Analysis: Bucking a National Trend, St. Louis Is Lowering Its Minimum Wage

It’s not been a great couple of weeks for those advocating an increase in minimum wages.

Late last month, the National Bureau of Economic Research published a working paper based on research conducted by economists at the University of Washington. The report found that the costs to low-wage workers in Seattle (where the minimum wage is gradually being raised to $15 per hour) outweighs the benefits by three to one, concluding that the average low-wage worker in the city lost $125 a month due to the hike.

The study’s impact and methodology set off a heated debate between minimum wage increase supporters and those that believe it hurts both businesses and their employees.

Regardless of the report, minimum wages in dozens of cities and local jurisdictions continue to be on the way up, with some areas (like Seattle) also phasing in increases towards $15 per hour. The exception is St. Louis, Mo, where the minimum wage — according to this report in the St. Louis Post-Dispatch — is set to go down: from $10 to $7.70 per hour.

“Disgusting,” was the response from Fight for $15, a national labor group.

Eric Greitens, Missouri’s governor, thinks differently. “This increase in the minimum wage might read pretty on paper, but it doesn’t work in practice,” he told the St. Louis Post-Dispatch. “Government imposes an arbitrary wage, and small businesses either have to cut people’s hours or let them go.”

Why down?

Although Missouri’s minimum wage is $7.70 per hour statewide, St. Louis already raised its minimum wage in 2015, with another increase to $11 per hour planned for January. After a two-year legal fight with local business groups, a bill was ultimately passed by the state legislature this spring that bars cities and counties from setting their own minimum wages above the state’s minimum. The bill takes effect on Aug. 28.

Greitens believes that St. Louis’ mininum wage is “impractical.” Business groups are cheering.

However, the change raises many questions for these same St. Louis business owners, the biggest being whether existing raised wages should be rolled back and what impact that would have on their employees and general public opinion. More interestingly, the Missouri government’s move could motivate others who oppose raising local minimum wages above their state levels to also take similar action.