Wage debate outlasts vote

Monday, November 13, 2006

Shannon Davis, who owns 11 McDonalds in Southeast Missouri and oversees about 500 workers, said when voters approved a minimum wage increase in Missouri, it will mean only one thing the next time they drive through to get a Big Mac, large fries and a Coke.

It will cost them more.

"A higher minimum wage is not going to be absorbed," said Davis, who owns two of the fast-food restaurants in Cape Girardeau. "This is going to be passed on to the consumer. A lot of businesses will have to do that. Anybody who employs minimum-wage workers has got to pass this on."

Such is the rippling effect of the Nov. 7 election, when Missouri voters overwhelmingly passed Proposition B, which raises the minimum wage in Missouri from $5.15 an hour to $6.50 an hour with increases tied to the Consumer Price Index.

The minimum wage increase was supported by nearly three-quarters of the voters. Five other states also approved minimum wage hikes Tuesday: Ohio, Colorado, Montana, Nevada and Arizona.

Davis and other business owners see it as a big hit to business that could drive up prices and even cause some jobs to be lost.

But not everyone sees it that way.

Give Missourians A Raise, the group that pushed to get the item on the ballot, national not-for-profit group Jobs with Justice and even the Missouri Catholic Conference endorsed the proposal.

In Missouri, the wage debate came up in the U.S. Senate race. Democrat Claire McCaskill, who supported the wage hike, beat out Republican Jim Talent, who took no official position.

Larry Weber, the executive director of the Missouri Catholic Conference, said his group was pleased that Missouri voters saw the need for an increase in wage for those at the bottom of the economic ladder.

Weber said that studies show 70 percent of workers affected by the minimum wage are predominately adult women and minorities and that 30 percent of minimum wage workers are the sole wage earner in the family.

Proponents say raising the minimum wage will benefit more than a quarter million people in Missouri and pump $21 million into the economy, rejecting opponents claims that raising the minimum wage will result in fewer employment opportunities.

"In the four years after the last federal minimum wage increase, the economy experienced its strongest growth in over three decades," Weber said. "Wages must be adequate for workers to provide for themselves and their families with dignity."

If it was just a one-time minimum wage increase, many opponents wouldn't have minded so much. But John Mehner, president and CEO of the Cape Girardeau Chamber of Commerce, said the automatic increases based on the CPI is a killer.

"The automatic escalator is the real bad part of the proposition," he said.

Mehner pointed out that in the late 1970s under President Jimmy Carter the CPI increased between 8 and 12 percent.

"How'd you like to have a couple of those years?" he said. "That would really push the wage up."

Dr. Bruce Domazlicky, director of Southeast Missouri State University's Center for Economic Research, said the increase is "awfully high" for a single jump.

"Another $1.35 an hour, that will have an impact on businesses," he said. "It's going to drive up their costs, and they probably won't have as many workers in some cases."

Another problem businesses may have is that if the country goes into a recession, prices will go up as demand falls off. Still, with the CPI, wages will go up, he said.

"I understand why it's in there," Domazlicky said of the automatic escalator. "I'm just not particularly sure it's a good thing."


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