Missouri And The Minimum Wage

There is a ballot initiative underway in Missouri that—if voters approve—would raise our state’s minimum wage to $8.25 an hour in 2013, as well as provide an annual cost of living adjustment in the following years.

On Thursday a judge rejected claims that the summary written by the secretary of state to explain the initiative to voters was faulty:

“We think it’s good news. We’re one step closer to making sure that the will of Missouri voters is being respected and we all get a chance to vote on this,” said Lara Granich, director of Missouri Jobs with Justice, which is backing the initiative.

Just why is this push to raise the minimum wage important? Take a look at the following, courtesy of Remapping Debate:

As you can see, and as Remapping Debate points out, the federal minimum wage “is significantly less in real terms” than in 1968. There are no provisions in the law that would allow the minimum wage to keep up with inflation and thus the purchasing power of those wage earners erodes over time.

Speaking of purchasing power, Remapping Debate also provided a comparison of the “family poverty threshold” between 1968 and 2011. It ain’t pretty:

The above green gap—which represents the shortfall between the earnings of someone working minimum wage and trying to support a family of four at the poverty threshold—is not something to be proud of, but at least it is better than it was in 2007:

Although there is no chance that a Tea Party Congress will raise the minimum wage at the federal level, Missourians can take matters into their own hands, should the ballot initiative succeed.

8 Comments

  1. Jane Reaction

     /  April 27, 2012

    There are plenty of good reasons to raise the minimum wage in this country. Here are two more: The minimum wage in France is $12.50 and in Australia it is $15.50, over twice our disgraceful pittance.

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  2. The minimum wage is a tough subject. I was forced to the lengthy Wikipedia page on the subject and it left me pretty much at sea on the subject. Among other things, it said:

    Until the 1990s, economists generally agreed that raising the minimum wage reduced employment. This consensus was weakened when some well-publicized empirical studies showed the opposite, although others confirmed the original view. Today’s consensus, if one exists, is that increasing the minimum wage has, at worst, minor negative effects.[77]

    According to a 1978 article in the American Economic Review, 90 percent of the economists surveyed agreed that the minimum wage increases unemployment among low-skilled workers.[78]

    A 1992 survey by published in the same journal revealed 79% of economists in agreement that a minimum wage increases unemployment among young and unskilled workers.

    The article notes that the minimum wage is essentially a mechanism for reducing poverty through government fiat and that there might be better ways to do that, such as a guaranteed minimum income through a negative income tax. Some very big names in economics support that concept, it says, including Hayek and Friedman. That however seems repugnant to me because it effective cancels the motive to work. Also, my intuition says that raising the minimum wage keeps constant pressure on the motive for businesses to improve productivity, i.e., mechanization and robots. That’s pretty scary in a service economy.

    Might robots with attractive personalities be in our near future? Avatars are entering our cyberspace even as we speak, er, write. There are still a few things human beings can do, not better but more effectively than machines: wait tables with a smile (and spit in your coffee if you get sassy), deliver TLC at the hospital bedside, sell you life insurance. But the list is getting shorter all the time – try getting a human being on the phone these days. What will society look like if these trends continue? Ug.

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    • For years I half-heartedly opposed the minimum wage because I saw it as a sort of legal collusion opportunity for employers: McDonald’s, say, knew that Burger King had to pay their employees X amount and the two companies could use the law to keep wages stable, albeit at rates set by law. There would be no bidding war for the unskilled laborers.

      Now, though, I am convinced that anyone working deserves at least not to have their labor exploited in what would often amount to a race to the bottom in wages, particularly during recessions in which jobs are not plentiful and the temptation for employers to take advantage and cut wages and benefits is too great.

      I look at it as a kind of collective understanding that there is a limit to wage exploitation of unskilled workers.  However, I would be open to someone making the collusion argument (with supporting evidence) that because the bottom is set by law it allows employers to keep wages artificially low in inflationary times (which seems to be supported by the data that generated the charts above). In other words, when wages might have naturally risen, the collusion effect was operating.

      But I would suggest that absent a wage floor, employers would become monopsonies when times were tough, which would only serve the employer’s bottom line.

      Duane

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      • Seems to me, Duane, that the fast food industry is pretty much on a monopsony basis now. Strangely, I know a young man who has worked at that for some years now. He seems to be capable of much more but is strangely satisfied with his niche, even though he remarked one time that he couldn’t afford to go to the dentist for an infected tooth. There is likely much more to his story, but I can’t help but wonder if his wage were even lower whether it would motivate him to make something more out of his life.

        But it gets more complicated. Also working in the same place, part time, are a school teacher and her daughter. There must be many in a poor economy doing such to make ends meet. I wonder if they would still be doing that if there were no minimum wage and the jobs paid less. Seems to me that they probably would, depending on their own motivations and financial circumstance. That would seem to make your point, which I think is that the minimum wage effectively serves to re-distribute some income at the expense of somewhat higher burger prices.

        I’ll have to think about this some more, but right now I can’t get enthusiastic about increasing the minimum wage.

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        • I would appreciate that after you have given it a little more thought (presumably, you will if it gets on the ballot), you share your conclusions (if you draw any). This topic at one time had me perplexed. But if I had to pay another quarter for a burger in order to get the wage up, that’s a no-brainer for me.

          There is a price to pay for civilization, even beyond taxes.

          Duane

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  3. ansonburlingame

     /  April 28, 2012

    To all,

    Jim raises traditional and meaningful questions over Minimum Wage laws. I would add to that list the following. What, exactly, is the purpose of Minimum Wage laws?

    But then of course I take it a little “deeper” in terms of political philosophy. Paraphrasing de Toucville (I think) is the idea of how democracy survives when 51% of the people are able to vote “more money” for themselves with no accompanying increase in effort on their part, or words to that effect.

    I also view the dillema from another perspective, one we see in play today. How does democracy survive when 51% of the people vote to NOT give more money to government, out of their own pockets.

    In other words the perils of pure democracy are evident, to me at least, on both sides of the equation of politics, taxes and spending.

    Consider just as an example if rescinding the Bush Tax Cuts ALL THE BUSH TAX CUTS ON EVERYONE, was placecd on a national ballot for November 2012. Taxes for ALL Americans would go up if the measure passed a popular vote.

    Do you think such a vote would pass a national referendum? I doubt that it would. But just raise taxes on the 1% and it would pass in a landslide, with only NO votes coming from 1%.

    Anson

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  4. Yep, let’s make it even MORE attractive to send jobs overseas!🙂

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  5. I like the collusion idea. Why not make the minimum wage $90 an hour, if we believe it’s efffective?

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