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National Restaurant Association - $15 minimum wage would cost city thousands of jobs

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$15 minimum wage would cost city thousands of jobs

As St. Louis lawmakers debate whether to make the city the third major city to implement a $15 minimum wage, a new study projects that the extreme increase would cause thousands to lose their jobs.

Trinity University economist David Macpherson used U.S. Census Bureau data to estimate that an increase to $15—nearly double Missouri’s $7.65 state minimum wage—would come at the expense of approximately 3,100 jobs.

Macpherson, who conducted the study for the Missouri Restaurant Association, estimated that younger workers would be hit the hardest. Employees between the ages of 16 and 19 would suffer about 40 percent of the losses, and 55 percent of the affected jobs would be held by women.

Restaurants would be among the hardest hit. Macpherson projected that “arts, entertainment, recreation, accommodations, and food service” would feel 16.7 percent of the job losses, higher than any other industry. Health care was a close second at 16.4 percent. Nearly two thirds of the losses—1,927—would be borne by individuals with education levels of high school or less.     

Further opportunities could be lost if restaurants flee St. Louis in favor of surrounding areas with lower wage costs, Macpherson wrote.

“Raising wages is an admirable goal, but St. Louis can’t afford a proposal that will put jobs out of reach for the employees it’s trying to help, and potentially push businesses over the city line,” the Missouri Restaurant Association wrote in the study.

The St. Louis Board of Aldermen has begun holding hearings on the wage proposal, and a vote could come within five weeks. If it passes, the city minimum wage will increase immediately to $10 and annually by $1.25 until it reaches $15 in 2020. The measure would also set the minimum cash wage for tipped employees at half of the minimum wage.

Restaurant guests would also likely see significant price increases. The Missouri Restaurant Association, which has been on the front lines of the fight against the dramatic wage increase, recently reviewed the impact of a $13 minimum wage increase—$2 less than the level proposed in St. Louis—on several local restaurants. The association found that the restaurants would have to raise prices nearly 22 percent above today’s levels to meet the costs of the mandate.

The potential impact of a $15 minimum wage on jobs and opportunity in the city is getting significant media coverage, including by the St. Louis Post-Dispatch, KMOX (CBS), and NPR.

If the proposal passes, St. Louis would be the third major city to raise its minimum wage to $15, the amount union activists are pushing in a number of cities and states. Seattle recently raised its minimum wage from $9.47 to $11 as the first step toward reaching $15 in 2017.  Los Angeles Mayor Eric Garcetti signed a bill June 13 that will raise the city’s minimum wage from $9 to $15 by 2020.

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