Allan Katz has a pretty good idea of what St. Louisans should expect when the debate over raising the minimum wage begins in earnest.
Katz leads a Kansas City task force made up of business leaders and advocates of raising the minimum wage to $15 an hour. The former ambassador to Portugal is trying to keep discourse civil: In meetings, ground rules stipulate that people can't clap or present anything beyond a "fact-based" argument.
“My goal here is to make everybody as reasonable as possible,” Katz said. “And if people start getting reasonable, if the city ends up doing something that everybody’s a little disappointed in, it’s probably a good thing. Then it’s not a zero sum game. What you really want to do is move forward.”
It’s unknown whether “reason" will prevail when the Board of Aldermen begins hearings on Alderman Shane Cohn’s minimum wage bill on Tuesday.
That's because of the stark dividing line between advocates of an increase and some small businesses that say Cohn’s proposal would hurt their businesses.
Beyond the policy debate is a less exciting – but perhaps equally important – legal fight. Are cities like St. Louis and Kansas City even authorized to raise the minimum wage – even if Gov. Jay Nixon signs a bill that appears to give the two municipalities a tight window for action? At least one state lawmaker is warning local policymakers of the negative consequences of a minimum wage increase.
“The General Assembly has spent considerable time developing public policy designed to help St. Louis and Kansas City,” said state Sen. Kurt Schaefer, R-Columbia, wrote last week. “Political stunts by St. Louis and Kansas City elected officials, such as the proposed minimum wage ordinances, are therefore disappointing and potentially devastating for Missouri’s overall economy.”
The municipal push is an offshoot of a broader, nationwide movement to raise the minimum wage. For several years, supporters have advocated raising the minimum wage to $15 an hour – saying that the current standard of $7.65 is too low.
“I don’t think any person who works 40 hours a week should be living in poverty,” said Alderwoman Megan Green, D-15th Ward and a co-sponsor of Cohn’s bill. “And that’s what we have right now. Somebody who’s making minimum wage is earning $16,000 a year roughly. You can’t raise a family on that. … It makes it very difficult to break that cycle of poverty.”
While proponents of a minimum wage hike have held rallies throughout the state, not much has happened legislatively.
The state didn’t have any competitive statewide elections in 2014, which may be why traditional Democratic funders – such as labor unions – put little money or effort into getting minimum wage increases on the ballot. And the heavily GOP Missouri General Assembly hasn’t been keen on the issue.
But things changed last month when Missouri lawmakers passed what’s known as HB 722, which bars cities from raising minimum wages. It includes language stating that the ban “shall not preempt any state law or local minimum wage ordinance requirements in effect on Aug. 28, 2015.”
That clause inspired both Kansas City Mayor Sly James and St. Louis Mayor Francis Slay to move forward with minimum wage proposals at a quick pace. Even though Nixon hasn’t signed HB 722 yet and many Democrats, including Slay, want a veto, it could provide the best legal avenue for the two cities to act. A Board of Aldermen committee will hear Cohn’s bill on Tuesday – and the full board could come to a final vote sometime in July or early August.
Cohn’s bill would increase the city’s minimum wage to $10 an hour and boost the threshold gradually until it arrives at $15 an hour in 2020. It exempts businesses with 15 or fewer workers or make less than $500,000 in gross sales every year.
The legislation could help out people like Latasha Chappel, a 33 year old who works at a Wendy’s in St. Louis. She said that $7.65 an hour is “not enough” to support herself and her three children.
“I have to go to pantries, I have to go to churches to get my bills paid,” Chappel said. “Fighting for $15 is a better opportunity for me. … And it’s going to be helpful to everybody out there that’s struggling like me as a mom.”
Bolting to the county?
One person watching the minimum wage debate closely is Michael Meuser, the president of Pogue Label and Screen.
Meuser moved his 35-employee company in 2005 to St. Louis’ Patch neighborhood, a poor area a stone’s throw from the city-county line. He pays his workers more than the state’s minimum wage of $7.65 an hour and provides them with benefits.
But Meuser foresees big problems if the city passes Cohn’s bill.
“If you have a group of people making $15, $16 an hour that have been with the company for a number of years, and then the government sets a minimum wage of $15 an hour, what are those people going to do then?” Meuser said. “Should they expect to get raises? It’s just not the fast food workers that are often times looked at as the ones this could be used for. It’s across the whole wage scale. And it throws the entire cost structure out of whack.”
“We’re in the packaging industry and we’re high labor. Labor’s 50 percent of my costs,” he added. “If you add another 30 to 40 percent to my cost on labor, it effectively prices us out of the game.”
It’s possible that other aldermen are hearing from business owners like Meuser. While Cohn’s bill has eight co-sponsors, the legislation would need 15 votes to go to Slay's desk. Conspicuously absent as co-sponsors are aldermen representing portions of business-heavy central corridor -- including Aldermen Lyda Krewson, D-28th, Joe Roddy, D-17th Ward, Scott Oligive, D-24th Ward, and Jack Coatar, D-7th Ward.
Some have also questioned whether a $15 an hour minimum wage may be too high for St. Louis -- or whether it may prompt businesses to move to St. Louis County. Asked if he would consider moving if the city raises the minimum wage, Meuser replied: “I would do more than consider it. If this happens, I will move my business. I couldn’t afford to stay in St. Louis.”
“I feel very strongly and very positive about city of the St. Louis. I think Mayor Slay has done a good job,” Meuser said. “This obviously hit me from left field. And not sure whether it’s pandering for votes or exactly what the motivation is here. You’d have to ask him that.”
Green said some business owners may not know about the bill's gradual implementation and exemptions. Alderwoman Cara Spencer, D-20th Ward, said St. Louis policymakers need to make sure business owners are part of the deliberation – similar to what’s going on in Kansas City with Katz’s task force.
“I’d like to see a more coordinated effort on the part of our city to get input from business owners and from residents across the board,” said Spencer, who is also a cosponsor of Cohn’s bill. “It’s a really important issue and one in which folks want to have input and have the ability to do so in a very coordinated manner.”
For his part, Katz said both sides of the minimum wage debate shouldn’t write off their adversaries’ arguments.
“Because it’s very easy in the environment in which we live to write the other side off as either being a bunch of crazies or a bunch of greedy people,” Katz said. “And I don’t think that’s the case in either one. Now, do you have people in the extreme on both sides? Of course you do. My goal here is to marginalize those people. What I want to do is get the vast majority of the people involved in this issue who have strong feelings about it. But we need to talk about what the basis of those concerns are and how we’re going to address it.”
Legal fight ahead
But even if some sort of consensus emerges at City Hall, there could be further blowback in Jefferson City.
Schaefer wrote to his colleagues last week that if Kansas City and St. Louis pass minimum wage increases, lawmakers should eliminate the cities’ 1 percent earnings tax. He said in an interview that "in order to move the economies of both St. Louis and Kansas City, we need to reevaluate their ability to have a third layer of income tax on productivity in those cities."
"Slay’s own argument on why he wants to double the minimum wage supposedly is to put more money in people’s pockets," Schaefer said. "Well if that’s the case, that’s the best argument ever for eliminating the earnings tax. You let people, not only employers but employees, keep that 1 percent that’s currently taken out of their checks."
Schaefer also said that Slay is pushing the increase now to distract attention from St. Louis' crime problems.
"I think that St. Louis and Kansas City know that they don’t have the authority to do this," Schaefer said. "I think that they both have staggering crime problems right now. ... I think they have absolutely no answers whatsoever in how to deal with crime. And I think that all this discussion about minimum wage is a diversionary tactic."
Schaefer’s comment refers to how St. Louis and Kansas City may not have the authority to pass minimum wage increases – even if Nixon signs HB 722 into law or the legislature overrides a veto. Other state laws, Schaefer said, would prevent a local minimum wage increase if HB 722 goes into effect. And he said the political leaders of St. Louis and Kansas City are wrong in their belief "there’s this deadline looming – and they can run and get under the wire before August 28."
St. Louis City Counselor Winston Calvert wrote a memo arguing that the city does have authority to raise its minimum wage – with or without HB 722 being implemented. And Green said Calvert’s memo suggests “we have the support of the city and the legal aspects of the city behind us to see this through to fruition.”
Meuser said he probably wouldn’t sue if Cohn’s bill passed, adding he’d instead “spend those dollars finding another facility, and upgrading a facility, and finding jobs in another area outside the city of St. Louis.”
“Businesses already look at the city of St. Louis with a 1 percent [earnings tax] as a disadvantage. We just absorbed that when we moved here because there were so many positive things,” Meuser said. “It’s going to be very difficult to attract new businesses when you are a small island of a $15 an hour minimum wage amongst a sea of different wage structure.”