ST. LOUIS • With as many as 35,000 workers racking up their first hours under the city’s new minimum wage Friday, one of them, Wanda Rogers, marveled at the math of an extra $2.30 an hour.
“It’s going to change my family’s life tremendously,” said Rogers, 46, who works at a McDonald’s restaurant at 1420 Hampton Avenue south of Forest Park. “We won’t have to struggle as bad as we were. I won’t have to worry about being able to pay my rent, pay my bills and buy household supplies and food.”
She was among a few dozen low-wage workers and labor advocates who marched around the downtown McDonald’s on Tucker Boulevard Friday celebrating the new mandatory citywide pay rate and vowing to fight for more.
Friday was the first day of the city’s new $10 per hour minimum wage, instituted after a two-year legal fight with business groups that opposed it. It puts St. Louis’ minimum substantially above those of the surrounding regions that are still under the Missouri and Illinois state minimum wages of $7.70 and $8.25, respectively.
Under the city ordinance, the minimum wage in St. Louis will rise again on Jan. 1, 2018, to $11, then increase annually after that with inflation.
The new rate structure that started Friday will affect many workers who interact with public all the time, including store clerks and fast-food workers. The new ordinance also will affect many seasonal concession workers, because it’s written to apply to employees who work at least 20 hours per year, which St. Louis labor attorney Hal Wellford called “a very low standard.”
At the St. Louis Zoo, for example, there are about 330 full-time positions that won’t generally be affected by the new rate. But of the roughly 800 part-time workers at the zoo, about 500 — most of them teenage concession workers — will see raises because their current pay is at or near the minimum.
Spokesman Billy Brennan said it would drive up the zoo’s labor costs by an estimated $750,000 annually.
“We work closely with the city of St. Louis in many ways, and the city leaders have strongly supported the Zoo. We will adhere to the requirements of the new minimum wage ordinance,” Brennan said in a written statement. “While this is a significant increase in the Zoo’s labor costs, it does allow us to continue to attract the best employees and compete effectively in the city’s labor market.”
Wellford, the St. Louis attorney, is with Littler Mendelson P.C., a global firm that specializes in employment and labor law. He said there were some quirks in the new ordinance that would keep employers and employees sorting out details for a while. For example, it applies only to businesses that employ at least 15 people, a standard that in some cases won’t be as simple to define as it may sound.
“There are a lot of questions about who is covered,” said Wellford. “There are some ambiguities to it.”
In any case, even some people who currently make more than the new minimum wage could see some increases as a result of it.
Businesses that already pay above the new minimum rate but that have policies tied to that rate — employee agreements to pay a certain percentage above minimum wage, for example — will end up having to increase those higher pay rates. Even without such agreements, as a practical matter, an above-minimum-wage worker who sees that a previously lower-paid worker is suddenly making substantially equal pay might press for a raise as well, to maintain a pay level relative to the bottom pay level.
“It does have a compression impact” on wages above the minimum, Wellford said. “That’s one unintended consequence of the new wage — or maybe an intended consequence.”
Critics of higher minimum wages in general claim that they give businesses incentives to lay off employees, or hire fewer of them, to cover the additional cost. When the higher minimum wage is instituted in one area — like St. Louis — while surrounding areas stay at lower rates, they say, that wage differential creates the added danger that businesses will simply move outside the area to keep paycheck expenses down.
“The business community is pretty concerned about it,” said Austin Walker, manager of government relations for the St. Louis Regional Chamber. He called the new wage differential between St. Louis and the surrounding area “an artificial wage shelf” that both existing and potential new employers in the city will take into account in decisions regarding location, staffing levels, expansion and more.
“We’re not opposed to discussing a statewide or national minimum wage increase. But a city-only increase ... puts the city at a competitive disadvantage,” Walker said. “It really acts as an additional tax on employers. It will increase the incomes of workers who keep their jobs, but some will lose them.”
Added to that, he said, is political uncertainty about whether this is in fact the final rate. The Missouri Legislature — which, unlike St. Louis city government, is controlled by Republicans — is considering legislation that could prohibit cities from setting minimum wages different than that of the state.
“The General Assembly can still nullify the wage, next week or next year,” Walker noted Friday. “That creates uncertainty.”
One recent report by two economists predicted that these and other factors in play around the St. Louis measure could cost about 1,000 jobs here. “[M]inimum-wage hikes reduce job opportunities especially for the young and less-skilled,” claims the report, by professors David Macpherson of Trinity University in San Antonio, Texas, and William Even of Miami University in Oxford, Ohio.
Their paper was written for the Employment Policies Institute, a conservative think tank that predicted in an accompanying statement that St. Louis’ new wage would “turn the city’s gateway of opportunity into a wall.” It predicts that “the city’s most vulnerable populations” would be hit hardest, particularly women, teenagers and people in their early 20s, and people without college education.
That report estimates about 25,500 people will be affected by the new wage. The National Employment Law Project, a nonprofit that favors higher minimum wages, puts it closer to 35,000 workers and predicts they will make an average of $2,400 more annually.
Outside the McDonald’s on Tucker Friday afternoon, the two dozen advocates who marched around the block said they were both celebrating the implementation of the new wage and rallying for a continued push to an ultimate goal of a $15 statewide minimum.
“We’re out here today celebrating that 35,000 workers have gotten a raise in the city of St. Louis. That’s a wonderful first step,” said one of them, Richard von Glahn, policy director at Missouri Jobs for Justice, a workers’ advocacy group. “We’re going to keep pushing, because we know there are hundreds of thousands of other workers in this state who need a raise.”
Betty Douglas, who works at the Hampton McDonald’s and was making $7.90 an hour until her $10 wage kicked in Friday, shouted to the small crowd through a microphone. “I have two extra dollars! ... This will be an extra $200 on my check!” she said, adding: “The fight isn’t over!”
As they marched, a separate, smaller group of people in business attire watched from a short distance, including a man who confirmed he was the McDonald’s restaurant owner but who declined to say more.