Missouri

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.

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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.

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

    “Well, figuratively, anyway…”

    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.

    Nice, Christian. Very nice.

    1. So taxation is in fact theft. Thanks, ThinkProgress.

  2. This is great news, and hopefully will be the start of a trend. Min wage laws undermine society in so many ways. It’s very insidious. For example, they quash incentive in education, because teachers and students think, “Why does it matter how hard I study, since either way I’ll get a $15/hour job?” Also of course they accelerate automation. And they have an immediate impact on rents in the area, which quickly erase most of the gains (which is why landlords love them). They also reduce prices for goods and services, so even though workers earn less, they can afford more of the good stuff.

    So much of the min wage hysteria is not by the workers themselves, but by all the industries that actually benefit from the minwage, e.g. mega-retail like walmart and target, which use these laws to quash competition from smaller companies, which can’t afford the regulatory burden.

    Yay libertarians!

    1. Trump can actually take some of the credit for this, because he severely frightened liberals with threats of mass deportation and restrictions on rights and all sorts of other horrors. As a result they see these fights as ‘small potatoes’ and didn’t put a lot of effort into them. Under Hillary they would be calling this a ‘massacre’ and we’d be paraded with sob stories of people whose children are going hungry. Which of course it’s horrible for children to go hungry, but that’s usually not caused by low wages.

    2. Fairly cogent analysis, but I’d disagree with this one point:

      “Also of course they accelerate automation.”

      In my opinion, the push for automation is not due to the fact that robot workers are cheaper, but that they are cheapest, i.e. they represent the “floor” of cost for menial tasks like food work, and thus their development is worth pursuing under any conceivable compensation regime that would have any chance to attract a human worker.

      1. As someone who used to work on fast food automation, I can tell you that minimum wage hikes and the threat of minimum wage hikes definitely increase the demand for the automation. Automation may eventually replace all the burger flippers, but replacing the customer facing employees in a service industry is not a given. No matter how cheap the robot, we’re still talking about a service sector that thrives on human interaction that robots cannot provide. When you have robots replacing front line order takers it means you have real problem.

        Plus, why accelerate the process of replacing humans with robots? Unless that’s the progressives’ real goal! Maybe the progressives really want everyone in the unemployment line because that means more Democrat voters? Hmmm…

        1. “Automation may eventually replace all the burger flippers, but replacing the customer facing employees in a service industry is not a given.”

          If you believe that, then have a look at this: Febo.

          1. I was just gonna say, I recently ordered from a tablet in a Red Robin.

            I will never be returning to that place, however, because their burgers are disappointingly lacking in grease. There was more flavor in the lettuce.

          2. Does anyone remember going to the “Automat” in NYC many decades ago?
            I do. FEBO looks like a modern implementation of the same thing.

            Is what goes on ‘behind the windows’ different? Some automation there might be possible now that wasn’t back in the ’50s, and that may be the only difference. How many food items can be prepared from scratch by robots? I don’t know.

            Unless they’re all prepared in central manufacturing sites and driven by self-driving vehicles that automatically unload the food selections and robots in the retail store move the deliveries to the right ‘windows’ for customers to choose.

            A year or two ago, I painted the same scenario for (nearly) completely automating shops like McDonald’s… picture it. Impossible today, but say, in five or ten years? Plan for it.

        2. No matter how cheap the robot, we’re still talking about a service sector that thrives on human interaction that robots cannot provide

          I’m quickly finding the self-checkout at the grocery store to be faster, more efficient and more friendly.

          Not the same thing as ordering food, maybe– I mean, obviously I won’t generalize self-checkout at the grocery stand to equate to the entire ‘service industry’, but there are cases where it’ll work well.

          I kind of see it like self-driving cars. There are cases where it’ll work well, and cases where it’ll be a laugh-inducing failure.

        3. Why have employees taking money and making change when you can set up a system using tablets to order your meal? I use cash very little as using a credit card is less trouble and I make the monthly payments electronically from my checking account to the credit card company. This is, after all, the 21st Century.

          1. Red Robin and Chile’s here in Raleigh do it now. “Waitrons” deliver the food to the table, refresh drinks and not much more. They still seem pretty happy working there.

  3. best way to attack the minimum wage is by attacking state-mandated wages – regardless of whether they are minimum or maximum or average.

    Those who spend all their time arguing over whether a minimum wage works are missing the point.

    1. Most people have stopped arguing principals though. Example is the ACA: Republicans aren’t even arguing it being wrong on principal, just arguing over how it can be improved, etc… Like it’s a given now.

      1. Oh god, I mean “principles” lol See? It’s an under-used thing!

  4. Shackford is going to be very cross about this state interference in municipal laws.

  5. It’s better that ten people be unemployed than one worker be paid too little. At least that’s argument I’ve heard from progressives. Not in those words exactly, but that’s their attitude. Getting paid too little is WORSE than being unemployed.

    1. The people who actually work minwage don’t complain about it. It’s the do-gooders who think they are saving humanity. But if you actually scratch the surface of the sjw’s, they are in industries that benefit from idleness and unemployment, such as prison guards and mental illness practitioners. Also you don’t have to be able to afford a one bedroom apt to survive. You can share an apartment, or even heaven forbid, live in a friend’s basement for a while.

      1. “The people who actually work minwage don’t complain about it.”

        Hahahahahahaha! This might actually be the funniest thing I’ve heard all week!

        But it’s got close competition with this one:

        “But if you actually scratch the surface of the sjw’s, they are in industries that benefit from idleness and unemployment, such as prison guards and mental illness practitioners.”

        So, all the prison guards are sjws? Seriously? Jesus, what kinds of wack drugs are you on?

    2. And Amazon cut the prices at Whole Foods across the board. Now the unwashed poor will be clogging the aisles at WF, sporting their crocs and baggy tee-shirts!

      This is the Era of Trump.

      1. When I explain virtue signaling to people, the example i always use is Whole Foods. If people go to a random supermarket, they just say they went to the grocery store. If they go to Whole Foods, they mention it by name…usually accompanied by a list of what they bought and how wonderful it is.

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

    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.

    It’s different when she does it because… reasons.

    1. 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.

      Boom.

    2. The truth of this is that all of the professional organizations and labor union rely upon the use of force (government) to get their way. Make organizations that depend upon the use of government to get their way “illegal” and watch the cost of living here in the US make a massive plunge downwards… Then if we did have a “Basic Income”, there would be absolutely no reason to have a minimum wage at all. Then elimination of all the regulations dreamed up by “big government” and there would be a big drop in the cost of hiring people. It was also a mistake of the Founders to have the national government regulate trade between the states. Without that part of the Constitution, we’d have a far smaller national government than we do now.

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

    Jamilah Rasheed?? Oh, yes — this Jamilah Rasheed?!

  8. See, this is why we need Bernie Sanders to make us more like Sweden.

  9. If this actually reduces some workers’ wages, that makes no economic sense. If their work was worth that much before the minimum wage decrease, why isn’t it worth the same amount after? Is this saying minimum wage laws actually do increase some people’s wages?

  10. And while Nasheed has fretted about families “smaller paychecks” on Twitter, she has consistently voted for increased taxes on everything from zoos to cigarettes.

    Politicians have families, and without lots of taxes their paychecks might be smaller. Won’t someone think about the politicians?!

  11. Reason… sigh. Tax cuts don’t put more money on people’s pockets… it KEEPS more money in people’s pockets.

    Jesus….

    1. The Repeal of the Corporate Income Tax would produce a much larger boost. Corporations spend a lot of money (and time) in figuring out ways to pay less taxes. They also move their “headquarters” out of the country to pay less taxes along with moving their production of goods to China or some other “low cost third world country”.

      Some years ago we had beautiful blonde governor of Michigan. She talked like a left progressive. Taxed the heck out of business. Then she acted surprised when businesses pulled up stakes here in Michigan to somewhere else. Turns out that taxing businesses really isn’t a good idea if you want to keep jobs in your state.

  12. Having worked since the age of 11 at various tasks, such as baby-sitting, lawn cutting, door-to-door selling, helper at a TV shop, hotel clerk, waiter, cook, etc.etc., I learned a hell of a lot of skills, that helped me all my life. I would at LEAST appreciate a lower-wage law for teenagers, who could learn all these skills, rather than sitting at home staring at their I-phones…

    1. So you want a minimum wage except for the most vulnerable among us? You monster.

  13. Jamilla nasheed (or whatever) literally doesn’t know what “literally” means.

  14. I wonder where the “minimum level” wage would settle without the intervention of government? I’m guess $5 an hour.

    1. Hate to sound like Stossel, but the market would determine it. If I wanted to pay someone $5, and the guy in the next block was willing to pay $6 to the same person for the same work, guess where that worker would go? And I’d have to make a decision: stick with $5 or get competitive.

      Our local McDonalds now offer entry-level jobs for $12 an hour. Plus benefits. Wow. Preempting minimum wage fights I guess. A few short years ago I taught at a career college and we told our students that they could expect to start (in a doctor’s office, as a paralegal, etc) at $12 per hour. So much for incentive. Why study for a year or so to make $12 an hour when McDonald’s gives it to you if you have a reasonably dexterous wrist.

  15. I am on both sides of the fence on this one. I hate minimum wage because you would think supply and demand would take care of this but
    I know there are many asshole businesses that would pay the lowest amount possible and work the hell out of desperate people and
    In some places minimum wage is a joke since no one could possible think it is worth the time spent earning what buys almost nothing in these expensive cities.
    So it seems like IF there are MW laws they should not be federal or state but local because of economic differences.

    1. You are correct in that IF they are to exist, they should be local. But they don’t need to exist.

      They DO locally adjust themselves to market rates. I live in Seattle. Before they passed the $15 nonsense the state minimum wage was like $9 something, close to $10. One of the highest in the country to begin with. BUT nobody in Seattle would actually work for that. Every single person I knew who had a crap job made more than that. $11-12 something an hour was the lowest I knew of anybody making in this city. That was the market wage for beater work in Seattle at the time. It was above the state minimum wage by a fair amount, and waaay over the federal minimum wage.

      In other words the market sorted itself out. Nobody would work for the actual minimum because you couldn’t survive in Seattle for that, so they had to offer more until they were actually able to hire people.

      Now I’m sure SOMEBODY SOMEWHERE in Seattle was working for the actual minimum. But they were probably a really awful employee, which is the only reason they weren’t working at the other 99% of places paying above that. Or perhaps they really loved their job. Or whatever. But as a practical matter, nobody made the actual legal minimum.

    2. So it would sort itself out just fine, and it would in fact create great incentives for economically depressed areas to draw in jobs. “Hey, people in Detroit are willing to work for $5 an hour, and real estate is worth nothing… I should setup a business there that needs lots of unskilled labor for the math to pencil out. Beats the hell out of Seattle!” But the federal minimum makes this illegal, so depressed areas just fall apart completely instead.

      Low cost of operation is a POSITIVE for most businesses, which is why many industries operate in small/midsized towns in states where real estate is generally cheap, and minimum wages are generally cheap. I’m going to be moving out of this gosforsaken communist hell hole shortly to move somewhere cheaper, with a lower minimum wage, for these very reasons. I have a hobby business I’ve been incubating for awhile, and it needs a chunk of juuust above minimum wage employees to be scalable. With the new increases here in Washington I have to leave the whole state, even though most of Washington outside of Seattle would have worked and been desirable to me personally before their $13.50 statewide increase.

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