On the Trail: What happens if St. Louis' minimum wage law survives?
When attorneys resume a legal fight this week over St. Louis’ minimum wage law, the atmosphere will be very different from when they first clashed in the courtroom.
St. Louis City Counselor Winston Calvert and omnipresent litigator Jane Dueker are set to resume a high-stakes legal battle on Tuesday morning. Dueker is representing businesses and business groups seeking to dismantle St. Louis’ law raising the minimum wage to $11 an hour by 2018. Calvert (along with private attorneys from Dowd Bennett) is defending the statute.
The legal rumble comes after the Missouri General Assembly overrode a gubernatorial veto of a bill banning local minimum wage increases. That means if Calvert and company are successful, St. Louis will have a higher wage scale than every other place in the state – especially since Kansas City is in the process of repealing its minimum wage hike.
(There are some important "what ifs" at play: It’s not out of the question that the state ban on local minimum wage hikes could face a lawsuit. Another law passed in 1998 could strike St. Louis' minimum wage law down. And unlike 2014, it’s possible labor unions, social justice activists and Democratic politicians could throw necessary resources behind a ballot proposal that increases the state minimum wage.)
With that in mind, though, it may be instructive to ask this question: If Dueker’s lawsuit fails, what does that mean for St. Louis’ economy?
Some aldermen, businesses and economists say the city would be at a major competitive disadvantage to St. Louis County, which decided against a minimum wage hike in its unincorporated areas earlier this summer. During debate over the minimum wage bill, Alderman Tom Villa contended the city was “creating a level playing field, only our playing field we’re putting mines in it.”
And Alderman Joe Vollmer, D-10th Ward, was even harsher in his assessment. He said that his colleagues couldn't "just make people clap and go home and sleep at night – and say ‘I did a good thing.’"
“This is the city of St. Louis – this is not San Francisco," Vollmer said during debate over the minimum wage bill. "It’s not New York. It’s not Seattle. You are living in a very small [place]. A city that’s getting smaller and will be getting smaller based upon your vote today if you vote in the affirmative. You are going to hurt many, many people. While you think you’re helping, you are not helping."
Other policymakers, though, say those types of arguments are overblown. Alderman Lyda Krewson, D-28th Ward, said many businesses in her ward already pay above the state minimum wage of $7.65 an hour.
“I think that it’s one of those things where we’ll just have to see how this plays out," she said. "Certainly there are some concerns about paying more than the surrounding areas. But you know, there’s also some pluses to that. Maybe the best employees will want to work here, as opposed to some other businesses. It’s sort of a ‘rising tide will lift all boats.’”
Boon or bust?
It should be noted that St. Louis is not the only city that raised its minimum wage independently from the rest of its state. The Center for Labor Research and Education at the University of California at Berkeley found about 25 cities and counties have made such a move.
Ken Jacobs, the center’s chairman, said that it would take some time to understand the true impact of recent local minimum wage increases that occurred in the last couple of years. But his organization has studied older local minimum wages in San Francisco and Santa Fe, and he said “in both cases, researchers have not found a measurable effect on employment.
“We’ve seen cities start to act. And that is in part because of the politics. They tend to be more liberal, so the votes are there to do it,” Jacobs said. “But there’s also some logic (and it’s a little bit different in St. Louis) in the coastal areas and other areas as well where the cost of living in the cities and the median income in the cities are so much greater than it is in other parts of the state.
“There’s a pretty strong logic for San Francisco and Bay Area cities to have a higher minimum wage than the rest of the state of California,” he added.
David Wiczer, an economist at the St. Louis branch of the Federal Reserve, said “when you’re looking for an employment effect” from a minimum wage increase, “I think that’s especially where people say they don’t see a major impact.
“If you ask some economists, they’ll say it’s clear that the evidence is in support of a ‘no result’ – that it’s clear that the evidence says that minimum wages do not have a significant adverse effect on employment,” Wiczer said. “But if you ask others, they’ll say ‘No, that’s not clear. I see these delayed responses. I see these small responses.’ So I think a good consensus would be the look at the President’s Council on Economic Advisers report. And that predicts that changes in the minimum wage have essentially a small effect on employment.”
(For full disclosure: David and I grew up in the same Chicago suburb, where we probably went to each other's Bar Mitzvahs.)
Jake Rosenfeld is a sociology professor at Washington University. He recently moved back to the Gateway City from Seattle, which recently raised the minimum wage to $15 an hour.
Rosenfeld said bluntly that “any academic that tells you that no businesses will be affected by a minimum wage increase is lying.” But he went onto say that “in general, it tends to be a bit of a wash.”
“Santa Fe is instructive here. They raised their minimum wage even higher in relative terms than the proposal in St. Louis back in 2004,” Rosenfeld said. “And the results seem to be that the sky didn’t fall. Some businesses weren’t able to compete. Businesses came in and took their place.
“In terms of specific industries, generally speaking academics focus on retail. And on fast food chains,” he added. “And so, to the extent that you’re a mobile business, this may spur your ability and desire to move elsewhere. But, you know, Busch Stadium is not about to pick up and move to Clayton nor are many of the other tourist attractions Downtown that employ a number of low-wage workers.”
Of course, this type of predictive analysis may be all for naught if Dueker prevails and knocks down St. Louis’ minimum wage law. A St. Louis judge says he’ll make a decision before Oct. 15 – though it’s probable that his ruling will face an appeal.
On the Trail, a weekly column, weaves together some of the intriguing threads from the world of Missouri politics.