Measure to hike Missouri's minimum wage heralded by low-wage workers, worries some businesses

Some businesses are opposing the initiative known as Proposition B, which would bump the minimum rate to $8.60 an hour starting Jan. 1, and increase it every year by 85 cents until reaching $12 in 2023.

Missouri’s minimum wage is now $7.85 an hour. It has not been raised more than 15 cents a year since 2009. Voters last raised the state’s minimum wage 12 years ago, to $6.50 an hour from $5.15 with a provision requiring the state to raise it modestly as the cost of living increased.

Raise Up Missouri, the main group campaigning for the wage increase, says nearly a quarter of Missouri’s workforce would see a raise if the measure passes. But members of the business community counter that being forced to pay those wages could be catastrophic to their bottom lines, and that increased labor costs will be passed along to consumers.

Two workers who eventually would see raises should the measure pass are Gary and Barbara Lomker of Dardenne Prairie. Both are former Shop ’n Save cashiers now employed by Schnucks after the Maryland Heights-based grocer bought 19 locations last month.

“People can’t live on $7.85 an hour,” said Barbara Lomker.

Her hourly pay is $9.75, and her husband makes a quarter less. Neither are full-time employees — she applied for such a position a year ago without success — so they don’t qualify for benefits such as health insurance.

Their $1,100 rent on their two-bedroom condo eats up a third of their budget, which is bolstered by a pension Barbara Lomker receives from her deceased first husband and Social Security benefits that Gary Lomker gets because he’s legally blind. Without that extra income, they say they’d be on the streets.

He walks roughly a mile to work due to the scarcity of public transportation where he lives and the cost of taking a taxi or a ride-hailing service. His wife often needs their car, a Toyota with 273,000 miles on it, to get to her job at a different store further away, which means she can’t give him a ride.

So a job within walking distance of their home is a must, which limits where he can search for employment.

“We’re getting to the age where we’re not going to be able to keep doing this,” said Barbara Lomker, who’s 60. Her husband is a year younger.

A raise in the minimum wage would give them some breathing room in their budget that is often stretched to afford groceries, they said, and allow them to better save for the future and to help others.

Gary Lomker lamented he was unable to give $20 to an organization that helps police officers that called asking for a contribution.

“I don’t have the money to donate,” he said. “All my money goes into our budget.”

Potential effect on business

Five days before the Missouri election, Amazon will raise the minimum wage of its workers to $15 an hour. The e-commerce giant, whose market value topped $1 trillion in September, long has been under political and economic pressure to increase the pay of its employees.

It’s one of several major companies opting to raise their minimum hourly pay — others include CVS to $11, Costco to $13 and Target to $15 by 2020.

If the minimum wage measure passes Nov. 6, Missouri estimates that state and local government tax revenue could increase as much as $214 million.

But opponents argue that there’s a downside to a minimum wage increase that could end up hurting workers.

Businesses already must offer competitive wages to attract workers at a time when unemployment is at record lows, said Glenn MacDonald, a Washington University economics professor.

A hike in the minimum wage means companies must look at other ways to conduct business, including using more automation to replace low-skill jobs — machines such as self-ordering kiosks are expensive, but labor more so — and those in such jobs will find their employment declining over time, he said.

MacDonald also said voters will see the measure and think by supporting it, they’re helping poor people get a raise, but that it’s not that simple.

“They’re not thinking about the people who will get fired. They’re not thinking about the businesses that will close. They’re not thinking about higher prices for consumers,” he said.

Most businesses, including the local company Lodging and Hospitality Management, already pay above the minimum wage — but should the wage increase pass next month, the increased labor costs will be passed along to customers, said Robert O’Loughlin, the company’s chairman and chief executive officer.

That firm owns 20 hotels in the St. Louis area, including all the DoubleTrees, two Sheratons, some Hiltons and Marriotts as well as Union Station and West Port.

“I think the minimum wage can’t be dealt with differently by a city, county or state. It should be an overall minimum wage so it affects everybody. Then it becomes more fair,” he said, saying the minimum wage should be decided at the federal level.

The federal minimum wage, set by Congress, is $7.25 an hour and has not been increased since 2009.

A business owner who supports the ballot initiative is Scott Sandler, owner of Pizza Head on South Grand Boulevard in St. Louis. He has nine employees. State law allows him to pay tipped employees just shy of $4 an hour — but he starts them at $9, he said, and they get raises when they stay on.

“It’s basically profit-sharing — that’s how I look at it,” said Sandler, who opened his restaurant about a year and half ago.

The law requires that tipped employees be paid half of the state minimum wage rate, with the employer paying the difference so the employee makes minimum wage. So if Proposition B passes, those workers would see a raise.

He starts other employees at $12, and pays one $16 an hour.

“The bottom line is that fair wages help the economy become more prosperous. By paying people a living wage, you’re going to have more economic sustainability,” Sandler said. “You’re going to have less turnover and basically a smoother operation overall. When more people have money in their pockets, they’re going to spend more.”

Raise Up Missouri reported raising more than $3.7 million for the effort last quarter. On Aug. 31, the Sixteen Thirty Fund, a liberal “dark money” nonprofit, dropped $3 million into the group’s coffers.

All told, as of Oct. 1, Raise Up Missouri has brought in more than $5.7 million for its cause. Nearly $4.7 million of that total has come from Sixteen Thirty, according to the group’s campaign finance report, filed Monday. The Sixteen Thirty Fund gave an additional $641,000 on Oct. 5, a total that is not included in the Monday filings.

Other major backers include the Washington-based Fairness Project ($285,000); the Black Progressive Action Coalition ($500,000); and the St. Louis-based 2018 Ballot Fund ($98,000).

Unions such as the United Food and Commercial Workers and the Service Employees International Union have also cut large checks to the effort.

Raise Up Missouri had more than $3.8 million on hand as of Oct. 1 and spent $552,000 last fundraising quarter.

And the schism about the state minimum wage has factored into the Missouri race for U.S. Senate, even though its winner will have no effect on the measure’s outcome.

At a debate Thursday, Republican candidate Josh Hawley said he opposes the ballot initiative, saying the federal government should determine that figure. Incumbent Claire McCaskill, a Democrat, said she supports Proposition B.

Jack Suntrup of the Post-Dispatch contributed to this report.