Removing minimum wage escalator on business groups' agenda in Jefferson City

Editor's note: This is the first in an occasional series exploring a legislative agenda of the Missouri Chamber of Commerce and Industry and other business groups. The Fix the 6 campaign launched in January and addresses six areas where these groups feel Missouri can improve in order to attract and assist businesses.

Five years ago, voters said they wanted Missouri's minimum wage to automatically adjust for cost-of-living increases. Now legislative efforts backed by business interests are underway to stop that.

Since voters approved Missouri's minimum wage escalator in a statewide ballot initiative in 2006, the state's business climate has changed, prompting business groups, including the Missouri Chamber of Commerce and Industry and the Missouri Restaurant Association, to advocate eliminating it.

The chamber identified the minimum wage escalator, which raises the minimum wage with any cost-of-living increase measured by the Consumer Price Index, as one of six things to improve in Missouri to make the state more competitive at drawing in and keeping businesses. The Fix the Six campaign launched in January.

House Bill 61 and Senate Bill 110, currently working their way through the Missouri Legislature, would repeal the escalator, which as it is makes it possible for Missouri's minimum wage to become higher than its federal counterpart. Both wage rates are now $7.25 per hour.

A minimum wage that increases as other costs in the state go up is something waitress Ellen Sikes, who is working her way through college, supports. Tipped employees make about half of minimum wage and depend on tips to make up the rest of their income.

"People aren't really generous with their money because of their own economic slump," said Sikes, who has been a part-time waitress at Olive Garden in Cape Girardeau since 2008. "People still want to eat out and order the same food, but tips have gone down in the last couple years, and it's not based on customer service. People are being more conservative with their money."

Supporters of the minimum wage escalator say businesses are using the economic crisis as an excuse to overturn the will of Missouri voters in the 2006 election.

"People were clear they wanted to be able to keep up, particularly in tough economic times. If you are the lowest paid workers in the state, you suffer most when prices go up," said Lara Granich, director of Missouri Jobs With Justice, a statewide organization representing union and nonunion workers.

'A budget challenge'

Automatic minimum wage increases make it hard for businesses and local governments to find funds to keep up with the mandated rates, opponents argue.

"Anytime the minimum wage has a mandated increase, it's always been a budget challenge," said Dan Muser, director of the Cape Girardeau Parks and Recreation Department. "In a lot of cases it has resulted in increasing fees to cover our bet on it to some degree."

The city employs 150 to 200 part-time workers each summer, many of whom earn minimum wage. Some returning workers earn more.

"You get into a compression issue where if minimum wage goes up 25 cents, and you've got people who have been there a little longer who are making 25 cents over minimum wage, then the new people coming in are making the same thing they are. It goes right up the line. It can create some issues, no doubt about it."

The automatic minimum wage escalator was described as a "double-edged sword" by Mark Dirnberger, owner of Bella Italia restaurant in Cape Girardeau and president of the Southeast Missouri chapter of the Missouri Restaurant Association.

"Most of our wait staff with tips are making $13 to $15 an hour; this forces us to give a raise to these people who are already making good money and takes away a $1 we would love to give to our employees in the back who are single moms with children and single dads paying child support making minimum wage," said Dirnberger, who has about 30 employees at Bella Italia.

The last minimum wage increase cost the average restaurant in Missouri $15,000 to $20,000 a year, he said. Dirnberger is also the treasurer of the Missouri Restaurant Association.

Dirnberger supports changing the laws to keep Missouri's minimum wage in line with the federal minimum wage.

Having a state minimum wage that is higher puts Missouri at a disadvantage for job growth and will result in fewer minimum wage employees being hired, said Sen. Jason Crowell, who sponsored SB 110.

Mid-America Hotels, based in Cape Girardeau, operates Burger King restaurants in Illinois, Kentucky and Arkansas as well as Missouri, the only state among the four with an automatic minimum wage escalator. From the time it was adopted, the escalator has been a concern for Joel Neikirk, vice president of operations with Mid-America Hotels Corp.

"The fear is that with inflation defined as rising general prices, as [wage] rates go up, prices go up. It's a proverbial vicious cycle," Neikirk said. "I don't think any employer is going to argue there are times it needs to be reviewed."

'Some tough decisions'

In Illinois, where the state minimum wage of $8.25 is higher than the federal minimum wage, Neikirk said he's already seen problems as a result.

"A lot of Illinois problems from a revenue perspective could be tied back to the aggressive minimum wage changes they made," Neikirk said. "We have made some tough decisions with our operations there due to the increased cost of doing business."

Rep. Wayne Wallingford, who is also an executive with McDonald's, called the escalator "bad government policy."

"It can really cripple small businesses in Missouri. Minimum wage hikes really make unskilled workers too expensive to hire," he said. "We have a great career path [at McDonald[']s] for individuals that want to go further in the company and make very large sums of money. When you come to us without any skills, we're happy to train you, but not at a skilled person's salary."

Getting a raise is an economic enticement to work hard and shouldn't be automatically mandated, Wallingford said.

A second hearing on HB 61, sponsored by Rep. Jerry Nolte of Gladstone, Mo., is scheduled for 5:30 p.m. today by the House International Trade and Job Creation committee. A previous hearing took place Jan. 26. A hearing date has not yet been set on Crowell's counterpart bill in the Senate.

mmiller@semissourian.com

388-3646

Pertinent address:

20 N. Spanish St., Cape Girardeau, MO