TOPICS > Politics

Missouri Debates Increasing Minimum Wage on November Ballot Initiative

October 18, 2006 at 6:30 PM EDT
LISTEN SEE PODCASTS

TRANSCRIPT

PAUL SOLMAN, NewsHour Economics Correspondent: St. Louis, Missouri, home of the gateway to the West, the pennant-contending Cardinals, the famed art museum. But we were here for political purposes.

PROPOSITION B CAMPAIGNER: That’s Proposition B, which is going to be on the ballot November 7th.

PAUL SOLMAN: A ballot measure to raise the minimum wage for all Missouri workers by more than 25 percent — from $5.15 to $6.50 an hour — and keep raising it in lock-step with inflation.

PROPOSITION B CAMPAIGNER: We’re just coming around asking all registered voters to please come out and vote “yes” on Proposition B.

MISSOURI RESIDENT: I sure will be there.

PAUL SOLMAN: Campaign spokeswoman Sara Howard points out that Congress hasn’t raised the federal minimum wage since 1997.

SARA HOWARD, “Give Missourians a Raise” Coalition: The fact is that no one can survive on $5.15 an hour. It’s been almost 10 years since the minimum wage was raised in this state, and in that time the cost of everything else has increased every single year.

PAUL SOLMAN: Twenty-two other states have already raised the minimum wage above $5.15: California and New York are at $6.75; Oregon at $7.50. And the proposal of $6.50, linked to inflation, seems to have struck a chord in Missouri.

A St. Louis Post-Dispatch poll says the measure is getting 68 percent support, and even the conservative Roman Catholic archbishop of St. Louis has endorsed it. And at one of St. Louis’ oldest Italian restaurants, Giuseppe’s, where we went for lunch, the kitchen staff were all for it.

And you?

GIUSEPPE’S EMPLOYEE: Yes.

GIUSEPPE’S EMPLOYEE: I’m for it.

GIUSEPPE’S EMPLOYEE: I’m going to vote for more money.

Costs of raising minimum wage

Gary Marble
Associated Industries of Missouri
Would the same individuals feel that way if they knew that two to three of them wouldn't have a job in three years or that, in five years, potentially the restaurant wouldn't exist at all?

PAUL SOLMAN: But Giuseppe's owner says of course every worker wants more money.

FORREST MILLER, Restaurateur: We'd like to give them all more money. And I'd like to be able for my customer to walk in the door, and I'd like to be able to say, "You know, I don't have quite enough profit this evening. So for us to stay in business, you're going to have to pay me $20 more."

So how is everybody's dinner this afternoon?

CUSTOMER: Great.

PAUL SOLMAN: Forrest Miller bought Giuseppe's three years ago, has invested $700,000, says he has yet to turn a profit. But the measure even gives his wait staff a raise, upping the amount he has to pay them before tips.

FORREST MILLER: That's $2.15 right now an hour. That's going to go up to like $3.25 an hour. Well, the average hourly wage for a waitress or a waiter here is about $25 to $35 an hour. So our cost is going to go up for each one of those waiters.

PAUL SOLMAN: Add that to the kitchen staff, and it's an extra $100 a night or so, a roughly 3 percent rise in costs. May not sound like much, but just last month every Wendy's in St. Louis closed down due to bankruptcy.

The restaurant industry's in bad shape, says business lobbyist Gary Marble. Yes, low-wage workers want raises, but...

GARY MARBLE, Associated Industries of Missouri: Would the same individuals feel that way if they knew that two to three of them wouldn't have a job in three years or that, in five years, potentially the restaurant wouldn't exist at all?

PAUL SOLMAN: Marble and Miller are just being typical businessmen, trying to hold down the cost of labor. It's an old story.

Tension between labor and employer

Alan Krueger
Princeton University
If workers are paid more, they tend to have lower turnover. Turnover is costly for employers, especially when they have to train new workers coming in, when they have to search for workers. So the higher wages help to increase productivity that way.

ANDREW WALKER, St. Louis Art Museum: This is a scene on the riverfront of St. Louis in the 19th century, where the flatboat men, the men who really work the river, have just come into port.

PAUL SOLMAN: Meanwhile, says curator Andrew Walker of this 1857 painting, calculating businessmen from the Northeast were as crucial to St. Louis' economic success as the workers.

ANDREW WALKER: In many respects, that tension that exists between labor and management, you know, the work is done. Is it enough to make it possible to continue that labor tomorrow?

PAUL SOLMAN: To keep the business solvent, that is.

The tension, of course, is that every extra penny spent on labor means higher prices and/or lower profits. So management wants low wages; labor, higher wages. And ever since 1938, the date of this painting by Missouri's Thomas Hart Benton, American society has mediated between labor and management by setting a federal minimum wage.

Though Congress has raised the minimum wage over the decades, its real value in today's dollars has fluctuated. Today, it's about the same as it was in 1955.

SARA HOWARD: And that's why you see states like Missouri and the five other states that are considering this issue this year and the 22 other states that have already raised their minimum wage moving forward, because we can't wait for the federal government anymore. We've got to take matters into our own hands.

PAUL SOLMAN: To which Forrest Miller replies...

FORREST MILLER: We have to keep the product cost in line with what the customer's willing to pay. When the customer says, "You're charging me too much," we do less business, we have less money to give people, and we have fewer jobs.

PAUL SOLMAN: But a modest increase in prices, if the Missouri measure passes, may not decrease Giuseppe's business, so says economist Alan Krueger, who's studied the ripple effects of minimum wage hikes.

ALAN KRUEGER, Princeton University Economist: A 3-percent increase in prices is hardly noticeable to most of their customers. And I would also add I think that customers accept it. It's not that we're being greedy; it's that we're required to pay higher wages. I think that they are willing to accept that kind of a price increase.

PAUL SOLMAN: But perhaps more important, a higher minimum wage may well pay for itself in terms of improving an employer's labor situation. The truly smart businessman, says Krueger, no matter how calculating, may realize that higher wages make for happier workers.

ALAN KRUEGER: If workers are paid more, they tend to have lower turnover. Turnover is costly for employers, especially when they have to train new workers coming in, when they have to search for workers. So the higher wages help to increase productivity that way.

Arguments for raising minimum wage

Tiffany Blount
Employee, Vintage Vinyl
I remember my very first job making $4.50. And I loved it, because I loved what I did, but after a while it's like reality has to set. I have to make money.

PAUL SOLMAN: Indeed, one of the ballot initiative canvassers is herself a minimum wage worker, shelving books at a local library. If the minimum wage is raised...

Will you work harder, or be more loyal, or less turnover, less likely to look for another job?

WANDA DAVIS, Ballot Initiative Canvasser: Less likely to look for another job, yes, because I actually like my job.

PAUL SOLMAN: Same thing at Vintage Vinyl, where everyone makes at least eight dollars an hour. Would Tiffany Blount leave if they only paid minimum wage?

TIFFANY BLOUNT, Employee, Vintage Vinyl: Oh, god, yes. I remember my very first job making $4.50. And I loved it, because I loved what I did, but after a while it's like reality has to set. I have to make money.

LEW PRINCE, Co-Owner, Vintage Vinyl: It's cheaper to retain people instead of having to go out and find new ones and train them. And that is the case.

PAUL SOLMAN: And there's even another argument for raising the minimum wage, says Vintage Vinyl co-owner Lew Prince: The money is going to stay in Missouri.

LEW PRINCE: If you look at who's against the minimum wage, it's the National Association of Convenience Store Owners, the National Association of Chain Drug Store owners, amusement park and casino owners. These are people who are taking profits that would be wages out of the state.

If you leave this money in the state, you're leaving it in the pockets of Missourians who are going to spend it in Missouri, hopefully on local businesses or much more on local businesses. It's an incredibly simple equation.

Hikes due to inflation

Sara Howard
"Give Missourians a Raise" Coalition
States that have raised the minimum wage already -- and there's 22 of them -- they have not seen a negative impact on businesses. There hasn't been a loss of jobs; in fact, there's been job growth.

PAUL SOLMAN: But the actual ballot measure is not that simple, argues Gary Marble.

GARY MARBLE: It is disingenuous at best and dishonest at worst.

PAUL SOLMAN: The Missouri rate hike is not just a raise to $6.50...

GARY MARBLE: That's not it at all. Shall we go to $6.50 an hour and increase it by what people make in New York City and Los Angeles? That's what it is.

PAUL SOLMAN: Remember, says Marble, future rate hikes are automatically linked to inflation, and worse still to the inflation rate of urban workers, which has risen a lot faster than inflation in Missouri. So simply extend that out in time.

GARY MARBLE: Let's go to 10 years. Now you're looking at $10, $11 per hour. Will everyone watching this program now think an $11-per-hour minimum wage is adequate?

PAUL SOLMAN: In fact, even Alan Krueger agrees that, if you raise it high enough, the minimum wage would discourage hiring.

ALAN KRUEGER: There's some tipping point. And in the U.S., I would suspect that a $10-an-hour minimum wage is beyond the tipping point, compared to the current level of wages.

PAUL SOLMAN: But, of course, the Missouri proposal is only $6.50, about $10,000 a year. Moreover, says Sara Howard...

SARA HOWARD: States that have raised the minimum wage already -- and there's 22 of them -- they have not seen a negative impact on businesses. There hasn't been a loss of jobs; in fact, there's been job growth.

PAUL SOLMAN: On the other hand, Giuseppe's owner insists the conventional wisdom about the minimum wage is correct, at least for some people.

FORREST MILLER: I think we provide a wonderful service to young people and disabled people that are trying to get into the work force. Little Joe, you met in the kitchen back there? I mean, he's deaf. He's a valuable employee. Don't get me wrong. He's a good man. But he can't answer the phone; he can't sell anything; he has difficulty communicating.

So those are some things that we're willing to overlook and use him as an employee. But, you know, when that wage goes up, what happens to those people?

PAUL SOLMAN: To which supporters of the Missouri measure make the practical argument that workers won't get hurt.

SARA HOWARD: And certainly, the moral argument that, if you work hard and you play by the rules you ought to be able to support your family and hopefully build a better life for your kids, I mean, that's the American dream. That's a community value that we all share.

PAUL SOLMAN: The debate will be resolved in Missouri on November 7th.