Foes prepare to wage battle for voters to raise minimum pay

When Jim Baumgartner considers the minimum wage, his thoughts wander to automated french-frying machines.

The owner of six McDonald’s franchises that stretch from Fulton to the state capital to Linn and Osage Beach, Baumgartner starts no employee at the current $5.15-an-hour federal minimum — except a handful of teenagers who have no experience. “They’ve never even cut grass at home,” he said.

But the $6.50 starting wage proposed in a new state ballot initiative would exceed the level at most of his stores, Baumgartner said. And he’s more concerned about a provision that would raise the starting wage annually to take into account inflation, or about 3 percent a year.

“That would really hurt us,” Baumgartner said, because his high turnover rate finds most of the staff reverting to starting wages.

He’s worried about the future of lower-volume outlets in Holts Summit and Linn, but rising costs raise red flags everywhere: “Especially McDonald’s is a penny-to-penny business. You’re always looking at one-tenth of a cent on paper here or a half cent there. If your labor costs go up half a percent, you’ll look for ways to cut that back.”

Which brings him to automated french-frying machines. Two years ago, an informal study in his office found savings on potential labor costs from simply buying a more powerful computer and printer.

Now he wonders if spending up to $20,000 each for a french-frying machine per store — which automatically drops baskets of cut potatoes into oil and raises them when finished — would result in long-term savings. “As the minimum wage goes up, I’ll have to look at this,” Baumgartner says.

And reconsider whether to hire the teenager who hasn’t mowed the lawn before.

Polls show public support for raise in minimum wage

As business associations gear up to battle a higher state minimum wage, they’re dusting off arguments about job loss and other economic disadvantages to reconfigure public opinion that is running decidedly against them.

A St. Louis Post-Dispatch poll in June found that Missourians favored the ballot proposition by a lopsided 3-1 margin.

Every demographic group in the state concurred except self-described Republicans, who only opposed the measure by 1 percent.
Even Republicans in southwest Missouri favored the idea by 23 percent. Political independents backed the plan 7 to 1.

The Post-Dispatch poll is not an anomaly. A Pew Research Center survey found 86 percent of Americans backed raising minimums to the level proposed for Missouri.

Organized by Give Missourians A Raise — made up of labor and community groups — the proposal would raise the bottom level paid in Missouri from the federal mark of $5.15 an hour to $6.50 next January. Then each year, an indexing provision would automatically adjust the minimum to cover inflation.

The Missouri Division of Budget and Planning says 42,000 residents, based on federal data, now are paid $5.15 an hour. The Economic Policy Institute projects that 120,000 Missourians make less than $6.50 and says, altogether, 256,000 likely would receive raises because of the higher state threshold.

Pro-business Republican majorities in one or both houses of the U.S. Congress have blocked repeated attempts to raise the federal minimum wage since its last hike in 1997.

But that string of defeats, polls suggest, has increased public support for a substantial wage increase because the federal minimum has become so devalued — only $4 in 1996 currency and less than its worth at any time in the last half-century.

At the current rate, a full-time worker only earns $10,712 a year. That amount falls $5,000 short of the federal poverty level for a family of three and covers only a fraction of family needs, particularly because minimum wage jobs usually don’t offer health insurance.

Missouri could join 22 other states and the District of Columbia, all of which have raised their minimums above the federal level. Voters in conservative states like Florida and Nevada have overwhelmingly approved minimum wage hikes in the past two years. Two neighboring states have already passed similar measures.

The Arkansas Legislature became the first in the South to enact a substantial raise in April, and Republican Gov. Mike Huckabee signed it. Illinois broke away from the federal minimum in 2003, and now $6.50 is the lowest allowable wage.

The city of St. Louis has joined more than 80 American communities that have adopted living wage ordinances, now requiring city contractors to pay more than $10 an hour and provide health coverage.

“Missourians don’t understand why Washington hasn’t taken care of this issue,” said Sara Howard, spokesman for Give Missourians A Raise. “We’re giving them the power to solve this problem themselves.”

Foes of measure join SOS Jobs campaign — except Missouri Chamber, which will focus on election

Missouri business groups so far have allied under an umbrella coalition — Save Our State’s Jobs (SOS Jobs) — to battle the proposition.

Included are Associated Industries of Missouri (AIM), the state’s main manufacturing lobby, along with the Missouri Restaurant Association, Missouri Retailers Association, National Federation of Business/Missouri (NFIB), Missouri Grocers Association and Missouri Merchants and Manufacturers Association.

Although the Missouri Chamber of Commerce and Industry has historically opposed moves to raise the minimum wage, the organization decided on Aug. 18 not to join the coalition.

“The Missouri Chamber continues to oppose the increase in the minimum wage, but will not formally join SOS Jobs or participate in the campaign,” said Michael Grote, the chamber’s general counsel.

Grote said the chamber had to pick its priorities and instead chose to focus on retaining pro-business majorities in the Missouri Legislature, where substantial Republican margins are threatened this year.

A significant number of members represented by the Missouri Chamber, as well as restaurants, retailers and NFIB’s mom and pop businesses, are the ones expected to be the most dramatically affected by an increase in the minimum wage.

Even though few of AIM’s members pay any employee the current minimum wage, Jim Kistler, the organization’s executive vice president, has emerged as spokesman for the SOS Jobs group.

Although business owners are the most natural constituency to oppose the minimum wage hike, a national Gallup Poll this spring found that even 46 percent of them support an increase. To rally the public, business owners and their employees against the pending ballot measure, Kistler said the business lobbies would emphasize:

Job losses for low-income families.

Businesses will hire fewer entry-level and other workers because their cost has increased, Kistler said. For decades, economists overwhelmingly agreed that the laws of supply and demand led to such reductions in employment. Minimum-wage opponents relied on that consensus to suggest such laws and increases only hurt the low-income families that they aim to help.

SOS Jobs released a study on Aug. 22 concluding that the proposed wage hike would hurt many minimum wage workers, because businesses would lay off employees so they could afford to meet the higher payroll.

The study was conducted by University of Florida economist David Macpherson and sponsored by the Employment Policies Institute, a nonprofit research institution. It estimated the wage increase would cause 1,552 employees to lose their jobs, creating an annual income loss to those employees of $15.1 million.

The Give Missourians a Raise Coalition contends that the raises would pump $21 million into the state economy and said researchers from other states found wage increases elsewhere had no negative economic impacts.

The consensus about the negative impact of minimum wage hikes on employment began eroding in the 1990s, when studies found that 1996 and 1997 federal increases had little or no effect on employment in an economy that was beginning to boom.

Economists’ attitudes on the minimum wage have shifted as more states have adopted higher minimum wages than the federal level. This spring, the New York-based Fiscal Policy Institute found that states with higher minimums had greater employment growth in retail and small business jobs than those locales tied to the federal level. It suggested that businesses respond to higher minimums by becoming more efficient and that higher labor rates leads to less turnover and greater productivity.

Job losses to other states.

Business leaders contend that Missouri — although it doesn’t recruit minimum-wage employers — would lose jobs to states that follow the federal rules.

All the state’s major business groups insist that any action on wage levels must come at the federal level, not state by state, to avoid competitive disadvantages.

These arguments so far have been weakened because significantly higher minimums are set in Arkansas – which competes with Springfield and southern Missouri for employers – and Illinois, which vies with St. Louis, Hannibal and Cape Girardeau. The full impact remains in Kansas City, Joplin and St. Joseph, which straddle the line with Kansas, another federal minimum-wage state that allows some employers to pay lower amounts.

Gov. Matt Blunt adopted business positions when he said this month he plans to vote against the proposition because it would send a “sign of a bad business climate” in Missouri to companies seeking to relocate.

But the major sticking point concerns the Missouri proposal’s indexing, which would raise the minimum here above Illinois and Arkansas. Michael Grote, the Missouri Chamber’s general counsel, referred to indexing as “an egregious increase that would eliminate jobs.”

Added Brad Jones, the state NFIB director: “The most troubling point is the indexing, which will never stop.”

The impact on average family wallets

Business groups in the campaign must show that out-of-pocket costs for consumers would outweigh the benefits that almost every worker could gain from a minimum wage hike.

Business spokesmen stress the minimum wage hike will increase the state’s pay structure for all workers, because raises at the lower end of the job scale will pressure business owners to increase pay up the ladder. “You’re talking about shifting the entire wage base up for everyone,” said Jones of the NFIB. If not, longtime, experienced workers feel devalued.

Labor leaders like Hugh McVey, president of the Missouri AFL-CIO, agree minimum wage hikes will increase general pay levels, which he says justifies its investment in the ballot measure. Otherwise, McVey said, “I have no members who make the minimum wage.”

The campaign: a Sunday sermon

Officials organizing the minimum wage drive portray their approach as largely low-key and grassroots — a position they can take because the public so strongly supports the proposal. “It’s the kind of campaign where you’ll talk about it on Sunday mornings,” said one key figure, who asked to remain unidentified.

Sundays could play a key role. Organizers are counting on strong support from the state’s pulpits, especially from the Catholic Church and mainstream Protestant denominations. “The minimum wage is a moral issue,” McVey said.

The Missouri Catholic Conference has a historic position favoring the minimum wage and increases — including indexing. Although some bishops have endorsed the issue independently, the conference planned to convene its policy committee to address the specific state proposal, said Mike Hoey, the conference’s assistant director.

Kistler said he looks for signs of the business campaign to surface early as SOS Jobs works with business owners and key employees to organize letter-writing campaigns, placement of op-ed pieces and other forms of “free” media.

He and other SOS Jobs officials already have talked about an advertising campaign of unspecified size, although political observers expect that paid advertising in the heated stem-cell debate will dominate the broadcast landscape this fall.

The plan’s supporters, however, are wary of how much business groups may spend against the measure. “We will never underestimate the money — and the money and the money — that big business will bring to this battle, and we expect a fight,” Howard said.

Kistler’s comments are laced with vitriol about unions — remarks in many ways reminiscent of the 1978 right to work campaign that found unions claiming a victory. “I wouldn’t be surprised if the unions spent $1 million or more on this,” he said.

Union membership among private employers has diminished in Missouri, which in 1978 was a heavily industrialized, unionized state, and the AFL-CIO’s political funding ability is stretched thin. The national union movement split in 2005, stripping tens of thousands of workers from the Missouri federation.

Give Missourians A Raise actually has reunited efforts of the Missouri AFL-CIO and Service Employees International Union, one of the labor federation’s largest former unions that withdrew last year.

Democrats look to capitalize on wage issue

For Democrats, the issue allows them to recapture lower-income voters who are natural allies on economics, but have crossed to the Republican side in recent elections because of conservative social issues.

State Auditor Claire McCaskill, the Democratic challenger, is excoriating U.S. Sen. Jim Talent, the Republican incumbent, for his decision not to take a position on the state minimum wage proposition. Talent supported a minimum-wage increase in the Senate this summer, but it was linked to tax breaks for large estates and subsequently died. He previously voted 11 times against minimum-wage increases, McCaskill said.

Democratic state auditor nominee Susan Montee’s family lent Give Missourians A Raise $150,000 to help fund the signature-gathering drive needed to place the issue on the November ballot. Apparent Republican nominee Sandra Thomas opposes the measure.
The strategy recalls the reasons why former Republican Gov. John Ashcroft agreed to sign Missouri’s first minimum wage legislation in 1990. The state previously had no minimum for workers not covered by federal law. Ashcroft at first resisted the state legislation, but Democratic legislators threatened to place the measure on the ballot — and jeopardize the election prospects of Republicans.

Will Congress regroup on minimum wage?

For business groups, their best hopes for an inexpensive antidote to the state initiative may lie with Congress, the body that helped create the public pressure to raise state minimum wages. Most Senate Democrats and two Republicans killed the minimum-wage bill this summer because Republican leaders tied it to the tax break on large estates.

Passing a minimum-wage bill this fall, of any kind, likely would dampen the fires under the Missouri plan. “That may well be true,” commented Jones of the NFIB.

When the Senate voted down the legislation this summer, it left open revisiting the bill, Jones noted. The federal bill raises the minimum wage to $7.25 by 2008, or higher than the Missouri plan, but does not include the indexing provision. In the U.S. Senate, Republican Majority Leader Bill Frist continues to resist attempts to vote on the minimum wage as stand-alone legislation and insists on packaging it with tax breaks.

Howard, the Give Missourians A Raise spokeswoman, said a federal compromise could reduce the need for a Missouri plan — but only if it includes indexing to eliminate the possibility of another nine-year wait between federal increases.