Missouri business groups to fight minimum wage hike

ST. LOUIS – Retail and restaurant groups are vowing to fight “with all available options” against the state’s minimum wage increase approved by voters this week.

The measure would raise prices for consumers and “impose a significant financial burden” on restaurants, grocery stores and other small businesses in Missouri, six industry groups said in a statement this week.

Such government mandates and regulations “stifle job growth and economic development,” the statement said.

“It’s too broad,” Buddy Lahl, CEO of the Missouri Restaurant Association, said in an interview with the Post-Dispatch Friday. “The language of the proposal is misleading to voters. … It affects the little people. We will protect small business owners.”

Opponents include Associated Industries of Missouri, Missouri Chamber of Commerce and Industry, Missouri Grocers Association, Missouri Restaurant Association, Missouri Retailers Association and the National Federation of Independent Business.

The group is considering “all available options, including possible legal action, to ensure that unemployment rates and the cost of living are not adversely affected by this proposal,” their statement said.

Voters on Tuesday overwhelmingly approved Proposition A, which would raise the state minimum wage from $12.30 to $13.75 an hour on Jan. 1 and raise it to $15 an hour in 2026 with annual inflation adjustments afterwards. The law also mandates that private sector employers with at least 15 workers cover one hour of sick leave for every 30 hours of work.

Lahl said the coalition plans to take its argument to the state Supreme Court: Because it deals with wages and sick leave, Prop A is not a single issue and therefore unconstitutional.

Proposition A passed with about 58% of the vote. Many unions, labor groups and small business owners supported the effort.

Several St. Louis-area entrepreneurs Louis are applauding the decision, while saying they will have to make changes.

“Is it going to be a little difficult for my small, independent business? Yes,” said Betty Bayer, owner of Betty’s Books in Webster Groves. “I’ll figure out how to make it work.”

The bookstore, which opened in 2021, has one full-time and three part-time employees. Bayer ends up working 60 hours some weeks to stay within her tight salary budget, she said.

She voted in favor of the proposal, so now is the time to “walk the walk,” Bayer said.

Randy McDonald, co-owner of LA Taco Cantina in Maryland Heights, said the move won’t affect this higher wage bill, since cooks already make above minimum wage. But the restaurant will regulate how much it pays its servers, or tipped employees, who make at least half the minimum wage, plus tips.

“There’s definitely going to be a noticeable difference,” McDonald said.

McDonald said the canteen has not raised prices in more than a year, but to stay competitive and cover the increase in the minimum wage, some dishes will likely go up 3% to 5%.

At EdgyChic Boutique in Florissant, owner Angela Harris said some of her workers can make up to $18 an hour, and the store offers a 401(k) plan with a company match. She hopes a higher minimum wage will bring more workers to the retail sector overall and deepen the employment pool, because workers have been hard to find.

“This attracts them to work here. A fair and decent wage equates to quality work,” she said. “It shows the heart of small businesses.”

Moves to raise the minimum wage have long faced criticism, such as concerns raised by Missouri business groups. Opponents say the higher costs lead to job cuts and strain small businesses with thin profit margins. The federal minimum wage is $7.25, which can be found in the nearby states of Indiana, Iowa, Kansas and Kentucky. Missouri voters also voted to raise the minimum wage in 2018.

Jerome Katz, a professor at St. Louis University’s Chaifetz School of Business.

Businesses will see if they can cut costs and raise prices to meet the new minimum wage, but that will happen across the board, he said. And usually, he said, communities are happy to see workers like them paid more.

“Everybody’s going to mature, but we’re going to get used to paying more,” Katz said. “Paying a little more hurts less when the money goes to people like them.”

The wage increase will have the biggest impact on businesses that are “closer to the bone in terms of profit margins”, he said. They can cut work. Some can even be completely closed.

“It will hasten their demise and force them to cut people and hours,” Katz said.

Retail, food service and service-sector jobs such as daycare will be the most affected, given the high percentage of hourly workers, said Peter Boumgarden, director of the Koch Family Center for Family Business at the School. of Business Olin University of Washington.

But many businesses already pay above minimum wage to attract and retain good employees, Boumgarden said.

“Competitive labor pressures are pushing the numbers up,” he said. “It’s a tight job market.”

Businesses that pay above the minimum wage won’t see negative effects from the increases immediately, but they may struggle in a few years after wages adjust for the Consumer Price Index, said Grant Black, an associate professor of economics at Lindenwood University.

But the newly mandated sick leave will hinder businesses more than the wage increases, Black said. Not only will companies have to pay higher wages to workers filling in for sick colleagues, but they will also have to pay higher wages to absent workers, he said.

“Managing, tracking all this information can be quite a significant cost,” Black said. “A cost of management, of human resources, would be a huge increase. For a smaller business, that’s another cost we never thought about.”