St. Louis businesses prepare for higher minimum wage

ST. LOUIS -- Alexis Straughter is barely paying for food and clothes, so when her 8-year-old daughter wanted to join the school track team, she had to say no -- she couldn't afford the uniform.

The 27-year-old certified nursing assistant and mother of two said Friday she is excited about the pay raise she'll get when St. Louis' new minimum wage takes effect, perhaps as early as this week.

"This is a tremendous, life-changing raise," Straughter said. "The raise will mean that I won't have to stress as hard about making ends meet. It means my kids can do extracurricular activities."

But many merchants and economic experts fear the implementation of a $10 minimum wage, increasing to $11 in January, will do more harm than good. Opponents say low-skill workers will lose their jobs, some businesses will close, and others will relocate to neighboring areas such as St. Louis County.

"The base labor rate is going to be something like 30 percent higher in the city as compared to the county," said Graham Renz, a policy researcher at the Show-Me Institute, a conservative think tank in St. Louis. "The city already has an economic deterrent with the earnings tax, so this high of a minimum-wage difference is really just another big incentive for businesses to move."

St. Louis aldermen passed the phased-in minimum-wage law in 2015.

Groups such as the Missouri Retailers Association and the Missouri Restaurant Association sued to stop it, contending the wage should be uniform across the state.

The Missouri Supreme Court last week upheld the wage increase, which becomes effective once a circuit judge lifts an injunction.

St. Louis joins about 40 other cities including Seattle, Los Angeles and Chicago that have raised the minimum wage. It doesn't go as high as the $15 wage being phased in for some places but is significantly higher than Missouri's $7.70.

The increase in St. Louis will give an immediate raise to an estimated 35,000 workers who will make, on average, $2,400 more each year, said Paul Sonn, general counsel for the National Employment Law Project, a not-for-profit that advocates for a higher minimum wage.

"That is enough to make a real difference for a waitress or a nursing-home worker who is trying to get by on less than $18,000 a year," Sonn said.

Glenn MacDonald, a business professor at Washington University in St. Louis, said there are negative aspects: Jobs will be cut. Costs will be passed on to consumers. Even then, not all businesses will be able to absorb the added cost.

"Some businesses that are hanging on by their fingernails will just shut down," MacDonald said.

John Chen shares that concern. Eight years ago, Chen and his wife were disheartened no restaurant would move into their Dutchtown neighborhood, a once-thriving area that has been hit with hard times. So they opened their own cafe, Urban Eats.

Chen already pays his workers above the state minimum wage, starting them at $9 after training. His cafe will survive, but he's not so sure about neighboring businesses. Chain stores and restaurants won't venture into the area, he said, so if mom-and-pop stores close, they won't be replaced.

"It's going to have an unintended consequence on neighborhoods like ours," Chen said. "If there's no economic opportunity, there's no opportunity for the young people here."

Other business owners are more optimistic. Joe Edwards, whose businesses include the Moonrise Hotel in the Delmar Loop area and the Pin-Up Bowl bowling alley downtown, said the higher wage not only benefits workers but makes them more loyal, reducing costly turnover.

"You can retain employees for a longer period of time, and attract good employees," Edwards said. "Whether it's a restaurant or retail store, if the service is good and the people are knowledgeable and presentable, people will go. Price isn't always the biggest factor."