Raising minimum wage would have been bad for St. Louis job seekers
Author: Jordan Bruneau and Michael Saltsman
Publication Date: May 2017
Topics: Minimum Wage
For St. Louis’ entry-level employees hoping to land a summer job, the recent end of the latest legislative session was a nail-biter.
With just minutes to spare before the constitutional close of the session, legislators offered these job seekers a last-moment reprieve from the city’s dramatic minimum wage increase that would have made a difficult summer job market even tougher.
Legislators voted to keep minimum wage at the state level, pre-empting the city’s 43 percent municipal minimum wage increase to $11 at the start of 2018, keeping the Gateway to the West open for entry-level employment.
A new analysis by economists William Even at Miami University and David Macpherson at Trinity University demonstrates just what a service these legislators performed.
Following the same methodology that the nonpartisan Congressional Budget Office used to estimate that 500,000 jobs would be lost nationally at a $10.10 minimum wage, the economists determine that roughly 1,000 jobs would be lost in St. Louis City at an $11 minimum wage.
Their analysis shows that roughly two-thirds of the job loss would come from those with no more education than a high-school diploma. Women would lose a majority of the jobs, and young employees aged 16 to 24 would lose two-thirds of them. Sixty percent of the job loss would come in just two sectors: retail and leisure and food service. These sectors have provided summer jobs for generations of Missourians.
St. Louis can’t afford to put up any more barriers to employment. Recent data released by the Census Bureau show that the city experienced one of the country’s largest declines in population over the past year, losing over 1 percent of its population. (St. Louis County, by contrast, lost only one-third of that.) Had it taken effect, the city’s minimum wage increase threatened to drive even more residents out to the county where starter labor costs would have been 30 percent lower.
Tragically, the lack of opportunity for young summer job seekers can still be severe. For instance, in the 63120 ZIP code northwest of downtown, youth unemployment is nearly 60 percent, accordingly to the most recent data available. If these young job seekers can’t find a job at the current state minimum wage of $7.70, they’ll be completely locked out of the workforce at higher minimum wage levels.
While some young job seekers in St. Louis were saved from being priced out of the job market by their state legislators, teens elsewhere haven’t been so lucky. Johnson County, Iowa, which increased its minimum wage by 39 percent to $10.10 between November 1, 2015, and January 1, 2017, saw numerous small businesses such as Orange Leaf frozen yogurt and D.P. Dough restaurant close their doors or cut staff opportunities as a consequence. (The state legislature in Iowa saw the writing on the wall, and also opted to set one minimum wage at the state level.)
In Chicago, a rising minimum wage has forced both local restaurants, such as Cantina 1910, and national brands, such as Panera, to close their doors. In what should be a stark warning for policymakers concerned about the city’s young people, one ice cream shop owner in the city’s Beverley neighborhood cut her summer student hires by half.
Similar consequences are playing out across the country in states and cities that have experimented with dramatic minimum wage increases. Spec ific stories can be found at Facesof15.com.
While St. Louis starter employees can breathe a sigh of relief, the reprieve is cold comfort for youth looking for summer jobs right now. The legislature fell one vote short of canceling the minimum wage immediately, meaning that job seekers will have to put up with a $10 wage floor through Aug. 28, i.e., the summer job season. In neighborhoods where youth unemployment approaches and exceeds 50 percent, it’s just another reason to sing the blues.