Question

What is your opinion about the minimum wage rate increase to $9.45 per hour in Missouri?

What is your opinion about the other scheduled increases in the next year?

How will this affect businesses who cannot afford to pay their employees?

Answer 1

1.

The minimum wage rate was increased by 85 cents to $9.45 per hour in Missouri which is almost a 10% increase over the previous year and a 22% increase on 2018 levels. Advocates for wage increase have the following opinions:

• The wage increase is essential to take care of inflation or increased prices
• Entry-level workers will get the most benefit from the wage increase
• Increases employee morale
• Reduce labor turnover and increases the productivity
• Workers will earn more and spend more facilitating more cash flow to local businesses and communities

Opponents for wage increase have the following opinions:

• It will burden businesses especially small businesses and will lead to an increase in the cost of doing business
• Some employers will be forced to shut their businesses leading too significant job losses
• Will result in price increases by businesses and will have a major impact on seniors on fixed incomes
• People are not motivated to work for long hours as they will get previously earned incomes by working for fewer hours
• Will lead to inflation
• Fewer employment opportunities to low skilled workers

Both arguments are valid points. Besides Missouri, a number of other states are also increased minimum wage rates in 2020. From 2014, which was the year of last increase before the 2018 increase, the cost of living has substantially gone up. A 10% increase in the minimum wage levels may account for 1-2% of the total cost of the business and may not have a major burden for most of the businesses. Besides, small employers having less than $500,000 annual income are exempted from increase. This increase in the minimum wage rate can be considered as Fair.

The minimum wage must be at the point above where workers are able to offer for their basic needs.

2.

Scheduled increases are there for 2021,2022,2023 with 85 cents each year until it reaches $12 per hour in 2023. This plan is agreed upon by the people of Missouri with 62% voting in favor of the plan.

Global health pandemic of COVID-19 destroying the lives of many people around the world. Economic consequences of this are the loss of jobs, reduced incomes, shattering of businesses, reduced demand for goods and services. Many businesses around the world particularly those of small businesses and businesses which have serious working capital problems are closing down.

The impact on businesses in Missouri is no different. The scheduled increases must be postponed to later years because

• Most of the businesses may not be in a position to bear an increase in the minimum wage rate levels due to reduced demand and increased expenses due to the pandemic
• Businesses may not able to and sustain a continuous increase in wage rates every year from 2019 to 2023. They need to reshuffle their strategies and business plans frequently.

3.

Effect on businesses who cannot afford to pay their employees:

• They may be forced to close down as sustainability of operations is no longer viable
• Increase in sale prices
• Reduction in the number of employees
• The firing of some senior employees
• May stifle business growth
• Major impact on small businesses as their payroll costs are major costs in the business