Minimum Wage Increase for Missouri Workers and Employers

Introduction

The Missouri minimum wage was rated at $6.50 per hour with effect from January 1, 2007. This wage is seen to have lost much of its effectiveness because its real purchasing power has extremely fallen to low levels over the interviewing years.

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During the last nine years of federal, most of the states comprising the majority of the nation’s labor force have realized the essence and importance of wage flow that supports work of low-wage while at the same time not exploiting the job prospects of low-wage workers. Claims from opponents have suggested that, increase in the minimum wage would lead to loss of jobs. This has been empirically evident. By analyzing the 1996 to 1997 federal minimum wage increase, the low-wage labor force was perceived to have better performance than it used to have in decades.

It was proposed that, Missouri’s minimum wage increment to $6.50 per hour would uplift wages for 256,000 Missouri employees which accounts for 10 ten percent of the country’s total workforce. Those who were affected directly were 120,000 workers who without the increment of minimum wage-earning between $5.15 and $6.51 in the year 2007. The additional 136,000 workers who were projected to earn more than $6.50 were also likely to receive a modest wage increase, as the employers adjusted pay scales to accommodate rises for minimum wage workers. At least a half (46 percent) of employees would be affected by the increase of minimum wage. Such employees were full-time workers who worked for at least thirty-five hours.

The general analysis from studies shows that, in decades around 1,553 employees are projected to lose their jobs opportunities due to minimum wage increase. Breakdowns by the family income, age and location are not surprising. As a result of minimum wage increase, there was cost to the income loss to layoff workers and employers. It has been noted that the higher costs that employers encounter will be either be reduction of profits to firms or passed on to customers through increment of prices.

Workers also lost income due to layoffs caused by the minimum wage increase. After analyzing the impacts of the minimum wage increase for workers and employers in Missouri, it is clearly indicated that the negative results outweigh the positive ones. The impact was felt on the side of males who contributed to 51% because they could not work in the low-wage industries.

The minimum value for an hour’s work was set by the federal government in the year 1938. This policy has been important for supporting the levels of wage of the low-wage workers. It also established a flow below which the firm will not allow the wages to fall. For nine years ago, is when the congress lastly adjusted the minimum wages of the workers and employees in Missouri in the year 1997. The minimum wage is seen to have lost much of its effectiveness because its real purchasing power has historically fallen to low levels over the interviewing years. During these nine years of federal in, most of the states comprising majority of the nations labor force, have realized the essence and importance of wage flow that supports work of low-wage while at the same time not exploiting the job prospects of low-wage employees (Sloan 1941, pg 17).

Of late, around 22 states including the Columbia district have had their minimum wages increased over the federal rate of $5.15 per hour. Around fifty-eight percent of the total United States labor force resides in one of these states with a minimum wage that has been implemented above the federal rate. In this year, around 10 states, including Missouri and Arkansas implemented strategies and measures to increase their minimum wages.

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Also, six states including Missouri are expecting to have an initiative on the coming November ballot so as to allow the voters to decide whether the minimum wage should be raised or not. The ballot initiative in Missouri was to increase the minimum wage up to $6.50 per hour as on January 2007 which was to be indexed annually to inflation thereafter. There have been claims from opponents that increase in the minimum wage would lead to loss of jobs. This has had empirical evidence. Following the 1996 to 1997 federal minimum wage increase, the low-wage labor force was perceived to have better performance than it used to have in decades.

For instance, increased hourly wage, lower unemployment rates, increased family income and also decreased rates of poverty. More so, the many changes in minimum wage at the state level have provided rare opportunities to economists to do before and after the comparisons to gauge the impact of the policy. The study shows that the policy has its intended effect. This is through lifting the incomes and earnings of the low-wage workers and their families without generating jobs losses.

There was a proposal that, Missouri’s minimum wage increment to $6.50 per hour would uplift wages for 256,000 Missouri employees which accounts for 10 ten percent of the country’s workforce.

Those who were affected directly were 120,000 workers who without the increment of minimum wage-earning between $5.15 and $6.51 in the year 2007. The additional 136,000 workers who were projected to earn more than $6.50 were also likely to receive a modest wage increase, as the employers adjusted pay scales to accommodate rises for minimum wage workers. According to analysis of the year 2005 current survey of population, it was revealed that the workers were potentially affected by a minimum wage increase were mainly adults who worked full time and provided significant income to their families. Also, Missouri’s boost in the minimum wage would affect the 102,000 children of the concerned workers affected are adults of age twenty and over (Sloan 1941, pg 67).

Almost half (46 percent) of employees would be affected by the increase of minimum wage. Such individuals were full-time workers who worked for thirty-five hours or more per week. In addition, 91,000 workers-36% worked half-time or more (20-34 hours per week). The Missouri’s workforce indicates to be fairly evenly split between female forty-nine percent and male fifty-one percent workers. It seems that the beneficiaries of minimum wage increase were disproportionately female because they worked in low-wage occupations and industries. As a result of minimum wage increase, there has been an effect of loss of jobs to workers because it will be no longer profitable for the organizations to employ them.

To estimate the job loss, there was computation of the fractional wage gain due to the minimum wage increase. This was done and averaged across the sample. Also, the employment loss is calculated using the estimated fractional wage gain. The study utilizes estimate labor demand elasticity for workers of minimum wage ported by Wascher and Neumark in 2000. From the study, an elasticity of -0.23 which means a ten percent increase in wages results in a 2.2 percent decrease in employment of the group affected. Generally, the analysis from studies shows that, in decades around 1,553 employees are projected to lose their jobs as a result of minimum wage increase.

Breakdowns by the family income, age and location are not surprising. Over one-half of the layoffs would happen among the employees who are under twenty-five years. Also, more than one-quarter of the layoffs would happen among employees who have a family income below $25,000. Over (717) two-fifths of job losers would occur in the small metro areas. In the city of Kansas and St. Louis metropolitan areas, about one-fifth workers would lose their jobs from the job market and industries (Goden 1926, pg 45).

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The results indicate that, over one-third of job losses are projected to occur in the hospitality and leisure industry (541 jobs) which in turn affects more than one-eighth of the workers in the leisure and hospitality industry. In addition, another 302 or 19.5 percent of job losses are to occur for employees in the retail trade industry. The educational and health service industry was also impacted by the job losses which accounted for about cases of job loss. The findings show that over two-fifths of the job losses are predicted to be from those in service occupations while other 20.4 percent would be from those sales occupations.

As a result of minimum wage increase, there was cost to the income loss to layoff workers and employers. The studies were carried out to examine the cost of employers of minimum wage increase. It has been noted that the higher costs that employers encounter will be either be reduction of profits to firms or passed on to customers through increment of prices. Workers also lost income due to layoffs caused by the minimum wage increase. For the ten years ago, republican congress eliminated the federal minimum wage at $5.15 per hour, which droved its values in real terms down to lowest point in 50 years. To worsen the matter, the eroded federal minimum wages dragged down pay the pay for everybody at the lowest end of the American economy. Consequently, most of the workers and employees earned less than what they would get per hour.

Even though the congress increased the federal minimum wage for the last 11years, the hourly workers in the thirty states are guaranteed a bit higher pay than a new federal law demands. Only twenty-three states will be above the federal minimum wage not unless the new state wage increases are enacted. The Secretary of Robin state announced the minimum wage initiative petition date (Gooden 1926, pg 97). Business associations, anticipation certification and business formed a coalition which was known as saving our states employments. The aim of the coalition was to alert the Missouri voters to the possible results of having the minimum wages raised.

The save our state’s job coalition associate members try to come up with efforts to have adjustments so as to be initiated at the federal level. Through the federal action, Missouri’s business would be playing ground with the neighboring states and not be disadvantaged in competing for new business opportunities.

Conclusion

After analyzing the impacts of the minimum wage increase for workers and employers in Missouri, it is clearly indicated that the negative results outweigh the positive ones. Such include loss of jobs which affects the concerned members of families. This is because according to 2005 survey analysis, most of the affected groups were adults who used to work full time to get income for their families. Because of the split between male and female workers, it seemed that the beneficiaries of the minimum wage increase were females (Gooden 1926, pg 231). This is because they worked in low-wage occupations and industries.

The impact was felt on the side of males who contributed to 51% because they could not work in the low-wage industries. Also, as a result of job loss, the competition on the job market became very stiff thus leading to increment of prices of products. Due to these negative impacts, I feel that the minimum wage should not be raised for Missouri workers and employers.

References

Gooden O, (1926). The Missouri and North Arkansas Railroad Strike. New York.

Sloan D, (1941). Missouri: A Guide to the “Show Me” State. New York.

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StudyCorgi. (2021, August 26). Minimum Wage Increase for Missouri Workers and Employers. Retrieved from https://studycorgi.com/minimum-wage-increase-for-missouri-workers-and-employers/

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