On January 1st, Missouriâ??s minimum wage will increase by 15 cents to $7.50 per hour, benefiting an estimated 104,000 low-wage workers in the state. The increased consumer spending generated by Missouriâ??s minimum wage increase will boost economic growth by $11.8 million, according to an analysis of Census data by the nonpartisan Economic Policy Institute.
Missouri is joined by 12 states â?? Arizona, Colorado, Connecticut, Florida, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont, and Washington â?? that will also raise the minimum wage on New Yearâ??s Day, boosting wages for a total of more than 2.5 million workers.
â??As Congress drags its feet on raising the federal minimum wage, more and more Americans are earning poverty-level wages in expanding industries like retail and fast food,â?? said Christine Owens, executive director of the National Employment Law Project. â??In the face of federal inaction, states are boosting the paychecks of the lowest-paid workers, promoting growth and consumer spending, and hopefully providing an example for Congress to follow.â??
Missouriâ??s minimum wage increase is the result of a ballot initiative approved by voters in 2006 that provides for annual rate adjustments to keep pace with the rising cost of living. In total, the minimum wage increases taking effect in all 13 states on January 1st will generate over $619 million in new economic activity and support the creation of 4,600 new full-time jobs as businesses expand to meet increased consumer demand.
Eleven total states have adopted annual inflation indexing for their minimum wages â?? in addition to Missouri, these states include Arizona, Colorado, Florida, Montana, Nevada, Ohio, Oregon, Vermont, Washington, and New Jersey, where voters approved a measure in November to raise the stateâ??s minimum wage to $8.25 per hour and index it to rise with inflation thereafter.
Because the federal minimum wage is not indexed to rise with inflation, its real value erodes every year unless Congress approves an increase. The Fair Minimum Wage Act of 2013, supported by President Obama and introduced in the U.S. Senate and House of Representatives earlier this year, would help recover much of this lost value by raising the federal minimum wage to $10.10 per hour and adjusting it annually to keep pace with the rising cost of living. The Fair Minimum Wage Act would also gradually raise the minimum wage for tipped workers from its current low rate of $2.13 per hour, where it has been frozen since 1991, to 70 percent of the full minimum wage.
As of January 1st, 2014, twenty-one states, plus the District of Columbia, will have minimum wage rates above the federal level of $7.25 per hour, which translates to just over $15,000 per year for a full-time minimum wage earner.
As the unemployment rate in many states continues to slowly decline, new job growth across the country remains disproportionately concentrated in low-wage industries such as retail and food services, making an increase in the minimum wage an urgent priority for growing numbers of working families finding themselves relying on low-wage work to make ends meet. Fully 58 percent of new jobs created in the post-recession recovery have been low-wage occupations, according to a 2012 report by the National Employment Law Project.
The most rigorous economic research over the past 20 years shows that raising the minimum wage boosts worker pay without causing job losses â?? even in regions where the economy is weak or unemployment is high. A recent study by the Center for Economic and Policy Research reviews the past two decades of research on the impact of minimum wage increases on employment and concludes that â??the weight of the evidence points to little or no effect of minimum wage increases on job growth.â?? An April 2013 poll found that 67 percent of small business owners support raising and indexing the minimum wage, indicating that the majority believe an increase will help boost economic growth.