs.

Not to mention, the St. Louis ordinance would’ve affected businesses either netting more than $500,000 annually, or those employing more than 15 workers.

It’s unclear how many businesses exceed that $500,000/year sales limit, but according to the federal Small Business Administration, firms in Missouri employing between 1-19 workers make up 17 percent of the private workforce in the state.

That’s 187,000 people, and remember: St. Louis officials figured around 35,000 residents would have been helped by a minimum wage increase. Run the numbers, and you will find Gov. Greitens and the state legislature argue giving 0.0031% of the state’s work force a raise will tank the economy.

Also, the state is about to deliver massive tax cuts to its wealthiest residents and tax deductions for businesses that could be as much as 25%.

As reported by the Associated Press in the Springfield News-Leader, this is will happen thanks actions by legislators in 2014 when they decided to build the cuts into the state budget which were designed to kick in once the state reached a certain threshold for revenue.

Officials are still running the numbers, but it looks as the fiscal time bomb is set to blow. It’s estimated the cuts would cost the state $620 million a year in tax revenue once fully implemented.

So just to recap: the state can’t risk businesses paying workers $84 million a year in increased wages, but it will clear the way for those same businesses – and the wealthiest among them – to get $620 million a year in tax breaks – at a time when the state is under enormous fiscal stress. Whose pockets is Gov. Greitens looking out for again?

And one more thing: A study released by the National Employment Law Project released last year looked at 22 minimum wage increases at the federal level from 1938 to 2009. They found there was NO CORRELATION between increasing the minimum wage and job loss. Instead there was a 68% increase in jobs across the board.

In fact, this was even more true for leisure/hospitality jobs and retail jobs; occupations where an increased minimum wage was expected to decimate employment. According to the study, the retail sector saw a 73% increase in jobs whenever the minimum wage went up and the leisure/hospitality sector saw an 82% increase when that happened.

The bad news is that no matter what the studies or the numbers say, it looks like Missouri seems hell bent on enriching the few and keeping profits fat for businesses at the expense of the workers and residents bearing the brunt of true fiscal hardship.

The good news is that the workers and residents in St. Louis and elsewhere know all of this and the same math and studies their representatives seem to ignore or reject indicates they will most likely get what they want.

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