The Minimum Wage Cut in St. Louis is Bad Politics, Good Policy

Despite the selective outrage from media and politicians, St. Louis workers will be better off without a higher minimum wage.


Minimum wage protesters in New York City
Erik McGregor/Sipa USA/Newscom

Missouri's state minimum wage preemption law—which Reason covered when the state legislature passed it back in May—went into effect yesterday.

Plenty of states have these wage preemption laws. What makes Missouri's law different is that it actually reduces the wage rate in St. Louis from $10, which had been in effect for the past three months, to the state's current $7.70.

Local politicos and media voices have been quick to play up this "theft" by the legislature.

"St. Louis gave minimum-wage workers a raise. On Monday, it was taken away," the Los Angeles Times headline read. "Thousands in St. Louis likely to see wage drop with new law," wrote the Washington Post.

"They literally took money out of the pockets of individuals," State Senator Jamilah Nasheed? (D – St. Louis) told ThinkProgress back in May.

The bill became law without the signature of Republican Gov. Eric Greitens, normally a critic of minimum wage increases, because he objected to its politically awkward timing. "I disapprove of the way politicians handled this. That's why I won't be signing my name to their bill," he said in a July statement.

It's hard to disagree with Greitens. The quick back and forth on the minimum wage left businesses in an awkward position, while providing labor unions and their political allies the opportunity of pushing a statewide increase.

A bit more puzzling is why politicians and the media are lavishing special attention on a bill that offers only the potential for worker wage reductions, when laws that certainly reduce their wages escape mention. These laws are called taxes, and most pass without nearly the kind of scrutiny from politicians or national media.

Neither the Washington Post nor the L.A. Times were so concerned about the paychecks of St. Louis workers when St. Louis County voters approved an April sales tax hike. And while Nasheed has fretted about families "smaller paychecks" on Twitter, she has consistently voted for increased taxes on everything from zoos to cigarettes.

The good senator even voted against a 2014 tax bill that increased the personal deduction for low income earners by $500, a tax cut the mainstream media, as far as I can tell, ignored. Tax cuts actually help workers and the economy by putting more money in their pockets.

Minimum wage increases meanwhile harm workers by encouraging employers to cut back on hours and job offerings. Seattle's $15 minimum wage is costing workers $125 a month in lost hours, and killing low wage job growth according to a University of Washington study.

After Washington D.C. shed some 1,400 restaurant jobs during the first six months of 2016 after raising its minimum wage to $10.50. Surrounding counties in Maryland and Virginia added 2,900 in the same period.

Similar examples abound across the country.

So, while Missouri's minimum wage law is bad politics, it is good policy. Government-mandated wage hikes harm the very workers they are designed to help.

Some St. Louis workers may see their wages go down. Others however will escape the joblessness and hours cuts that have plagued the other cities that have raised their minimum wage.