Missourians sound off on minimum wage
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Missourians sound off on minimum wage

Date: September 20, 2006
By: Rachel Higginbotham
State Capitol Bureau

JEFFERSON CITY - Jefferson City business owner Jim Baumgartner and one of his employees, Travis Lee, personify the debate over raising Missouri's minimum wage.

Baumgartner started working at McDonald's on Missouri Blvd. in Jefferson City in 1959. Back then he made 80 cents per hour.

"Times have changed," he jokes. "Now I make $1.25."

Baumgartner has come a long way since the McDonald's on Missouri Blvd. He now has six of his own McDonalds', all located along US Route 54. That's why he named his small business 54 Foods.

54 Foods now employs more than 300 workers, and Baumgartner says he doesn't see that number changing immediately if Proposition B passes this November.

The proposition would raise the minimum wage in Missouri from $5.15 to $6.50 per hour. The wage would then be increased every year for inflation based on the Consumer Price Index.

Travis Lee has worked as a cook at one of Jim Baumgartner's McDonalds' for five months. He works more than 30 hours per week and makes more than the minimum wage. Baumgartner hired him at $6 per hour, and he nows makes $6.15 per hour. But he says it isn't enough.

"The minimum wage needs to be at least $7 to start out," he said. "Especially in food service. It's non-stop work. $6.15 an hour ain't even right."

Lee doesn't fit the mold of most hourly wage workers in the U.S. While hourly wage workers tend to be younger than 25, female and without children, Travis is 34, male and a father of three.

"The minimum wage needs to be at least $7 to start out," he said. "Especially in food service. It's non-stop work. $6.15 an hour ain't even right."

Lee wasn't aware that Proposition B was on the November ballot before the time of his interview. He said he isn't sure if he's even registered to vote. But he also said that the 35-cent increase in Proposition B, while small, could make a big difference.

"I'd use it [the money] to provide for my children; take them out on more family outings, buy them more clothes," he said.

Baumgartner said that although his employees' starting salary is just cents below the level in the November ballot proposal, it's the automatic, annual inflation adjustment in the proposal that has prompted his opposition.

"It's a little bit of a concern with the inflationary clause built in there. I feel that it could get out of hand after a while," he said.

He also voiced concerns that an increase in the starting wage would mean that his long-time employees would also demand higher wages.

"There could be some compression effect," he said. "If I start a guy at $6.50 and I've got a guy making $6.75 or $7, he's probably going to be disgruntled if he doesn't feel like he gets some type of small raise because there's not enough difference between his hourly [wage] if he's been there for a few months and somone who just started."

But while Baumgartner doesn't support Proposition B, he said he understands why people do.

"[Workers] are looking for the best deal they can get, and I don't blame them," he said. "I would be the same way if I was in the job market."

Lee isn't as understanding of Baumgartner's situation, however: "He's a pretty good guy, but I can't believe he opposes [a wage increase]," Lee said. "I'd think that for as long as he's been in the business, he could afford it."

Proposition B has become a rallying point for this year's election for low-wage workers and small business owners like Baumgartner.

Small business advocacy organizations that back owners like Baumgartner claim that a raise in the minimum wage could hurt their interests.

The National Federation of Independent Business is one such organization. Brad Jones, Director of the Missouri State NFIB, says that if Proposition B passes, it could be a bad deal for businesses.

"When you ask small business people what's going on with their economy, they're going to talk to you about two things: health care premiums and minimum wage," said Jones. "It's a perfect storm between the two, and [if Proposition B passes], it's going to result in consequences."

Jones said that, contrary to Jim Baumgartner's situation, most small business owners will have to lay-off employees.

"Marginal part-time workers will become no-time workers," he said.

Jones also says that the yearly increase for inflation is a concern of his. "The CPI is the problem, because Missouri will have the highest [minimum wage] in the next few years," he said.

Jones says that because the Missouri minimum wage could eventually be the highest in the Midwest, businesses may leave the state in search of cheaper labor.

"If you're going to give an increase," he said, "do it across the board. Everyone wants a level economic playing field."

If passed, Proposition B would make Missouri the sixth state in the Midwest to pass an increase beyond the federally mandated minimum wage. Minnesota, Wisconsin and Illinois currently have minimum wages over $5.15 per hour. Michigan and Arkansas will put increases into effect on Oct. 1.

Since the federal minimum wage was raised to $5.15 per hour in 1997, 22 states have passed laws to increase.

None of the five states in the Midwest has a minimum wage tied to the CPI, although Michigan's will rise from $6.95 to $7.15 in July 2007, and again to $7.40 in July 2008.

Jim Baumgartner said that, while not formally, he does adjust his employee's wages according to the livng costs.

"We have some employees that drive a pretty good distance, probably farther than they should, to work for me," he said. "Last year, when the price of gas started going up, we gave them all a dime-an-hour raise. It wasn't much, but I think a lot of people do things like that."

According to the Missouri Economic Research and Information Center, 42,000 Missourians earned the minimum wage in 2005. Most of those workers were employed in the service sector--jobs like those at Jim Baumgartner's McDonalds', in food production and service.

Small-business coalitions like NFIB predict that if Proposition B passes, 1500 of those jobs will be lost. The numbers come from a report by David McPherson of Florida State University.

But the "fiscal note" attached to the proposition reads much differently.  It predits the proposal would generate an extra $3.3 million to $4.3 million annually in extra revenue for state goverment.

However, Michael Podgursky, professor of Economics at MU, warns that the fiscal note can be more complicated than it looks. "I think you have to view that with some caution," he said. "The presumption there is that people will make more money and spend more on taxes, but that's not always the case."

"[Proposition B] is radical," he added. If it passes, "it will be a big increase in minimum wage, but could also set off a complicated economic dynamic regarding standards of living," he said. "It's a big step."

Proposition B is similar to a measure filed in the legislature earlier this year that never got out of committee.  The bill would have raised the state minimum wage to $6.50 per hour, with a yearly increase for inflation.

"It was a very partisan bill," said the bill's sponsor, Rep. John Bowman, D-St. Louis County. "It was the same old rhetoric about how it will lead to job loss in Missouri, but we all know they're not shipping dish-washing and food-serving jobs to India."

After Bowman's bill died in committee last spring, the organization Give Missourians a Raise managed to gather more than 135,000 signatures to put the measure on the ballot in November.

"I'm happy that the voters will make this decision on Nov. 7," Bowman said. "The people of the state no longer have to rely on politicians to make a decision like this."

As for who will actually vote on Proposition B in November, Sara Howard, a spokesperson for Give Missourians a Raise, says it probably won't be low-wage workers like Travis Lee. "It's a strange fact of life, but low-wage workers are less likely to be registered to vote," she said.

"It's something that we're working on," she added. "We want to make sure that everyone who is eligible to vote can do so, especially if they have the opportunity to vote themselves a raise."