Silver as an investment

Missouri Legislature Reverses St. Louis Minimum-Wage Hike

A week ago, we reported on a study from the University of Washington that exposed how the city of Seattle’s progressive minimum wage increases, which began in 2015, are – contrary to the hopes of misguided liberals – actually crushing the city’s poor.

Specifically, the study found that higher minimum wages caused a 9.4% reduction to total hours worked by low-skilled workers, or roughly 14 million hours per year.  Given that a full-time employee works 2,080 hours per year, that's equivalent to just over 6,700 full-time equivalents who have lost their jobs, just in the city of Seattle.

While the higher minimum wage law remains intact in liberal Washington State – despite the research suggesting that it’s harming Seattle's most vulnerable workers – the Missouri legislature recently acted to prevent a similar catastrophe from playing out in St. Louis by passing what’s known as a preemption law to invalidate a city-approved minimum wage hike that was slated to take effect in late August. The hike would’ve raised the city’s minimum wage to $10 an hour, from the state-approved $7.70.

Preemption laws are becoming increasingly popular in GOP-controlled states as cities – typically bastions of liberal sentiment – try to raise minimum wages above statewide minimum levels. As the Huffington Post reports, it’s impossible to say how many St. Louis employers will take the GOP up on the offer to slash pay, given the effect such a move could have on competitiveness and morale.

But if businesses agree that the wage hike was too aggressive, then at least some of them will likely revert to lower pay rates, particularly in low-wage industries like fast food.

“If St. Louis’ existing measure were to stay in effect, the city’s minimum wage would be $10 this year and would then climb to $11 in 2018. The statewide rate of $7.70 typically goes up just a few cents a year, since it’s tied to an inflation index.

 

St. Louis originally passed a minimum wage hike two years ago, prompting business groups to sue to stop it in court. The Missouri Supreme Court recently ruled that the St. Louis measure was lawful, but the new state preemption law renders it irrelevant.”

However, St. Louis is one of the more interesting preemption-law case studies because it undoes a hike that was already approved – even if it hadn’t yet gone into effect. But at least 17 states have preemption laws that stand in the way of local minimum wage legislation, according to a recent study by the National League of Cities.

Though Missouri is hardly alone. Just days after the Birmingham, Ala. City Council passed a wage hike in February 2016, GOP state legislators in Alabama passed a preemption law taking aim at the new $10.10 minimum wage. The Alabama chapter of the NAACP ended up filing a civil rights lawsuit against the state, claiming that the majority-white legislature was disenfranchising Birmingham residents, who are 73 percent African-American.

Fearing the political backlash associated with potentially cutting people’s pay, Missouri Gov. Eric Greitens wouldn’t affix his signature to the bill; Missouri’s constitution stipulates that bills that go unsigned by the governor automatically become law.