Some Missouri workers might be making some extra cash starting next week. Minimum wage in Missouri will increase by 75 cents to $8.60 on Jan. 1.
Missouri voters passed a $12 minimum wage initiative in November. Right now, the minimum wage is $7.85. It will continue to grow 85 cents per hour every year to reach $12 an hour in 2023.
For Missouri, such an increase could change the landscape of household incomes. According to city-data.com — which aggregates its information from various sources — 6.8 percent of Missouri households made less than $10,000 per year, compared to 8.5 percent in St. Joseph in 2016. In the second lowest bracket, 10.4 percent of Missouri households made between $10,000 and $20,000 in 2016. For St. Joseph, that number was 14.6 percent.
Minimum-wage workers aren’t the only workers who will get a pay bump from the increase.
Rebecca Lobina, director of the Small Business and Technology Development Center, said workers earning wages close to the minimum wage will be boosted too.
“Now, they can’t just leave them at that. That’s bad for morale and doesn’t seem fair, so everybody’s wages essentially will rise up,” Lobina said.
Businesses that pay some employees close to the minimum wage will have to either raise those individuals’ salaries or risk losing competitiveness and lowering employee morale.
Small businesses will be affected the most from the wage increase, and will ultimately pass the cost onto customers.
“A lot of small-business owners are trying to figure out, ‘Where can we cut corners,’” Lobina said.
Businesses that make less than $500,000 only are required to abide by federal wage laws. Lobina said these businesses mostly are self-employed businesses or only have one additional employee.
Governmental entities also are exempt from the law. The City of St. Joseph is choosing to match the state minimum wages, though.
“We should certainly keep up with the minimum wage, same as everyone else should. So, we’ve historically always done that,” City Manager Bruce Woody said.
Woody estimates matching the state’s minimum wage could cost the city $275,000-$325,000 in a five-year period. The city employs about 650 full-time and 150 part-time employees. Most of the part-time employees work for the Parks and Recreation Department and all make within a few dollars of the minimum wage.
“We’ve worked out some pay schedules that we are just about ready to present to our City Council to recommend how we will handle this transition over the next five years,” Woody said.
Woody is proposing to slowly increase wages for the lowest earning employees.
The city is the ninth largest employer in St. Joseph. Most major businesses in St. Joseph have starting salaries above the minimum wage.
American Family Insurance is the sixth largest employer. The corporation moved the company’s minimum wage to $15 an hour in 2017.
“We did that because we think that creates an environment where employees are more productive, they’re more engaged, they bring their best every day to work,” American Family Insurance spokesperson Erin Johansen said.
Triumph Foods is the second largest employer in St. Joseph. It does not pay any of its employees minimum wage. It starts its Union-Production employees at $14.70 per hour.
“Any of our nonunion, hourly and salaried personnel are compensated well above the minimum-wage level along with additional incremental compensation increases and annual bonuses,” Triumph Foods spokesperson Chris Clark said.
Lobina said bigger businesses are not going to see the effects of the new minimum-wage law as much as smaller businesses.
“If any small business out there hasn’t looked at this minimum wage — to see how it’s going to affect them — or at their budget, they can feel free to come and visit my office and I’d be happy to help them work through those numbers,” Lobina said.
Lobina’s office is in the St. Joseph Chamber of Commerce building at 3003 Frederick Ave. Entrepreneurs can call Lobina to schedule an appointment at 816-364-4105.