The next domino to fall in the minimum wage hike wave seems to be St. Louis, but opponents aren’t going down without a fight.
A couple of weeks ago the aldermen of the city voted to raise the city’s minimum wage to $11 an hour in a phased approached by 2018. The pay floor officially rises to $8.25 on October 15 then hits $9 on January 1, 2016, $10 in 2017, and $11 on January 1, 2018.
This bill exempts small businesses that employ fewer than 15 people or that gross less than half a million in annual sales. Forgot non-compliance, however. Cheaters could be fined up to $500 per violation, jail time of 90 days, and a potential revocation of business licenses.
As the St. Louis Post-Dispatch reports, the vote was highly contentious as proponents described the dignity that the poor would receive from this wage boost while opponents foretold the harm to the struggling economy and businesses that the city is desperately trying to hold onto.
This story is not over though as a consortium of groups filed suit this week to stop the city from instituting the minimum wage hike. They argue that the aldermen overstepped their bounds and they seek seeking a restraining order to block the increase. Here’s more:
The suit was filed in St. Louis Circuit Court by lawyer Jane Dueker on behalf of the Missouri Chamber of Commerce, Cooperative Home Care, Missouri Restaurant Association, Missouri Retailers Association, National Federation of Independent Business, Naufel Inc. and Associated Industries of Missouri.
“The direction we are heading in threatens to create a nightmare for businesses, forcing them to comply with different workplace rules in every municipality where they conduct business,” said Daniel P. Mehan, Missouri Chamber president and CEO. “To move our state forward, we need to make Missouri a better place to do business. Efforts by our largest cities to raise the minimum wage only make our state less attractive for business growth and job creation.”
In July, Gov. Jay Nixon, a Democrat, vetoed a bill that would have taken effect on the day the city passed the bill to ban municipalities from instituting their own minimum wages. But some predict that the Legislature could attempt to override the veto this week, setting the stage for further legal limbo.
One columnist recommends that instead of fighting the minimum wage raise in St. Louis, opponents should push for tax credits – specifically the earned income tax credit – for all Missouri residents. He calls it a superior alternative that would go a long way in showing all voters that instead of making a few better off and a lot worse off by raising the minimum wage, it can make everyone better off especially poor and working families. He explains:
If the pro-business side wants to have a chance of winning this fight, it needs to propose a better way of helping the working poor.
Fortunately, the earned-income tax credit would do just that. We’ve had one at the federal level since 1975, and 26 states have added it to their tax codes, too. Missouri has not.
The earned-income credit is designed to reward work while boosting the wages of low-income workers. The federal credit and many state ones are refundable, meaning that you can qualify even if you don’t owe any taxes.
The federal credit has become one of the government’s most powerful antipoverty tools. It also improves progressivity, a virtue that’s lacking in many state tax systems, including Missouri’s.
A higher minimum wage creates winners and losers: Some folks get a raise while others lose their jobs or have their hours reduced. A state earned-income credit, by contrast, helps all low-income workers.
This columnist rightly acknowledges that the earned income tax credit doesn’t get the attention it needs as the better alternative to helping poor and working class families in an increasingly expensive world.
This tax credit is not without its flaws. At the federal level, it is a target for fraud and abuse. However, show me a federal program that isn’t. It’s incumbent on government to be good stewards and put controls in place to prevent, identify and stop waste and fraud.
Minimum wage hikes will continue to be an issue as campaigns such as 15 by 15 marches across the country. Those with economics and reason shouldn’t back down from calling out why it will harm those it’s intended to help, but we also need alternatives.